The report concludes CSL failed to perform ‘timely and complete’ bank reconciliations, produced inaccurate accounting records for debtors and cash while handling the central finance functions of the Public Health Laboratory Service Board.
The NAO also says CSL had ‘poor controls’ over the making of payments for goods and the creation of creditors on the CSL accounting system.
The criticism will come as a blow to the £107m turnover CSL which is planning a flotation for the Spring of next year.
As a result of the failure CSL had to cut its charges to the Board by £116,000 in 1998/99 and had to make further reductions of £88,000 for 1999/2000.
The Board however had to pay an additional £620,000 in consultancy fees to help rectify problems.
Sir John Bourn, head of the NAO, said: ‘The lesson for other public bodies from the Board’s experience is that, when letting and managing such a contract, potential risks need to be identified, evaluated, mitigated and managed so that the fundamental responsibilities of the Board and its Accounting Officer for the proper management of its resources can continue to be discharged.’
The Board, which tracks infectious diseases in England and Wales, has been working with CSL to rectify many of the problems. The NAO has been assured key controls are now in place.
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