Northern Ireland Court Service Annual Report and Resource Accounts 2008-2009 for the year ended 31 March 2009 Ordered by the House of Commons to be printed 15 July 2009

Resource Accounts presented to the House of Commons pursuant to chapter 20, section 6(4) of the Government Resources and Accounts Act 2000

LONDON: The Stationery Office 15 July 2009

HC 472


CONTENTS


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Annual Report

1. Director’s report

1.1 Basis of Accounts

This is the Annual Report and Accounts for the Northern Ireland Court Service ("the Department") for the financial year ended 31 March 2009. These Statements have been prepared in accordance with directions given by HM Treasury in pursuance of the Government Resources and Accounts Act 2000.

1.2 Establishment of the Northern Ireland Court Service

The Northern Ireland Court Service is the Lord Chancellor’s department in Northern Ireland. The Department was established by the Judicature (Northern Ireland) Act 1978 as a "unified and distinct Civil Service of the Crown". Its role is to provide administrative support for the Northern Ireland courts, enforce civil court judgements through the Enforcement of Judgments Office and support the Lord Chancellor in discharging his ministerial responsibilities in Northern Ireland including responsibility for judicial appointments and legal aid.

Further information about the Court Service can be found at www.courtsni.gov.uk.

1.3 Departmental Boundary

The departmental boundary incorporates only the core department of the Northern Ireland Court Service.

During the year the Department held responsibility for the granting of funds to the Northern Ireland Legal Services Commission (NILSC) and the Northern Ireland Judicial Appointments Commission (NIJAC). As executive Non Departmental Public Bodies (NDPBs) the NILSC and the NIJAC are outside the departmental boundary for the purposes of these resource accounts.

The funds invested by the Court Funds Office are specifically excluded from the departmental boundary, in accordance with HM Treasury guidance. Third party monies are similarly excluded.

The NILSC, NIJAC and Court Funds Office each publish their own audited financial statements.

1.4 Departmental Reporting Cycle

The Department is required to prepare an Estimate for HM Treasury in January each year, which details the proposed spending of the Department for the coming financial year. Supplementary estimates are prepared in winter and spring, if required, to take account of any changes during the year.

The main estimate and any supplementary estimates are published each year on the HM Treasury website at www.hm-treasury.gov.uk.

An Annual Report is published by the Court Service each year on www.courtsni.gov.uk/publications.

1.5 Ministers

The Northern Ireland Court Service is the Lord Chancellor’s department in Northern Ireland.

The following held ministerial office during 2008-09:

1.6 Departmental Management Board

The Departmental Management Board meets generally monthly and supports the Director as Head of the Department. It is responsible for reviewing, challenging and providing advice and guidance on the departmental delivery strategies, achievement of departmental objectives and targets, plans and programmes, performance management and governance arrangements.

The composition of the Departmental Management Board during the year was as follows:

D A Lavery Director NI Court Service
D P Andrews Head of Publicly Funded Legal Services
J Durkin Head of Court Operations
G Fee Head of Criminal Policy and Legislation
L McAlpine Head of Civil Policy and Legislation
S Broderick Head of Tribunal Reform
D Thompson Finance Director
K King Non-executive Director

Executive members of the Management Board are appointed in accordance with the Civil Service Management Code.

David Thompson is an appointee, recruited via Interchange from PricewaterhouseCoopers LLP.

Kevin King is an independent member of the Management Board.

1.7 Other Committees

The work of the Management Board is supported by two further committees. These are the Finance Committee and the Audit and Risk Management Committee. These committees meet on a quarterly basis with additional meetings being held if required. The Finance Committee is chaired by David Lavery. The Audit and Risk Management Committee was chaired by Kevin King until 18 May 2009 and is now chaired by PJ Fitzpatrick who was appointed on 1 May 2009 as a non-executive Director.


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2. Management Commentary

2.1 Principal Aim and Objectives

The Department's vision is:

"Serving the community through the administration of justice."

The Department's purpose is:

The Court Service has published a Corporate Plan for 2008-2011 which identifies four key strategic aims as follows:

The Corporate Plan 2008-2011 can be found on the Court Service website at www.courtsni.gov.uk/publications.

2.2 Performance in 2008-09

During the year the Court Service delivered its programme of planned activities in support of the delivery of the strategic aims of its Corporate Plan.

Modernising court business

During the year we developed a new Business Modernisation & Customer Service Strategy which sets out the Court Service’s vision of how we plan to develop our business until 2010/11 in order to deliver quality, customer-focused services.

The Court Service continues to modernise the way in which court business is transacted to meet the expectations of all court users by seeking opportunities to further exploit our successful technology programmes below:

In respect of the ICOS Programme, the ICOS Electronic Interfaces Project was successfully extended to enable the secure electronic exchange of information between the Court Service and other public sector organisations.

The Court Service is a partner in the Causeway Programme which will underpin electronic communication and information sharing between the criminal justice agencies in Northern Ireland when fully implemented. The technical solution is currently undergoing rigorous user acceptance test trials and is planned to enter live service later in 2009.

As part of the Electronic Service Delivery Programme we enhanced the Enforcement of Judgments On-line Case Tracking service and conducted Feasibility Studies in respect of providing future Probate and Matrimonial services on-line.

The Courtroom Technology Programme was further progressed during the year with the implementation of new Video Conferencing and evidence display facilities across the province.

