Ministry of Defence can't reconcile inventory and financial systems

The Ministry of Defence is struggling to reconcile a range of complex warehousing systems with financial databases, it has emerged.

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The Ministry of Defence is struggling to reconcile a range of complex warehousing systems with financial databases, it has emerged.

The MoD cannot line up a full set of consistent data between the warehousing systems, which track equipment inventory, and the value of assets held on its accountancy software.

The “significant discrepancies” between databases meant there was not enough accurate data to allow the National Audit Office to sign off all of the department’s financial accounts.

Some of the stock systems had become “highly complex” applications, because of the number of different lines of MoD stock and the huge range of locations involved. But the MoD also used basic spreadsheets for other items. The MoD accounts report £45 billion of net expenditure for the 2009-10 financial year, and assets totalling £131 billion.

The MoD is now attempting to rationalise the number of different systems, the NAO noted. But “significant weaknesses” remain in reconciling the systems: in spite of a number of clear processes for doing so, there was only limited detection and correction of error. Two of the biggest systems checked by the NAO had large discrepancies.

Among “deep-rooted” problems, there was also an issue of discrepancies between warehouse management records and actual inventory counts. This meant data held was “not reliable”, the NAO stated.

The MoD needed to standardise processes and systems more, the NAO said, as well as creating better management information.

Meanwhile, the £245 million Joint Personnel Administration System, built by EDS (now HP) to administer payroll, still contained significant inaccuracies due to human error, the NAO said.

That system, last year described as “catastrophic” by the Defence Select Committee after it shortchanged thousands of personnel, now had an 11 percent error rate in allowances and expenses. While there were improvements on the previous year, the MoD needed a “robust control environment” to improve data input.

The news comes a fortnight after the NAO issued a separate report, which found the MoD lacked a proper database of its estate holdings. This meant it was unable to cut those costs effectively, because it could not assess how heavily sites are used, their running costs, or the potential income from a sale.

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