"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.
ISBN: 9780102965339 [Buy from TSO]
HC: 187, 2010-2011