HMCTS has improved its ability to provide financial information on fines and penalty transactions but significant issues remain with key data systems.

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Amyas Morse, Comptroller and Auditor General, has reported to Parliament today that HM Courts and Tribunals Service has improved its ability to provide information on fines and penalty transactions. The C&AG, however, cannot form an overall opinion on the financial statements of HMCTS as significant issues remain affecting the truth and fairness of the Trust Statement in respect of receivables, cash and fixed penalties.

The C&AG recognises that the duty to produce the Trust Statement was introduced in 2010-11 and the transition period was short. Key systems which maintain data relating to fines and penalties – which are case management systems, and not designed for financial reporting – did not have the capability or functionality to support financial statements.

As a result of these issues, HMCTS has not been able to produce the records required to support key areas of the 2011-12 accounts. Specifically:

  • HMCTS were not able to provide sufficient evidence over the opening balance of receivables – although summary electronic records were available in all cases, HMCTS could not provide the original case files for audit purposes for several older debts;
  • management are unable to prove the accuracy or completeness of the cash balance recognised in the Trust Statement; and
  • HMCTS do not possess accounting records supporting the imposition of fixed penalties necessary for accruals-based financial statements. HMCTS are operationally responsible for fixed penalty collections, but information concerning the point of issue of fixed penalties is provided by local police forces. This, however, is not sufficiently robust to provide a reliable figure for use in the Trust Statement.

HMCTS was, for 2011-12, able to produce a listing of individual in-year transactions and debt balance in the Trust Statement. This is a significant improvement on 2010-11, when no transactional information was available, and has allowed the C&AG to confirm that, in all material respects, the transactions relating to fines and penalties processed by HMCTS, and recorded in the financial statements, conform to the relevant statutory and other authorities.

HMCTS continues to face a critical challenge given that the systems and processes for fines and penalties were not designed for financial reporting. In respect of the issues affecting his opinion on the financial statements, the C&AG recognises that HMCTS is working to improve the quality of the information available and expects these issues to be progressed as systems capability is increased. HMCTS should continue its ongoing review of the existing systems, and also consider how better financial reporting might help to improve collection and enforcement.


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