Customer Service 2008/09

A three year Business Modernisation and Customer Service Strategy was issued for consultation in early 2009. The strategy sets out the Court Service’s vision of how we plan to develop our business until 2010/11 in order to deliver quality customer-focused services.

Key successes of 2008/09 include:

An action plan for year 2 of the Business Modernisation and Customer Service strategy has been developed. Customer Service Board will monitor action plan progress throughout the year.

Courts Funds Office (CFO)

During the year work continued on the CFO modernisation project, to review all aspects of CFO business policy, practices and operations to ensure a modern, professional, transparent, flexible and cost effective service which meets the specific needs of clients and stakeholders. During the year the following was achieved:

The Enforcement of Judgments Office (EJO)

The EJO, responsible for the recovery of money, goods and property from civil court judgments, continues on its quality improvement programme under the Modernising Government Agenda. In 2007, EJO introduced and implemented an extensive Quality Management System which was accredited under International Organisation of Standardisation 9001:2000 (ISO 9001:2000). Re-assessment against the ISO Standard was completed in December 2008 and EJO again successfully met all aspects of the stringent criteria. The current economic climate continues to have a considerable impact on the work of the EJO. Intake of cases for the recovery of money has increased by almost 90% and cases for re-possession of property are also up by approximately 30%. This of course presents significant challenges to EJO, however with the detailed approach required by ISO and the continued application of the principles of the European Foundation for Quality Management Business Excellence Model; EJO has a solid base to work from. EJO continues to work in cooperation with it’s partners and customers to continuously improve its effectiveness. This year saw closer cooperation with Citizens Advice Bureau and Housing Rights Service and the introduction of improved means to communicate with users, including new information leaflets.

The Coroners Service

The modernised Coroners Service for Northern Ireland was inspected by Her Majesty’s Inspectorate of Court Administration (HMICA) during 2007. HMICA issued a report in October 2007 on the progress made by the Coroners Service since it’s establishment in April 2006 and recommending 7 areas where continued development could be made. The Coroners Service drew up and implemented an action plan to take forward the recommendations and at the same time issued a Business Review covering the disposal of business between the period of April 2006 to March 2007. To date, the HMICA action plan has been implemented as far as possible and it is due to be revisited by HMICA in 2009/10. These reports may be viewed on the Coroners Service website at www.coronersni.gov.uk.

Tribunal Reform Programme

In April 2008 the Northern Ireland Executive endorsed the continuation of the tribunal reform programme. This programme is focused on the transfer of administrative responsibility for the 13 Northern Ireland departmental tribunals to Court Service.

The Executive asked officials to agree the financial, administrative and human resources arrangements under which this transfer would take place. During 2008/09 we agreed with 6 relevant Northern Ireland departments a framework for the transfer of their tribunals to Court Service addressing the administrative and human resources arrangements. We prepared a robust Outline Business Case setting out the benefits both financial and non-financial of the reform programme. This has been approved by Department of Finance and Personnel. The process to report back to the Northern Ireland Executive was commenced. This involves briefing the 6 departmental ministers and the relevant Assembly Committees.

Following approval the Court Service plan to transfer the tribunals over a 12–15 months period and co-locate 8 of the smaller tribunals.

The Criminal Injuries Compensation Appeals Panel Northern Ireland (CICAPNI)

During the financial year CICAPNI (the Panel) received a total of 725 appeals which shows a decrease of 134 from last years figure of 859. This number represents an appeal rate of just fewer than 41% of the 1,777 reviewed decisions given by the Compensation Agency during the same period and is an increase of 8% on last year (33%). In the year the Panel processed 832 appeals and out of that number 324 applicants won their appeals thus indicating a successful application rate of approximately 39%. The total value of awards made to the successful applicants amounted to £2,857k. The Panel finished the year with 573 appeals in hand and continues to work closely with the Agency's Presenting Officers Section in order to seek ways of reducing that number. The Panel also provided timely and considered advice to the Secretary of State on matters within the Scheme.

The Panel received 4 applications for judicial review in the financial year which represents a judicial review application rate of less than 0.5% of the total decisions made by the Panel in the year thus indicating the high quality of the decision making of the Panel.

The net costs of operating the panel for the 2008-09 financial year were £701,986 (2007-08 £669,368).

Promoting Confidence in the Justice System

During the year the Court Service worked with colleagues in the Northern Ireland Office (NIO) to facilitate the enactment of the Justice and Security (Northern Ireland) Act 2007 which delivered the Government’s commitment to abolish non-jury “Diplock” courts. With a view to making juries in Northern Ireland more representative of society as a whole, we have also progressed plans to widen the jury pool by conducting a review of persons ineligible to perform jury service and those excusable as of right.

The Court Service worked closely with the NIO on reforming sentencing reflected in the draft Criminal Justice (NI) Order currently laid before Parliament. The draft Order introduces extended sentences for public protection for serious cases and a system of release on license for all prisoners which will replace the system of fifty percent remission. The Order also contains provisions designed to update and enhance road traffic law and contains a number of other miscellaneous provisions.

The Service has also been involved in preparation for the possible future devolution of justice functions in Northern Ireland. This has included the identification of those legislative steps necessary to devolve functions from the Lord Chancellor and the Court Service to the Northern Ireland Assembly and the development of policy in relation to devolution of those functions. Developmental work has also been undertaken to establish a framework for the future status of the Northern Ireland Court Service on devolution and on a draft concordat on judicial independence.

