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National Audit Office report: Client Funds Account – Statutory Child Maintenance Schemes 2012-13

Client Funds Account – Statutory Child Maintenance Schemes 2012-13

Amyas Morse, the Comptroller and Auditor General, has again been unable to give a full sign off to the statutory child maintenance schemes account.

After abolition of the Child Maintenance and Enforcement Commission (CMEC) in July 2012, the Department for Work and Pensions took over operational responsibility for the schemes. The account records the amounts of child maintenance received from non-resident parents and payments to parents ‘with care’. But the C&AG has qualified his opinion on the regularity of receipts and payments because of the level of error in maintenance assessments. He has also given an adverse opinion on the truth and fairness of the outstanding maintenance arrears.

Irregular receipts and payments

In 2012-13, the Department received £827.3 million in respect of child maintenance from non-resident parents. As a result of errors in the calculations of maintenance assessments, the NAO has estimated that a proportion of non-resident parents have made overpayments amounting to £7.6 million, while others have made underpayments totalling £6.1 million.

Outstanding maintenance arrears

There is currently a reported cumulative total of £3.853 billion in outstanding arrears from non-resident parents dating back to inception of the statutory schemes in 1993. This balance represents the total amount owed by non-resident parents to either the parent with care or, sometimes, the Secretary of State. Current legislation allows for the writing-off of outstanding arrears only in very limited circumstances. The NAO considers that these figures do not give a true and fair view because of the level of error in the underlying case data, which is a result of both inaccurate maintenance assessments by caseworkers and incorrect processing of cases.  The Department is unable to estimate the value of errors arising due to inaccurate maintenance assessments, but it is significant. The best available estimates of the impact of incorrect processing of cases indicate that the reported arrears at 31 March 2013 are overstated by around £15.2 million and understated by around £105.2 million.

Financial reporting and IT systems

Since the inception of the statutory child maintenance schemes, there have been significant problems with the main IT systems supporting the schemes. Among other problems, the IT systems do not have the functionality to report fully arrears for the account. To address this, the Department has developed a separate process to scan the underlying systems and produce reports.

During the year the Department introduced the 2012 scheme, which is managed through new processes and a new IT system.  The Department intends that this will reduce much of the previous administrative complexity and reliance on manual processes.

The efforts of the Department have resulted in the reporting of more robust arrears position than that reported in the past. However, owing to the scale and age of the accumulated issues, there remain significant and unresolved inaccuracies in the reported arrears balance.

March 2014

 

 

Publication details:

Published date: April 1, 2014