Amyas Morse, the Comptroller and Auditor General (C&AG), has again qualified his audit opinion on the MOD’s accounts.
The C&AG has qualified his opinion for the sixth year running because the Department has again not complied with the accounting requirement under the International Financial Reporting Standards (IFRS) for determining whether a contract contains a lease (the kind of contract which provides the Department with exclusive or near-exclusive use of assets and capability). The C&AG has noted, however, that the Department has made some progress in quantifying the impact of not applying this standard.
The MOD has confirmed that compliance with the standard is possible for existing contracts – but in practice this would create significant challenges. There would be a need for changes in business systems and processes, as well as for wider interaction by the Department with its supplier base to obtain the necessary asset and liability information.
16 July 2015