The Court Service Outreach Programme coordinates and underpins a commitment to promote and enhance knowledge and understanding about the courts and the wider justice system.

2.3 Financial Position and Results for the Year

Financial Position (Balance Sheet)

The Department’s activities are financed mainly by Supply voted by Parliament and financing from the Consolidated Fund.

The Department’s Balance Sheet consists primarily of tangible fixed assets totalling £241m. Of this, £237m represents land and buildings; the remainder being information technology assets, furniture and fittings, plant and machinery.

During the year the department expended £6.167m in capital refurbishment and improvement of its property. IT additions amounted to £1.661m primarily as a result of the department’s ongoing programme of business modernisation.

Results for the Year (Operating Cost Statement)

The Operating Cost Statement represents the net total administration and programme resources consumed during the year by Request for Resources. The results for the year are set out in the Operating Cost Statement and are as follows:

The Department employed an average of 753 (Full Time Equivalent) staff during 2008-09, an increase of three from 2007-08. Accommodation rentals, PFI service charges, and non-cash asset related charges accounted for the majority of other administration costs.

As in previous years, a large portion of the Department’s expenditure was allocated to publicly funded legal services, or Legal Aid. The funding of Legal Aid continues to be a pressure on departmental resources. However, the ongoing programme of reform has been designed to address this. The administration of publicly funded legal services is carried out by the Northern Ireland Legal Services Commission (NILSC). The NILSC is an executive Non-Departmental Public Body (NDPB), and subject to the relevant government and accounting guidelines. Details of operational and financial performance of the NILSC can be found on their website at www.nilsc.org.uk. The total grants paid to NILSC in 2008-09 amounted to £87m, approximately 50% of the gross expenditure of the Department.

The Department is also responsible for providing grant in aid funding to the Northern Ireland Judicial Appointments Commission (NIJAC). NIJAC is an executive NDPB and is also subject to the relevant government and accounting guidelines. Further details about the activities of NIJAC can be found on their website at www.nijac.org. The grant in aid paid to NIJAC during 2008-09 totalled £1.5m.

The Department had operating income of £24.8m which was used to support the administration of justice.

Fees from civil court work are included in these financial statements as appropriations in aid (AinA).

It is government policy that the provision of services for civil court proceedings must be self-financing, so the fees earned from this type of work must cover the cost of that provision. Note 10 shows the level of civil court costs, and the associated income generated. In 2008-09 the recovery level was 99%.

Comparison of Outturn against Estimate (Statement of Parliamentary Supply)

Supply Estimates are a request by the Department to Parliament for funds to meet expenditure. When approved by the House of Commons, they form the basis of the statutory authority for the appropriation of funds and for the Treasury to make issues from the Consolidated Fund. Statutory authority is provided annually by means of Consolidated Fund Acts and by an Appropriation Act. These arrangements are known as the “Supply Procedure” of the House of Commons.

As a government department the Court Service is accountable to Parliament for its expenditure. Parliamentary approval for its spending plans is sought through Supply Estimates presented to the House of Commons.

The Statement of Parliamentary Supply provides information on how the department has performed against the Parliamentary and Treasury control totals against which it is monitored. This information is supplemented by Note 2 which represents Resource Outturn in the same format as the Supply Estimate.

In 2008-09 the Court Service met all of its control totals. At £142.1m the net resource outturn was £3.4m less than the 2008-09 Estimate of £145.5m. The main reasons for this variance were:

A reconciliation of resource expenditure between Estimates, Accounts and Budgets can be found below.

2008-09
£000
2007-08
£000
Net Resource Outturn (Estimates) 142,050 130,942
Adjustments to additionally include:
Non-voted expenditure in the OCS
7,880 7,424

Net Operating Cost (Accounts)

149,930 138,366
Adjustments to additionally include:
Resource consumption of non departmental public bodies
6 2,004

Resource Budget Outturn (Budget)
of which

149,936 140,370
Departmental Expenditure Limits (DEL) 149,936 140,370
Annually Managed Expenditure (AME) - -

It should be noted that the resource consumption of NDPB’s included above is an unaudited figure. The Resource Budget in the Estimate for 2008-09 is £153,468k (2007-08: £149,180k).

Cash Flow Statement

The Cash Flow Statement provides information on how the Court Service finances its ongoing activities. The main sources of funds are from the Consolidated Fund.

The Cash Flow Statement shows a net cash outflow from operating activities of £134.4m (2007-08 £122.5m). The change is mainly due to increased support of the departments NDPBs.

Statement of Operating Costs by Departmental Aim and Objectives

This statement reports expenditure by Departmental objective. The basis of allocation and apportionment of administration and programme expenditure is set out in Note 22.

Pensions and Early Departure Costs

Details about the Department's pensions and early departure costs policies are included in the notes to the accounts. Details of pension benefits and schemes for Board members are included in the remuneration report.

