MoD accounts fail on inventory and IFRS

The Ministry of Defence has been criticised by MPs for poor asset management that means it has effectively lost more than £6bn worth of equipment, reports PublicTechnology.net.

Following the qualification of the MoD’s accounts - for the fourth year running - the House of Commons Defence Select Committee released a report that criticised the department’s accounting processes and systems.

“It is alarming that [it] should be unaware of the location, usability or indeed the continued existence, of assets to a total value of £6.3bn,” the MPs concluded.

Inventory including battlefield radio sets valued at £184m, weapons and other materials cannot be accounted for in terms of value or location. The stock held at 29% of locations checked by the NAO did not match the recorded inventory.

The Commons report includes comments from the NAO’s audit qualification. As well as highlighting the inventory problems, it also noted that the MoD did not comply with accounting requirements under IFRS to determine whether long term contracts were in fact leases. “Given the substantial number and high value of the contracts involved, the NAO concluded that material values of assets had been omitted from the 2009-10 financial statements,” the NAO noted.

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