MoD fails to keep track of its assets

The MoD inventory system has struggled to keep adequate track of its equipment

A report by the National Audit Office (NAO) highlights continuing challenges faced by the Ministry of Defence (MoD) in maintaining adequate records for certain spares, inventory and military equipment.

The report, authored by Amyas Morse, the NAO's controller and auditor general, noted that the MoD has taken steps to improve its management of stock in these areas over the past year.

However, it said that the MoD still suffered from high levels of discrepancies in stock counts and an inability to reconcile warehouse system records with accounting systems.

The discrepancies are understood to have increased since last year as the MoD addresses the scale of the challenge, uncovering more problems as it goes.

Morse said: “Despite action by the department to improve its asset management and accounting, the issues I have identified are systemic and deep-rooted. The level of control exercised by the department [on its assets] is not yet sufficient.”

The report was limited by the MoD's failure to comply with certain accounting requirements for determining whether or not a contract contains a lease. Because of this, a material value of assets and liabilities has been omitted from its financial statements. The department has told the NAO that the cost of reviewing all its existing contracts to determine whether they contain leases would exceed the benefits of compliance.

An MoD spokesperson said: “These issues have had no impact on the MoD’s ability to provide essential equipment to frontline troops. The NAO has recognised that the MOD has improved procedures for inventory management and, by the end of March this year, had completed a full reconciliation of [for example] Bowman radios.”

In other news, the MoD has asked a US contractor to expedite the delivery of a £35m order for night-vision goggles for use in combat operations in Afghanistan. The units were due to be shipped over three years, but are now all due for delivery in the next eight months.