Botched IT blamed for hole in Home Office accounts

IT problems have been partly blamed for financial chaos at the Home Office that has resulted in the National Audit Office (NAO) saying it is unable to sign off the department's accounts for 2004-05 as being fair and correct.

The implementation of the accounting module of the Home Office's Oracle-based Adelphi finance, HR and procurement system in May 2004 was supposed to automate manual processes and bring greater efficiency.

At one point a £3m discrepancy had to be written off by the Home Office by making gross adjustments to its accounts totalling almost £1bn.

But the NAO said warnings about the risks of implementing the new system were not addressed by the Home Office resulting in difficulties in transferring and cleansing data, and staff not being trained to use the system properly.

The NAO report said: "These problems and delays, together with a lack of understanding of the new accounting system, meant that the Home Office could not use data from its new accounting system effectively to produce a cogent set of accounts to the required faster closing and statutory timetables."

At one point a £3m discrepancy had to be written off by the Home Office by making gross adjustments to its accounts totalling almost £1bn. The Home Office said it found no evidence of fraud behind the missing money.

But the NAO review found control weaknesses within key IT applications, including access to the system and inadequate segregation of duties.

The report said: "These weaknesses made access to the database by unauthorised staff possible, representing a risk to the integrity of Adelphi data and exposing the Home Office to a greater risk of fraud and error."

Sir John Bourn, head of the NAO, told parliament that the Home Office had not maintained proper financial books and records for the financial year ending 31 March 2005 and that he could not reach an opinion on the "truth and fairness" of the Home Office's accounts.

The Home Office said it is now taking steps to strengthen its financial control framework, and to improve its financial statements preparation processes.