2.4 Business Focus for the future

The organisational aim of the Court Service is supported by the following four strategic aims:

The Corporate Plan 2008-2011 sets out the programme of work for the Court Service over the next three years and explains how we plan to use the resources, detailed below. The resources agreed in the Comprehensive Spending Review 2007 (CSR 07) are as follows:

2008-09
£’m
2009-10
£’m
2010-11
£’m
Resource DEL 132.7 131.9 131.4
Near cash resource DEL 115.0 114.0 113.0
Net administration budget 10.7 10.5 10.2
Capital DEL 7.0 7.4 7.4

The Corporate Plan 2008-2011 can be found on the Court Service website at www.courtsni.gov.uk/publications.

2.5 Principle risks and uncertainties

Devolution

The Court Service is working closely with the Northern Ireland Office and the devolved administration to ensure it is in a position to devolve its justice responsibilities as soon as the Northern Ireland Assembly so resolve and Parliament approve.

Work has also been ongoing on other legislative, governance and practical arrangements which will be necessary to the devolution of policing and justice.

2.6 Coroners and Justice Bill

During the year the Court Service worked with the Ministry of Justice to include within The Coroners and Justice Bill discrete provisions relating to the Coroners Service in Northern Ireland. These include enhancing the powers exercisable by Coroners in securing the attendance of witnesses at an inquest and the extension of the Northern Ireland Coroners jurisdiction to investigate deaths that occur.

Rights of Audience

The Court Service has been working with the Department of Finance and Personnel on provisions in the Legal Complaints and Regulation Bill to extend solicitors rights of audience in the higher court tiers in Northern Ireland. If approved by the Assembly the new provisions will enable solicitors registered with the Law Society of Northern Ireland as solicitor advocates to be given extended rights of audience before the High Court and Court of Appeal. The Bill will be published for full consultation later this year.

2.8 Public Interest and Other matters

2.8.1 Employment of Disabled Persons

The Department follows the Civil Service Code of Practice on the Employment of Disabled People that aims to ensure that there is no discrimination on the grounds of disability and that access to employment and career advancement in the Department is based solely on ability, qualifications and suitability for the post.

The Department has in place a Code of Practice on the Employment of People With Disabilities and a Good Practice Guide for Managers. A Disability Liaison Officer has been designated to support people with disabilities in their employment. The Department aims to ensure that people with disabilities have equality of opportunity and fair participation in all aspects of their employment, and that discrimination does not take place.

Following the introduction of two new disability duties for public authorities in June 2007 the Court Service issued a Disability Action Plan for the period 2007-09. The Plan details the actions we have already taken and future plans to:

  1. Promote positive attitudes towards disabled people; and
  2. Encourage the participation of disabled people in public life.
2.8.2 Equal Opportunities and Diversity

The Department is an equal opportunities employer. Policies are in place to guard against discrimination, ensure compliance with legal requirements and aim to ensure that there are no unfair or illegal discriminatory barriers to employment and advancement in the Department. The Department employs a designated Diversity Officer who has responsibility for promoting awareness of diversity and equality policies, monitoring the uptake of policies and conducting regular reviews of workforce composition. The role includes acting as an inter-departmental liaison officer with the Cabinet Office and the Northern Ireland Home Civil Service Network.

The Department has in place an Equal Opportunities Policy which guards against discrimination in employment, a Diversity Strategy, which values difference and an Equality Scheme which ensures that all 9 groups contained in Section 75 of the Northern Ireland Act 1998 are protected.

An Employment Equality Plan has been put in place to draw together all the proposed activity, which will take place in relation to these policies within the life of the corporate plan. The Equal Opportunities policy states that there shall be no discrimination against staff on grounds of gender, marital status, race, colour, nationality, ethnic origin, religion, disability, age or background. Employment and promotion are based solely on merit. Staff who work reduced hours are assessed on exactly the same basis as those working full time. A Dignity and Harmony at Work policy is in place and provides systems and procedures to enable and support staff to challenge harassment and bullying.

2.8.3 Employee Involvement

The Department attaches considerable importance to ensuring the involvement of employees in delivering its aims and objectives. The Whitley Council within the Court Service provides the means for communication and negotiation with Trade Union Side. The Whitley Executive Committee meets quarterly and is chaired by the Head of Operations. The vice-chairperson is appointed by Trade Union Side.

In addition to using the Whitley forum for communication with staff, a central focus of the development and review of policy within the department includes staff consultation. This is achieved through policy review focus groups to which staff may nominate themselves.

A Workplace Health Committee meets throughout the year to discuss health and safety matters of concern to staff and management.

The Court Service has a well established internal communications system, which meets the requirements of the Information and Consultation of Employees Regulations (NI) 2005, which includes for example team briefing sessions, focus groups, the staff handbook, staff notice board, intranet site, staff notices and staff attitude surveys. The departmental magazine of the Court Service, “Open Court” is circulated quarterly to all members of staff.

2.8.4 Payment within 30 calendar days

The Department seeks to comply with the “The Better Payments Practice Code” for achieving good payment performance in commercial transactions. Further details regarding this are available on the website www.payontime.co.uk. Under this Code, the policy is to pay bills in accordance with contractual conditions or, where no such conditions exist, within 30 days of receipt of goods and services or the presentation of a valid invoice, whichever is the later. The prompt payment results for 2008-09 showed that 98.17% (2007-08: 98.02%) of invoices were paid in accordance with the terms of the standard.

2.8.5 Payment within 10 workings days

The Prime Minister’s statement of 8 October 2008 set a challenge to Government Departments to pay suppliers as soon as possible, with the aim of bringing forward all payments to within 10 days. Following the guidance issued by Sir Gus O’Donnell on 17 November 2008, the Department is in the process of revising internal timescales for the processing and payment of invoices.

