The National Audit Office (NAO) said that Defra had made improvements in its financial management but raised concerns over its financial management activity.
The spending watchdog said it had expected faster progress in improving performance since it last reported in 2008 and a higher level of financial maturity, given the resources spent and the focus on financial management. Amyas Morse, head of the NAO, said: “Defra has made progress in its financial management. However, there is more to do and progress needs to speed up. The department should grasp the opportunity of its recently-launched change programme to instil good financial management across its business and deliver better value for money.”
The NAO said Defra had undertaken a number of projects designed to strengthen its financial management and that these have had some positive results, although the department has not fully assessed all the benefits of these projects.
It said the department had improved its financial capacity and capability, by increasing the number of permanent, qualified finance staff and also by offering financial skills training courses for non-financial staff.
However, NAO official said there are still weaknesses in financial capability; and financial skills could be better integrated across the department. The department should also focus on improving its commercial skills, it said.
A Defra spokeswoman said: “The NAO report recognises progress made in Defra’s financial management and capability. Financial reporting has improved and the department has increased the number of permanent qualified finance staff. Defra always looks to find new ways to deliver value for money and we are making further improvements.”
Since 2002, Defra has consistently underspent against its Parliamentary estimate. The underspend in 2010-11 was £530m (10 per cent). It has, however, improved its management of expenditure against its departmental expenditure limit, reducing its underspend in 2010-11 to £34m (one per cent of expenditure).