"The financial management of the Ministry of Justice,
both at its headquarters and its arm's length bodies, has improved
but it falls short of established best practice in three
significant areas. The Ministry does not have a consistent
financial management approach, lacks a full understanding of the
costs of its operational activities and policies and has yet to
integrate its financial systems and processes, reducing its ability
to monitor its overall budgetary position.
"Without improvements in these areas, the Ministry will
not be able to make informed decisions on relative operational
performance, affecting its ability to deliver the sustainable
efficiencies that are needed in the current constrained spending
environment. The Ministry has yet to produce a clear timetable for
the delivery of its financial management improvement initiatives to
achieve best practice levels in financial management. This
timetable needs to be established with urgency and we recommend
that it is put in place within the next four months."
Amyas Morse, head of the National Audit Office, 6 July
2010
The Ministry of Justice has made progress in improving its
financial management, according to a report published today by the
National Audit Office, but it falls short of best practice in the
consistency of its financial management approach, its understanding
of its costs and the integration of its financial management
systems and processes.
Today's report recognises that the Ministry has made an
important step forward in establishing a Value for Money
Improvement Committee. This will assist the Ministry in delivering
its future efficiency programme; integrating its financial systems;
improving its cost data; and enhancing its internal financial
management reporting. However, the Ministry is yet to produce a
clear action plan to deliver its financial management initiatives
and needs to do so over the next four months to demonstrate its
commitment to continuing to improve its financial management.
The efficiency of the Ministry's financial management is
affected by the differing financial management approaches in its
arm's length bodies, a consequence of its complex delivery
mechanisms and recent machinery of government changes. Financial
management in these bodies, particularly in the National Offender
Management Service, is yet to be fully integrated with the
Ministry's. This affects the Ministry's ability to monitor its full
range of financial and operational risks - a key requirement in the
current climate of fiscal restraint.
The Ministry does not yet understand, in sufficient detail, the
costs of its activities within its prisons, the probation service
and the courts. Procurement systems have been overhauled but this
still leaves the 40 per cent of the Ministry's cost base relating
to staff time. To address this, the Ministry has introduced major
programmes to understand the costs of its activities in the
National Offender Management Service and HM Courts Service. These
programmes have the potential to generate significant operational
benefits and savings, but they are not due to be completed until at
least 2012. Without full information on its costs, the Ministry's
ability to allocate resources on the basis of the relative
financial and operational performance of individual prisons,
probation services and courts is reduced.
The National Audit Office also notes that the Ministry's Finance
Directorate does not have sufficient visibility of the costs of its
policy proposals, reducing the effectiveness of the Ministry's
financial control of its forward policy agenda.
Publication details:
HC: 187, 2010-2011
ISBN: 9780102965339