The Ministry of Defence has made significant improvements in its management of and accounting for assets held on its inventory systems. However, the Department recognizes that it still faces significant challenges.Jump to downloads
Amyas Morse, the Comptroller and Auditor General (C&AG), has qualified his audit opinion on the MOD’s 2013-14 accounts.
Accounting for lease-type arrangements
The C&AG has qualified his opinion for the fifth year because the Department has 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 that the Department has made some progress in quantifying the impact of non-application of this Standard. The Department’s review confirms that the omission is material to the financial statements.
The MOD has provided a materially correct valuation of military equipment in the form of inventory and capital spares (at 31 March 2014). In response to previous NAO reports, the Department has implemented a systematic impairment review process and exercised greater control over its inventory and capital spares equipment.
“The Ministry of Defence has made significant improvements in its management of and accounting for assets held on its inventory systems. Consequently, this is the first time since the end of March 2008 that the Department has had an unqualified audit opinion on its inventory and capital spares holdings. However, the Department recognizes that it still faces significant challenges. In particular it remains constrained by aging legacy warehouse and inventory systems which necessitate a high level of manual intervention to ensure data integrity.”Amyas Morse, head of the National Audit Office
- Report-of-comptroller-and-auditor-general-on-the-2013-14-accounts-of-the-ministry-of-defence.pdf (.pdf — 335 KB)
- HC: 764, 2014-2015