Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Implement HM Treasury-compliant financial framework, publish timely RFCA accounts, and ensure future compliance.
Conclusion
The Department’s arrangements for monitoring and reporting on the RFCAs’ financial performance are inadequate. The RFCAs’ accounts have been produced very late in recent years. The Department published the RFCAs accounts for 2020–21, 2021–22 and 2022–23 together, in October 2024, which means that some information about the Council and the RFCAs’ financial performance was not publicly available until more than four years after it had occurred. The Department had not published the 2023–24 accounts at the time of our inquiry, more than a year after the end of that financial year. Despite the RFCAs receiving £146 million of public money in 2023–24, the Department does not have an overall financial framework for them which complies with HM Treasury requirements. The Department began developing a new financial framework in 2022, but this is still not in place: it is currently with HM Treasury for comment, and the Department says that it expects to finalise it in the next few months. In addition, some of the RFCAs’ financial reporting is not compliant with HM Treasury and International Financial Reporting Standards. For example, the Council, which consolidates the accounts of the 13 RFCAs, was unaware that it should include a cash flow statement and the Department did not pick them up on this omission. 6 recommendation As a matter of urgency, the Department should: a. agree and implement a HM Treasury-compliant financial framework; b. publish the RFCAs’ accounts for 2023–24 in a format that complies with the applicable HM Treasury and international accounting standards; and c. work with the Council to ensure that in future the RFCAs understand the requirements they must comply with and are equipped to do so. 7 1 The Ministry of Defence’s vision for the RFCAs Introduction
Government Response Summary
The government agrees, stating it has already funded a professionally qualified Finance Director and agreed a Treasury-compliant financial framework. The department commits to working closely with RFCAs to ensure full compliance with public financial requirements and will provide updates on progress.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. the required financial standards and has already funded a professionally qualified Finance Director as recommended in the 2019 review. The newly agreed Treasury compliant Framework document clearly sets out financial controls, reporting expectations and oversight arrangements. The department will work closely with the RFCAs to ensure full compliance with public financial requirements. The department will provide updates on progress as requested by the Committee.