NAO finds mismanagement at Courts Funds Office

4 Nov 99
The reputation of government executive agencies has been dealt another blow this week after auditor general Sir John Bourn accused the Courts Funds Office of financial mismanagement and losing track of £9.8m.

05 November 1999

Following the fiasco at the Passport Agency, a report from the National Audit Office has highlighted serious management failures by the CFO, which has responsibility for the management and investment of funds lodged in court by people pursuing litigation.

The CFO also has responsibility for funds deposited on behalf of mentally incapacitated people and minors whose financial affairs are under the control of the Court of Protection.

The NAO report is the latest in a stream of criticism of the accountant general of the Courts Funds Office, Julia Lomas. She has already faced stringent attacks from both the NAO and the Public Accounts Committee in her other role as chief executive of the Public Trust Office.

Sir John has questioned the CFO's management of the funds, which stand at £31.4m. Particular criticism has been levelled at the CFO's inability to analyse the figures in the unclaimed balances fund, leaving £9.8m unaccounted for.

An NAO spokesman said: 'It is a very basic issue. Any public body holding money on behalf of the public should do everything in its power to find out and know whose money it is holding.'

The CFO must establish proper records and review the make-up of the unclaimed balances, Sir John said.

The auditor general's criticism follows his report earlier this year on the Public Trust Office, an executive agency of the Lord Chancellor's Department, which protects the financial welfare of people with mental incapacity.

Last February, the NAO found considerable weaknesses in the way the PTO monitored patients' capital, and questioned the accountability of the organisation because of 'weaknesses in performance measurement and lack of progress in developing accurate and consistent agency accounts'.

The Public Accounts Committee accused the trust in September of 'failing to ensure that the financial interests are adequately protected'.

Chairman David Davis said it was a 'serious failure' that the CFO does not know the ownership of some £10m of assets in its care. He added: 'The CFO must urgently get to grips with this problem. Part of this involves looking at options for removing the very old balances, some of which date back to the 1700s.'


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