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Ministry of Justice: Financial Management Report 2011

Financial management at the Ministry of Justice has improved considerably since the National Audit Office last examined this subject in 2010. However, in some important areas, such as income collection, the Ministry still has a great deal to do.

The NAO’s 2010 report was critical of the Ministry in three main areas: the consistency of its financial management approach; its understanding of its costs; and its financial management systems and processes.

The Ministry now has effective governance structures in place and, in 2010-11, managed its money far more effectively, allowing it to redeploy funds to where they were most needed. Today’s report has found that financial management is now much more central to the operation of the organization and the quality and consistency of financial planning and forecasting have improved. Financial management is being led from the top and financial information for decision making is more relevant and useful, with the Ministry’s planning work allowing it to bring together a wide range of business information to estimate the financial implications of its workload. It has also improved oversight of its arm’s-length bodies.

The Ministry still has gaps in financial reporting skills and some of its underlying systems need further improvement. It was one of only two government departments that failed to produce their financial accounts by the 2011 summer Parliamentary recess. Several factors led to the Ministry’s problems, although the most immediate was that accounts for the National Offender Management Service were produced late. The Legal Services Commission, an arm’s-length body of the MOJ, had the audit opinion on its 2010-11 accounts qualified owing to the potential level of error, put at an estimated £50 million. There has also been little change in how the Ministry monitors and collects assets due under confiscation orders, with the amount of outstanding debt having increased by almost £400 million in 2010-11.

Amyas Morse, head of the National Audit Office, said today:

"The Ministry of Justice has made considerable and welcome improvements to its financial management since I last reported. This is crucially important if the Ministry is to meet its cost reduction targets.

"However, the Ministry should not underestimate how much there is still to do. Collection of fines and assets due has not improved; the Legal Services Commission needs to reduce the error rate in its payment of legal aid; and good financial management must become business as usual."

Notes for Editors

  1. Under the terms of the settlement in the 2010 Spending Review, the Ministry of Justice will see a real-terms reduction in funding of 23 per cent by 2014-15 compared with 2010-11. The Ministry aims to make front line savings of around 10 per cent and reduce back office function costs by around a third; if successful, this will contribute around £1 billion of the annual £2 billion savings required by 2014-15.
  2. 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.
  3. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 880 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

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