2.8.6 Auditors

The financial statements are audited by the Comptroller and Auditor General (C&AG) in accordance with the Government Resources and Accounts Act 2000. He is head of the National Audit Office. He and his staff are wholly independent of the Northern Ireland Court Service, and he reports his findings to Parliament.

The audit of the financial statements for 2008-09 resulted in an audit fee of £54,000 (2007-08: £45,850), £47,000 of which relates to the year end audit and £7,000 relates to the audit of the restatement of 31 March 2008 balances onto an International Financial Reporting Standards (IFRS) basis. This fee is included in non staff administration costs, as disclosed in Note 8 to these accounts. The C&AG did not provide any non-audit services during the year.

2.8.7 Directorships and other significant interests

A register is maintained by the Court Service that includes details of company directorships and other significant interests held by Board members which may conflict with their management responsibilities. This register is available for public inspection upon request.

2.8.8 Sustainability report

The Northern Ireland Court Service is committed to aligning itself with the NI Executive’s policy on sustainable development as set out in the Northern Ireland Sustainable Development Strategy. The Northern Ireland Court Service strives in its day to day activities towards maintaining the best possible environmental performance. An Environmental Policy is currently being drafted and it is hoped that this will be ratified and published early 2010.
In the interim the Northern Ireland Court Service key targets are:

2.8.9 Community Programmes

The Court Service Outreach Programme coordinates and underpins a commitment to promote and enhance knowledge and understanding about the courts and the wider justice system.

During 2008/09 the Court Service organised a wide range of educational and community based activities throughout Northern Ireland including a range of court visits tailored to meet the needs of schools, colleges, community groups and the general public. We facilitated 46 school visits and 74 work placements this year, as well as 5 Duke of Edinburgh group visits across the province.

The National Magistrates’ Court Mock Trial Competition is a highlight of the Court Service’s Outreach programme. Each year it involves 4,500 young people throughout England, Wales and Northern Ireland, and 800 magistrates and other legal professionals. The Northern Ireland heats of this Competition (2008/09) were hosted by the Court Service in Laganside Courts on 28 March 2008. This event provides young people with an excellent opportunity to gain a better knowledge and understanding of the justice system in an exciting and innovative way. This was filmed by the BBC and will subsequently be circulated to all schools in NI and posted on Education Online.

The Court Service supported Criminal Justice Week (week commencing 30 March 2009) by inviting local schools to attend themed open days at 2 court venues. The events were themed around ‘Witnesses in Court’ and were aimed at primary school children – designed to highlight the role of witnesses in the court proceedings.

One event was also filmed by North Eastern Education and Library Board TV (NEELBTV), and circulated to all schools and posted on Education Online.

Our Community Programmes take place under a number of different themes. Below are major themes which the Court Service has developed programmes within which members of the community may be able to get involved.

Further information on the above can be found on www.courtsni.gov.uk.

2.8.10 Environmental Issues

The Court Service is currently developing an environmental strategy which will be issued in 2009/10.

2.8.11 Personal Data Related Incidents

The Court Service have given consideration to Cabinet Office guidance on Report of Personal Data Related Incidents. The guidance requires that ‘a summary of incidents report’ to the Information Commissioner’s Office and the number of incidents recorded by the Department, but not required to be reported, to be disclosed in the Annual Report and Resource Accounts of the Department. The Court Service are content that there are no such incidents. The Court Service report any incidents which they feel fall under this guidance to the Cabinet Office and Information Commissioner’s Office immediately.

2.8.12 Managing Attendance

Stringent targets have been set to reduce the sickness absence rate for Departmental staff. The actual rate of sickness absence for 2008/09 was 9.2 days absence. This compared to 10.4 days absence in 2007/08. Whilst the sickness absence targets are challenging, there is a range of policies and procedures in place, which reflect best practice in both the public and private sector to ensure that staff are afforded every opportunity of getting back to good health and into the workplace as quickly as possible.

2.9 Other

International Financial and Reporting Standards adoption

Currently public sector finance is experiencing considerable changes due to the mandatory implementation of International Financial Reporting Standards (IFRS). Although IFRS will allow for greater understanding, consistency, comparability, and quality of financial statements and reports worldwide, it will result in significant change to existing financial reporting, primarily through longer and more detailed disclosures, for those in the public sector.

The NI Court Service is currently in its final stage of preparations for the move to IFRS and it is anticipated that the 2009/10 Resource Accounts will be produced on an IFRS basis in line with HM Treasury deadlines.

The move to IFRS will result in a number of changes to accounting treatments within NI Court Service Resource Accounts. Early indications are that the Resource Accounts will be adjusted for the following:

Integrated Court Operations System

The continuing development of the Department’s Integrated Court Operations System (ICOS) has again been to the forefront of the activities of the finance department over the year. Finance staff have been involved in helping to ensure that appropriate financial controls and interfaces were incorporated into the new system. This collaborative approach to system development was a priority to ensure the accuracy of the financial outputs. As well as improving the efficiency of case management, ICOS facilitates the payment of fees and fines at any court location throughout Northern Ireland.

