The Foreign and Commonwealth Office (FCO) has received praise from the public accounts committee (PAC) for at last putting its house in order.
Edward Leigh, the committee's chairman, told MPs the department had "made significant progress in recent years in how it manages its finances".
Against a backdrop of historically weak financial management, the Foreign and Commonwealth Office has made considerable progress over the past three years to improve the accuracy, reliability and timeliness of financial information, said the PAC report.
Having recognised the need to take action, the department set up its 'Five Star Finance' project with a series of targets and milestones, which is due to be completed in the summer of 2010. The challenge is now to complete the project successfully, and to ensure that all the improved procedures and practices are embedded in the normal running of the business.
Leigh said some of the improvement had been down to the recruitment of professionally qualified staff at the top, including a new finance director, and upped the number of accountants in its finance area.
"The benefits have been tangible across the department in the form of better financial skills and understanding of the importance of good financial management and improved confidence in the figures, leading to better informed decisions," he said.
"The FCO has demonstrated its keenness to share across government what it has learnt about improving financial management practice but the Treasury has perhaps not done enough so far to lead the process."
Over half of the Department's expenditure of some £2bn is paid out in foreign currency. As a result of the weakening of sterling against other major currencies, the department has suffered a significant reduction in its purchasing power.
The department also confirmed that its aim is to maximise the benefits from each of its embassies in pursuit of British trade and foreign policy interests, and that it has no plans to sell-off any of its prestigious buildings around the world.
