Recommendation 7

The Comptroller and Auditor General also qualified the Department’s 2024–25 accounts because of a regularity issue.15 This related to provisions to cover probable compensation and legal costs associated with personal injury claims, and probable costs and compensation associated with Afghan resettlement schemes.16 The Department needed to make a prior-year adjustment because these provisions, totalling £2.56 billion, should have been included at 31 March 2024. It did not have the necessary Parliamentary approval for this prior year adjustment.17 The Department 12 Qq 6 and 8; MoD, Annual Report and Accounts 2024–25, HC 1130, 4 November 2025, pp 142-143 13 Q 27 14 Qq 8-10; MoD, Annual Report and Accounts 2024–25, HC 1130, 4 November 2025, p 157 15 Q 14; MoD, Annual Report and Accounts 2024–25, HC 1130, 4 November 2025, p 142 16 In accordance with International Accounting Standard 37: Provisions, Contingent Liabilities and Contingent Assets, a provision is a liability of uncertain timing or amount. In some circumstances such as a lawsuit, it may be disputed either whether certain events have occurred or whether those events result in a present obligation. In such a case, an entity determines whether a present obligation exists at the end of the reporting period by taking account of all available evidence, including, for example, the opinion of experts. On the basis of such evidence, where it is more likely than not that a present obligation exists at the end of the reporting period, the entity recognises a provision. 17 Q 14; MoD, Annual Report and Accounts 2024–25, HC 1130, 4 November 2025, p 158. 10 has written to the Committee setting out the steps it has now taken so that the Comptroller and Auditor General is made aware of all material provisions and liabilities on a timely basis. The letter also describes the arrangements the Department has put in place so that it can identify such liabilities and properly assess their impact for Parliamentary Expenditure Limits,