Court Funds Office

Through the Court Funds Office, the Department administers a banking and investment service for funds deposited in court. Examples of the types of funds include monies held for minors, certain assets of some mental health patients, and payments in court in satisfaction of a claim. A formal review of administrative and investment processes has commenced with the objective of improving the efficiency and effectiveness of this service. The performance of these funds is outside the departmental boundary and further details may be found in the published white paper accounts for Funds in Court in Northern Ireland.

Environmental Liabilities

At the year-end there were no potential environmental liabilities. The Court Service had no contracted capital commitments as detailed in Note 23 to these accounts.

Disclosure to Auditor

So far as I am aware, there is no relevant audit information of which the Department’s auditors are unaware. I confirm that I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the Department’s auditors are aware of that information.


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3. REMUNERATION REPORT

Remuneration Policy

The remuneration of senior civil servants is set by the Prime Minister following independent advice from the Review Body on Senior Salaries.

The Review Body also advises the Prime Minister from time to time on the pay and pensions of Members of Parliament and their allowances; on Peers’ allowances; and on the pay, pensions and allowances of Ministers and others whose pay is determined by the Ministerial and Other Salaries Act 1975.

In reaching its recommendations, the Review Body has regard to the following considerations:

The Review Body takes account of the evidence it receives about wider economic considerations and the affordability of its recommendations.

Further information about the work of the Review Body can be found at www.ome.uk.com.

Service Contracts

Civil service appointments are made in accordance with the Civil Service Commissioners’ Recruitment Code. The Code requires appointment to be on merit on the basis of fair and open competition but also includes the circumstances when appointments may otherwise be made.

Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Staff are appraised annually against a set of competencies and individually targeted objectives. Bonuses, which form only a small percentage of total salaries, are the only form of remuneration subject to performance conditions.

Further information about the work of the Civil Service Commissioners can be found at www.civilservicecommissioners.gov.uk.

Salary and pension entitlements

The following sections provide details of the remuneration and pension interests of the Ministers and most senior officials of the department.

Remuneration (audited)

The Department is not responsible for the remuneration of any ministers. Ministerial salaries are accounted for in the financial statements of the Ministry of Justice.

Name and Title 2008-09 2007-08
Salary £000 Benefits in Kind (nearest £100) Salary £000 Benefits in Kind (nearest £100)
Mr DA Lavery
Director
120-125 - 115-120 -
Mr D P Andrews
Head of Publicly Funded Legal Service
70-75 - 65-70 -
Ms J Durkin
Head of Court Operations
70-75 - 70-75 -
Ms G Fee
Head of Criminal Policy and Legislation
55-60
(65-70 full year equivalent
- 5-10
(65-70 full year equivalent)
-
Mr G Keatley
Head of Division
60-65 - 60-65 -
Ms HL McAlpine
Head of Civil Policy and Legislation
85-90 - 80-85 -
Ms S Broderick
Head of Tribunal Reform
55-60
(65-70 full year equivalent)
- 50-55
(60-65 full year
equivalent)
-
Mr HA Hunter
(Seconded to NIJAC)
(until 30 September 2007)
- - 35-40
(65-70 full year Equivalent)
-
Mr K King
Non Executive Director
5-10 - 10-15 -

Salary

‘Salary’ includes gross salary; performance pay or bonuses; overtime; reserved rights to London weighting or London allowances; recruitment and retention allowances; private office allowances and any other allowance to the extent that it is subject to UK taxation.

This report is based on payments made by the Department and thus recorded in these accounts.

Kevin King, non-executive director, supplies his services under the terms of a contract, which commenced on 7 October 2004. He is remunerated by way of a daily attendance fee. As non-executive director, there are no entitlements to pension or other contributions from the Court Service.

David Thompson, Finance Director is an appointee, recruited via Interchange. PricewaterhouseCoopers LLP (PwC) supply his services under the terms of a contract, which commenced 5 March 2007. PwC are remunerated by way of a daily attendance fee. There are no entitlements to pension or other contributions from the Court Service. The total amount paid to PwC in 2008-09 for the services of David Thompson was £192,775.

Benefits in kind

The monetary value of benefits in kind covers any benefits provided by the department and treated by HM Revenue and Customs as a taxable emolument.

Pension Benefits (audited)

Name and title Accrued Pension at age 60 at 31 March 2009 and related lump sum
£000
Real increase/ (decrease) in pension and related lump sum at age 60
£000
CETV at 31March 2008*
£000
CETV at 31March 2009
£000
Real increase/ (decrease) in CETV
£000
Employer contribution to partnership pension account
Nearest £100
Mr DA Lavery
Director Northern Ireland Court Service
35-40 plus 110-115 lump sum 0-2.5 plus 0-2.5 lump sum 671 739 6 -
Mr D P Andrews
Head of Public Funded Legal Services
20-25 plus 65-70 lump sum 0-2.5 plus 0-2.5 lump sum 318 351 4 -
Ms J Durkin
Head of Court Operations
20-25 plus 60-65 lump sum 0-2.5 plus 0-2.5 lump sum 258 286 5 -
Ms G Fee
Head of Criminal Policy and Legislation
10-15 plus 35-40 lump sum 0-2.5 plus 2.5-5 lump sum 154 188 20 -
Mr G Keatley
Head of Division
30-35 plus 90-95 lump sum (0)-(2.5) plus (0)-(2.5) lump sum 645 680 (17) -
Ms HL McAlpine
Head of Civil Policy and Legislation
20-25 plus 65-70 lump sum 0-2.5 plus 0-2.5 lump sum 308 339 3 -
Ms S Broderick
Head of Tribunal Reform
5-10 plus 25-30 lump sum 0-2.5 plus 0-2.5 lump sum 111 127 5 -

* The figure may be different from the closing figure in last year’s accounts. This is due to the CETV factors being updated to comply with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008.

