The Government department dealing with business will have to manage much tighter finances in the future as a result of the coalition's spending review, an official report has found.

The Department for Business, Innovation and Skills (BIS) is targeting a 27% reduction in resources between 2010/11 and 2014/15, although its total spending is forecast to reduce by 6% during the four-year period, said the National Audit Office (NAO).

The spending watchdog praised the department for keeping its financial management on track during a period of "substantial" organisational change.

The department, headed by Business Secretary Vince Cable, was said to have worked hard to improve its financial management.

Amyas Morse, head of the NAO, said: "The department should meet the challenges posed by the 2010 spending review through coherent strategic planning, rather than short-term fire-fighting.

"Until it does so, the department will not achieve the value for money it needs from its financial management activities."

A Business Department spokesman said: "We are pleased that the NAO has recognised the hard work the department has done to ensure sound financial management and value for taxpayers' money.

"We are committed to a 27% reduction in our resources and, as recognised by the NAO, we are working hard to ensure we have the skills and capacity to manage this challenging but achievable target.

"We are also working closely with our 42 partner organisations to develop more effective management across the whole of the BIS family."

The Press Association, photo by bisgovuk