Embarrassing accounting blunders at Serious Fraud Office

The all party financial watchdog, the House of Commons Public Accounts Committee, revealed the embarrassing blunders this week .

The SFO misinterpreted the accounting treatment for VAT on contracted out services and failed in 1998/99 to follow Treasury guidance to report sums received rather than sums receivable .

And then the costs and damages – worth £159 628 were charged to the wrong account. The PAC revealed: ‘This accounting treatment was corrected after their year end , too late for a Supplementary estimate.’

As a result of the two errors the SFO had to get Parliament to take the emergency step of authorising ‘an excess vote’ of 740 000 on top of the authorised spending.

The SFO recognise that had they the correct accounting treatments before the end of the year, they could have avoided this emergency step and gone for a normal supplementary estimate instead.

As a result, the PAC has asked the Treasury to remind the SFO and three other departments ‘to ensure that staff are fully competent to apply the correct accounting treatment for handling Appropriation Transactions.’

The SFO, the Ministry of Defence, the Lord Chancellor’s department and the office for National Statistics {all of which also were criticised for requiring excess votes} are also asked to make 4 other changes.

These are to make sure that their estimates are ‘robust’ , to treat them as spending limits, not expenditure targets: to attach the same importance to estimating and managing receipts as expenditure and to regularly review spending and collection of money against budgets to allow early corrective action.

The Ministry of Defence required more than £37m extra because of shortfalls in receipts; the Lord Chancellor’s department more than £1.1 million owing to poor accounting for property and rent, and the office for National Statistics an excess vote of £5.12 million for doing activities without Parliamentary authority .

The PAC said that excess votes was a practice to regularise financial anomolies.In authorising them , the committee says: ‘To regularise the position is not to condone it , however, and the committee expect a robust management response by the department concerned to address the weaknesses which have led to these excesses.’

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