Civil Service Pensions

Pension benefits are provided through the Civil Service pension arrangements. From 30 July 2007, civil servants may be in one of four defined benefit schemes; either a ‘final salary’ scheme (classic, premium or classic plus); or a ‘whole career’ scheme (nuvos). These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus and nuvos are increased annually in line with changes in the Retail Prices Index (RPI). Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a good quality ‘money purchase’ stakeholder pension with a significant employer contribution (partnership pension account).

Employee contributions are set at the rate of 1.5% of pensionable earnings for classic and 3.5% for premium, classic plus and nuvos. Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years’ pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits in respect of service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 calculated as in premium. In nuvos a member builds up a pension based on his pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member’s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and, immediately after the scheme year end, the accrued pension is updated in line with RPI. In all cases members may opt to give up (commute) pension for lump sum up to the limits set by the Finance Act 2004.

The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 3% and 12.5% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of three providers. The employee does not have to contribute but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer’s basic contribution). Employers also contribute a further 0.8% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement).

The accrued pension quoted is the pension the member is entitled to receive when they reach pension age, or immediately on ceasing to be an active member of the scheme if they are already at or over pension age. Pension age is 60 for members of classic, premium and classic plus and 65 for members of nuvos.

Further details about the Civil Service pension arrangements can be found at the website www.civilservice-pensions.gov.uk.

Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The figures include the value of any pension benefit in another scheme or arrangement which the individual has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their purchasing additional pension benefits at their own cost. CETVs are calculated in accordance with The Occupational Pension Schemes (Transfer Value ) (Amendment) Regulations and do not take account of any actual potential reduction of benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

Real increase in CETV

This reflects the increase in CETV effectively funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

D A Lavery
Accounting Officer
26 June 2009


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STATEMENT OF ACCOUNTING OFFICER'S RESPONSIBILITIES

Under the Government Resources and Accounts Act 2000, HM Treasury has directed the Northern Ireland Court Service (‘the Department’) to prepare for each financial year, resource accounts detailing the resources acquired, held or disposed of during the year and the use of resources by the Department during the year. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Department and of its net resource outturn, resources applied to objectives, recognised gains and losses and cash flows for the financial year.

In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

HM Treasury has appointed the Director of the Northern Ireland Court Service, being the Permanent Head of Department, as Accounting Officer of the Department. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the Department’s assets, are set out in the Accounting Officers’ Memorandum issued by HM Treasury and published in the Managing Public Money.


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STATEMENT ON INTERNAL CONTROL

Scope of responsibility

As Accounting Officer, I have responsibility for maintaining a sound system of internal control that supports the achievement of the Northern Ireland Court Service’s policies, aims and objectives, whilst safeguarding the public funds and departmental assets for which I am personally responsible, in accordance with the responsibilities assigned to me in Managing Public Money. As Accounting Officer for the sponsoring department of the NI Legal Services Commission (NILSC) and the NI Judicial Appointments Commission (NIJAC), I have designated their Chief Executives as Accounting Officers. The relationships between the Court Service and the NILSC and NIJAC have been formalised in agreed management statements and financial memorandums.

The purpose of the system of internal control

The system of internal control is designed to manage risk to a reasonable level, rather than to eliminate all risk of failure to achieve policies, aims and objectives. It can therefore only provide reasonable, and not absolute, assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of departmental policies, aims and objectives; to evaluate the likelihood of those risks being realised and the impact should they be realised; and to manage them efficiently, effectively and economically. The system of internal control has been in place in the Northern Ireland Court Service for the year ended 31 March 2009 and up to the date of approval of the annual report and accounts, and accords with Treasury guidance.

Capacity to handle risk

The Court Service is committed to the principles of risk management as an integral part of the work of the Department at all levels and forms a central element of its corporate governance arrangements. Risk management is championed by the Finance Director with Management Board owning the overall risk management framework. Divisional Heads are responsible for ensuring the management systems in their area are robust for accountability, critical challenge and oversight of risk.

Risk management is considered formally at Management Board meetings through the review of the Corporate Risk Register and Corporate Plan monitoring reports. These reports include a section on attendant risks thus ensuring that risk management has been incorporated into the corporate planning and decision-making processes of the Department. Risk management also constitutes a standing item on Branch and Divisional meeting agendas.

A revised Risk Management Policy has been implemented and Risk Coordinators have been appointed across the Department who are responsible for promoting, supporting and coordinating risk management in their business areas. A tailored risk management training package has been rolled out to staff at all levels, which includes all risk coordinators and Heads of Division, and is based on Treasury guidance and advice on best practice.

Training material appropriate to authority levels and duties has been provided to staff as part of the training package. Continued support and guidance is facilitated though the Planning and Performance Management Team whose role is to support risk management arrangements. The Planning and Performance Management Team continues to review and develop the Department’s risk management skills by keeping up to date with significant risk developments and in the development of a risk management handbook which is complaint with Treasury ‘Orange Book’ guidance and is due to be issued during 2009/10.

