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National Audit Office report: Client Funds Account – Statutory Child Maintenance Schemes 2013-14

Client Funds Account – Statutory Child Maintenance Schemes 2013-14

The C&AG has qualified the DWP’s Client Funds Account on the grounds of material errors in the calculations of child maintenance assessments. He has also given an adverse opinion on the truth and fairness of the outstanding maintenance arrears.

Amyas Morse, Comptroller and Auditor General, has qualified his audit opinion on the Client Funds Account of the Department for Work and Pensions on the grounds of material errors in the calculations of child maintenance assessments. He has also given an adverse opinion on the truth and fairness of the outstanding maintenance arrears.

The statutory child maintenance schemes in Great Britain are delivered by the DWP which is leading the schemes through a period of major reform. For the first time since 2003, a new scheme has been introduced (the ‘2012 Scheme’) which is intended eventually to process all child maintenance cases. At present the Department is running the older ‘legacy’ schemes concurrently with the new ‘2012 Scheme’, while it begins to transfer cases from one to the other.

The Client Funds Account records the receipts of child maintenance from non-resident parents; payments to parents with care and the Secretary of State; and a statement of cash balances held at the year end; this being the value of maintenance received which has not yet been paid out.

Irregular receipts and payments

In 2013-14, the Department received £851.7 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, within this amount, a proportion of non-resident parents have made overpayments of child maintenance amounting to £7.3 million (0.9% of receipts), while others have made underpayments totalling £6.9 million (0.8% of receipts).

Outstanding maintenance arrears

The balance of £3.993 billion as at 31 March 2014 is the cumulative total of outstanding arrears since the Child Support Agency was established in 1993. This balance represents the total amount owed by non-resident parents to either the parent with care or, in some instances, the Secretary of State. Current legislation allows the Department to write off 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 owing 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 2014 are overstated by around £15.2 million and understated by around £114.2 million.

Financial reporting and IT systems

The 2012 Scheme is supported by a new IT system, which interacts directly with HMRC and DWP databases to obtain information necessary to produce maintenance calculations. The Department anticipates that, over time, this will result in quicker, more accurate assessment calculations. In the future, therefore, the Department expects accuracy levels to improve, but at the current early stage of the 2012 Scheme, these expectations are still to be proven.

 

 

Publication details:

Published date: December 17, 2014