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• Full report -  HM Courts and Tribunals Service Trust Statement for the year ended 31 March 2012 

Amyas Morse, Comptroller and Auditor General, has reported to Parliament recently 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.

Notes for Editors

1. Trust Statements are accounts prepared by government bodies responsible for collecting revenue – including taxation, duties or fines and penalties – on behalf of the Consolidated Fund (the central fund operated by HM Treasury). Trust Statements account for the transactions and balances specific to these collection activities, and are separate from the statutory accounts of collecting entities. On behalf of the Consolidated Fund, HMCTS collect fines and confiscation orders (imposed by the judiciary and police) and penalties (imposed by the police), and are required to account for the imposition, collection and disbursement of these revenues through a Trust Statement.
2. In his report on the 2010-11 Trust Statement, the C&AG had disclaimed his opinions on both financial statements and on regularity, reflecting the fact that HMCTS could not provide him with the accounting records to support his audit work. The financial statements were based principally on summary reports produced by Libra, the case management system used in magistrates’ courts, but management could not provide the transactional records underlying this aggregated information.
3. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
4. The National Audit Office scrutinizes public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services, and our work led to audited savings of more than £1 billion in 2011.