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Even though the MoD's accounts for 2013-14 have been qualified, we are gratified that the Department MoD is making substantial progress in management of its accounts. There are residual concerns, and this year's Report and Accounts were delayed by five months to resolve uncertainties around the accounting treatment of assets under construction. The accounts were eventually qualified on the grounds of the accounting for contracts likely to contain a lease and on the accounting for non-current assets, capital spares and inventory items. Whilst acknowledging the continuing challenges, we welcome the progress being made by the Permanent Under-Secretary and his team to resolve the problems that have led to these delays and qualifications, but note that the forthcoming Strategic Defence and Security Review and the management reform of the Service Commands will throw up new questions to be addressed in the administration of the MoD's accounts.
The MoD is making real improvements more broadly in its management of its assets and liabilities. Progress has been made in DIO in consolidating information systems for recording land and property and, notwithstanding the auditor's qualification, in management of inventory. The MoD has also developed a new strategic cost model that will enable it to identify the cost of changes in force structure and identify what an affordable structure would be within a given budget. This tool will be a crucial element in helping the MoD to prepare for the next Strategic Defence and Security Review and will contribute to the transparency of decision-making in the context of that Review. Successful operation of this model would mark a further step forward in the Department's management and strengthen its hand in negotiations for the next Comprehensive Spending Review.
We also welcome the steps being made by the Department to increase the transparency of its reporting on its own performance, including incorporating a number of our previous recommendations; it is essential that the information provided on the MoD's performance takes account of the changes in focus that the Department will undergo in coming years.
One of the biggest changes in the administration of the Department over the last year has been the reforms to Defence Equipment and Support. Our successor Committee will continue to follow closely changes in the Department's approach to equipment acquisition. It will wish to ensure that the arrangements for project management contractors for each of the four domains avoids the risk of "stovepiping" in acquisition decisions within each of the three Services and Joint Forces Command.
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