Press Release - Appropriation Accounts 1998-99: Lord
Chancellor's Department and Serious Fraud Office
23 February 2000
The Comptroller and Auditor General, Sir John Bourn, today
reported to Parliament that he has qualified his opinion on the
Lord Chancellor's Department Appropriation Account due to limited
evidence available to confirm that £633 million of criminal legal
aid payments complied fully with legal aid regulations. He has also
reported on control weaknesses in the Lord Chancellor's Department
and the misinterpretation of proper accounting treatment by the
Serious Fraud Office which have led these departments to incur
expenditure in excess of the amounts granted for 1998-99 and for
which further Parliamentary authority is now required.
Lord Chancellor's Department
In each of the years since 1990-91, the Comptroller and Auditor
General has qualified his audit opinion on the Department's
Appropriation Account, and the Committee of Public Accounts has
taken evidence from the Department on four separate occasions. The
Department has taken seriously the Committee's concerns and, over
time, its initiatives have secured a steady improvement in the
amount and quality of documentary evidence obtained to support
claims for free legal aid and income and expenditure allowances in
other cases.
During 1998-99, the Department's Internal Assurance Division
maintained its continuing review of magistrates' courts' compliance
with legal aid regulations. This work is directed to improving as
well as monitoring performance.
As a result of its audit work at 30 courts, in two rounds of
visits, the Internal Assurance Division found:
- for applicants claiming free legal aid, 95 per cent provided
good proof of entitlement;
- for applicants not claiming free legal aid, but who might be
liable to make a contribution, 93 per cent on one round of visits
and 99 per cent on the other had supplied some evidence of their
income; and 96 per cent and 98 per cent of applicants provided
evidence of expenses allowable against income; and
- there were errors in the determination of contributions in 31
per cent and 32 per cent of cases examined.
To obtain independent evidence and to confirm the validity of
the Internal Assurance Division's results, the National Audit
Office conducted a similar examination at 10 locations, and
found:
- for applicants claiming free legal aid, 93 per cent (74 per
cent in 1997-98) provided adequate evidence of entitlement and, in
a further 5 per cent of cases (13 per cent in 1997-98), that
evidence was insufficient. However, in 2 per cent of cases (13 per
cent in 1997-98), free legal aid had been granted without any
evidence of entitlement;
- for applicants not claiming free legal aid, 91 per cent (85 per
cent in 1997-98) had supplied some evidence of their income and 86
per cent (69 per cent in 1997-98) had provided evidence of expenses
allowable against income; and
- there were errors in the determination of contributions in 32
per cent of the cases examined (38 per cent in 1997-98).
The National Audit Office visits show a lower level of
compliance in the amount and quality of documentary evidence
provided, compared to the Internal Assurance Division's findings.
Since the National Audit Office visits were carried out for audit
rather than management purposes, they were not preceded by the
pre-audit visits conducted by the internal auditors in their sample
of courts, which should have helped to improve compliance with the
regulations in those courts.
In view of the limited evidence available to give reasonable
assurance of full compliance with regulations relating to the award
of criminal legal aid and determination of contribution orders, the
Comptroller and Auditor General has qualified his opinion on this
account for a further year.
The Comptroller and Auditor General has also reported to
Parliament that he has qualified his opinion on the above account
because the Lord Chancellor's Department has exceeded, by £1.14
million, its limit on running cost expenditure. The excess
expenditure arose because rent paid in 1997-98 was not accounted
for until 1998-99 and this was not discovered until the end of that
year by which time remedial action could not be taken. Also
contributing to the excess expenditure, there was an increased cost
of capital charge which had resulted from the revaluation of
property. The Department has taken action to prevent these control
weaknesses recurring and to improve financial information as well
as the monitoring of expenditure.
Serious Fraud Office
The Comptroller and Auditor General has reported to Parliament
that he has qualified his opinion on the Appropriation Account of
the Serious Fraud Office which has overspent by £0.7 million. The
Department incurred excess expenditure of £0.1 million but
receipts, which may be offset against expenditure, fell short of
the amount expected by £0.6 million.
The excess expenditure arose because unexpected costs were
awarded against the Department when the court quashed search
warrants obtained in connection with a mutual legal assistance case
for an overseas government. The deficiency of receipts resulted
from the misinterpretation of the proper accounting treatment for
VAT on contracted out services. Had the Department recognised the
correct accounting treatment before the end of the financial year,
it would have taken steps to change its planned expenditure to
avoid the excess.
Sir John Bourn said today:
"The Lord Chancellor's Department has clearly made
significant progress towards improving the checking of criminal
legal aid applications though more remains to be done.I am
disappointed, however, to have to report that financial control
weaknesses in the Lord Chancellor's Department and the incorrect
accounting treatment by the Serious Fraud Office meant that both
departments have exceeded the funds granted by Parliament and had
to ask for further parliamentary authority to approve their
expenditure."
Notes for Editors
Within the legal aid system, the Lord Chancellor's Department
has responsibility for policy and legislation affecting legal aid
and for funding the costs. In granting criminal legal aid, however,
magistrates' courts act independently and are not subject to
direction by the Department.
The Lord Chancellor's Department is continuing to monitor
compliance by magistrates' courts with criminal legal aid
regulations. The Access to Justice Act 1999 included proposals for
a fundamental reform of the legal aid system. Under a new scheme
for criminal proceedings, due to start in October 2000, courts will
no longer be required to means test defendants as part of the grant
of criminal legal aid. But, if not acquitted, the defendant may be
ordered to pay some or all of the defence costs at the end of the
trial.
The Comptroller and Auditor General, Sir John Bourn, is the head
of the National Audit Office employing some 750 staff. He and the
NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 9/00
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