Ottawa Citizen | DND Is Having Trouble Spending Its Budget: What is the Solution to that Problem?


By DAVE PUGLIESE SUN, JUN 5 2011 Defence Watch

The Department of National Defence has been having trouble spending all its budget over the years. It will once again have to return a significant amount of funds from its budget back to government coffers after it couldn’t spend the money in the last fiscal year.

Sources say that DND wasn’t able to spend more than $1.5 billion of its $21 billion budget for the fiscal year 2010-2011.

But DND will be able to keep some of that, receiving approval from government to carry forward $444 million into the next fiscal year, as I noted in a recent article in the Citizen.

“Forecasted lapse of funds is significant,” financial documents presented to a senior DND management board in February pointed out.

The funding is “lapsed” because it could not be spent by March 31, the end of the 2010-2011 fiscal year.

What are the reasons for not being able to spend all the money?

Poor management practices and a lack of procurement staff to oversee the billions of dollars in proposed equipment purchases have been blamed for DND’s inability to spend all of its budget.

The lapsed funds include money from operations and maintenance as well as equipment procurement budgets.

It’s an ongoing problem.

In 2009-2010, DND had lapsed funds totaling $1.18 billion, according to the Public Accounts report and DND’s own financial statement. Of those, the department was allowed by the government to carry forward $410 million.

Auditor General Sheila Fraser also identified the problem with lapsing funds in a 2009 report. “The Department’s financial management and monitoring of resources may not be adequate to support decision making by senior management,” that report noted.

“The lack of accurate and timely information for decision makers contributed to the lapsing” of funding, it added.

In December 2009 the Standing Committee on Public Accounts, citing the auditor general’s report, also issued a study calling on DND to improve its financial management systems and controls.

However, the VCDS is suggesting that during this year, improvements might be undertaken to ensure that such large amounts don’t lapse. We’ll see how successful he is.

Ottawa Citizen | DND Is Having Trouble Spending Its Budget: What is the Solution to that Problem?

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