The Home Office has published its 2024-25 accounts. Gareth Davies, the Comptroller and Auditor General (C&AG), has issued a clean audit opinion, providing assurance to Parliament on the financial statements.

Here we share highlights from his audit certificate. You can read the full certificate and report in context in the Home Office’s annual report and accounts.

Opinion on financial statements

In my opinion, the financial statements:

  • give a true and fair view of the state of the Department and the Departmental Group’s affairs as at 31 March 2025 and their net expenditure for the year then ended; and
  • have been properly prepared in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions issued thereunder.

Opinion on regularity

In my opinion, in all material respects:

  • the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2025 and shows that those totals have not been exceeded; and
  • the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

Key audit matters

Accounting for implications following change in government policy

Description of risk

Following the General Election in July 2024, the incoming Government confirmed that it was terminating the Migration and Economic Development Partnership (MEDP) with the Government of Rwanda. In the Parliamentary Accountability Report in its 2024-25 Annual Report and Accounts, the Department noted that it was in discussion with HM Treasury to assess whether the expenditure incurred on the MEDP (£290 million by the end of April 2024) met the Managing Public Money definition of a constructive loss.

Disclosures in respect of the MEDP arrangement, are of high parliamentary and public interest. I concluded therefore that it was a Key Audit Matter to confirm that any changes in Government policies had been accurately and completely reflected in the Parliamentary Accountability Report, and that any losses or write offs had been properly authorised.

Key observations

The Department’s initial losses statement did not include the payments totalling £290 million under the MEDP arrangement, but after further conversations with the NAO and HMT clarifications on the Managing Public Money guidance, the Department decided to include the payments in the losses statement. I have obtained sufficient assurance over this risk from my substantive testing.

Non-current assets- Asset Clearing Account

Description of risk

The asset clearing account is a suspense account to which the Home Office posts transactions when it incurs expenditure on items of a capital nature prior to their precise detail being clarified and then posted to the relevant asset class or expensed if not meeting the criteria for capitalisation. At 31 March 2025, the balance on the asset clearing account was £961 million (£695 million at 31 March 2024). This balance included assets which needed to be analysed and either expensed or transferred to the appropriate asset class within the non-current asset register. This process results in risks to the classification of assets between Property, Plant and Equipment (PPE) and intangible assets and to the allocation between asset classes within these groups. In addition, there is a risk that the depreciation and amortisation charges associated with these assets is incorrect if they have been allocated to an incorrect asset class or incorrectly identified as either fully operational assets or assets in the course of construction.

The Department allocated the balance on the asset clearing account at 31 March 2025 of £961 million across all asset classes, with the largest allocations to Intangible Assets under Construction (£326 million), Intangible Assets Information Technology (£223 million) and Property Plant & Equipment Assets under Construction (£190 million). In addition, the Home Office estimated a total of £100 million for the depreciation and amortisation associated with this asset clearing account, of which over 67% was assumed to relate to Intangible Assets Information Technology.

Key observations

My testing in this area did not identify any material misstatements.

Government Actuary’s Department – pension accrual

Description of risk

The Department’s draft financial statements included a material accrual at 31 March 2025 of £329 million relating to the police and fire pensions top-up grant. As in 2023-24, this accrual includes an element relating to the change in pensions legislation, which is a consequence of the redress of age discrimination against pension scheme members caused by the transitional arrangements applied when schemes were replaced in 2015.

The police and fire authorities are not able to forecast the cash deficit in relation to this and so the Home Office commissioned the Government Actuary’s Department (GAD) to estimate this element of the accrual. My audit identified this as a significant risk as there are a number of complex assumptions and modelling that feed into this accrual and an expert is required to calculate this estimate.

Key observations

My testing in this area identified that the Department had received additional information about the likely value of its pensions accruals from returns provided by police and fire authorities in June 2025 which had not been factored into its initial valuation of the liability as at 31 March 2025. This required a material adjustment to reduce the liability by £289 million, which is reflected in the final financial statements.

In addition, I reviewed payments made during 2024-25 against the accrual for pension liabilities of £889 million recognised in the Department’s financial statements as at 31 March 2024. My review identified that the Department had received updated information from police and fire authorities in June 2024, before the 2023-24 accounts had been certified. This indicated that net pension accruals reported at 31 March 2024 were overstated by £285 million. This updated information was not drawn to my attention at the time or reflected in the certified financial statements for 2023-24 and I consider this to be a material error requiring an adjustment to the prior year’s financial statements. Note 20 to the financial statements on pages 272 to 274 of the Annual Report and Accounts discloses the impact of this restatement.

Application of materiality

Departmental group

Materiality: £277 million

Basis for determining overall account materiality: 1% of gross expenditure of £27,762,277,000 (1% of gross expenditure of £28,022,212,000 in 2023-24)

Rationale for the benchmark applied: Gross expenditure is the main driver for the accounts. The Statement of Outturn against Parliamentary Supply is the chief focus for users of the accounts, and this is derived from the Statement of Comprehensive Net Expenditure and in particular gross expenditure. Furthermore, users of the accounts would be interested in specific expenditures such as expenditure on asylum costs and policing.

Department parent

Materiality: £270 million

Basis for determining overall account materiality: 1% of gross expenditure of £27,349,884,000 (1% of gross expenditure of £27,571,405,000 in 2023-24)

Rationale for the benchmark applied: In line with the group accounts, gross expenditure is the main driver of the parent accounts, so the same basis for determining materiality has been used.

Home Office Annual Report and Accounts 2024-25

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