The risk and control framework

Risks are considered in tandem with objectives at all levels in the organisation and formally reported on Branch, Divisional and Corporate Risk Registers. The risk process is complaint with Treasury ‘Orange Book’ guidance which sets out 5 key stages.

Risks are primarily identified through risk identification workshops and are assessed in terms of their probability of occurrence and impact on the achievement of objectives, and scored and reported on accordingly.

Responsibility for the management of each risk is assigned to a risk owner and recorded on the risk register, along with controls in place to mitigate the risk, or action plans in place in order to enhance the level of control.

Risk Registers are formally reviewed on a quarterly basis and documentation updated accordingly as a result of the implementation of actions planned. The updated risk registers record any movement of risks in terms of impact and probability of occurrence from one period to another and this enables an appreciation of how the risk has changed over time.

Updates on corporate risks are formally reported quarterly to Management Board where the Board will collectively review, recommend and pursue actions in place to manage the risks. The corporate risk appetite is set by Management Board and used as a starting point for setting levels of risk tolerance down the Department. Managers and Heads of Division escalate risks to the next level of management which have exceeded specific risk appetites.

Our Information Risk Policy supplements our corporate approach to risk management and encourages staff and managers to consider information as assets, supported by the compilation of Information Asset Registers. Therefore, information assets are subject to the risk management processes outlined above. In support of that process, the Information Risk Policy requires Information Asset Owners to provide written assurance to the Senior Information Risk Owner that any information assets within their business areas have been subject to the minimum measures mandated by the Cabinet Office in June 2008 and the policies and procedures of the Northern Ireland Court Service. Additionally, the Northern Ireland Court Service continues to be accredited to ISO27001, the information security standard. Notwithstanding the above, we continue to monitor and review our approach to information risk management.

The Audit and Risk Management Committee is responsible for the maintenance and development of the risk management and review processes through, for example, ensuring compliance with the quarterly review points, biannual formal stewardship reporting in order to ensure continued alignment with planning and monitoring at corporate, divisional and branch level. In challenging the risks identified by executive management the Committee ensures that there is ongoing consideration of the impact of both external and internal initiatives in the planned work for the Department.

Risk management is integrated into the activities of the Department through linking risk directly to the achievement of objectives, visible sponsorship and support from senior management, implementation of revised risk management policy bringing an approach consistent with best practice, inclusion of the risk management and review of key risks on the Board agenda as well as divisional and branch level, a standardised hierarchical suite of risk registers and revised risk documentation, inclusion of risk management responsibilities in job descriptions, and support and provision of guidance on risk issues from the Planning and Performance Management Team.

Review of effectiveness

As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. The Board receives regular reports from the Audit and Risk Management Committee concerning internal control, risk and governance. At the end of the reporting period, Heads of Division reviewed the stewardship statements completed by Business Managers in order to create a series of divisional statements from which I have been able to take assurance in respect of the management of risk and the achievement of objectives.

The Department’s Risk and Assurance Branch operates to the Government Internal Audit Standards. It submits regular reports, including an independent opinion by the Head of Risk & Assurance on the adequacy and effectiveness of the Department’s system of risk management, control and governance.

My review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the executive managers within the Northern Ireland Court Service who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their management letter and other reports. The review processes outlined ensure that there is continuous improvement in the system of internal control.

I have been advised on the implications of the result of my review of the effectiveness of the system of internal control by the Board and the Audit & Risk Management Committee and a plan to address any weaknesses and to ensure continuous improvement of the system is in place.

During 2008/09 a review of the EJO accounting system was carried out. A number of significant weaknesses in the operation of the accounting system were highlighted, notably a failure to effectively reconcile system records with the bank account and a range of administrative and supervisory weaknesses. An unacceptable level of assurance was given. An action plan to address the weaknesses was agreed at the conclusion of the review and management are progressing the implementation of the recommendations. A formal follow-up review will be carried out in 2009/10.

An audit review of the Gifts and Hospitality policy was carried out during the year. Weaknesses in the central monitoring processes were identified and a limited assurance rating was awarded. Subsequent to the report issuing, the Court Service has implemented more robust monitoring procedures and a follow-up review is planned for 2009/10.

A review of contract management procedures was carried out by Pricewaterhouse Coopers LLP and highlighted a number of weaknesses; recommendations to enhance controls are being implemented by management. This area will be reviewed again in 2009/10.

I have continued to work closely with the Northern Ireland Legal Services Commission (NILSC) to assist the NILSC to improve its financial management regime. The joint Northern Ireland Court Service / NILSC Financial Management Oversight Board meet regularly throughout the year to co-ordinate a range of activities to assist the NILSC in progressing various initiatives to improve its financial management. During the year progress was made on the production of Annual Accounts and the development of a more robust forecasting process. The NILSC financial statements for 2003/04 and 2004/05 were certified during the year. The work led by the Financial Management Oversight Board has informed discussions with HMT which secured a significant injection of funding during the year.

The arrangements I put in place for the Northern Ireland Court Service to provide the NILSC with a senior accountant who is the NILSC’s Director of Finance, supported by a range of accountants and technical consultancy support continued throughout the year.

The NILSC’s internal auditors have undertaken a comprehensive programme of reviews of operational and financial systems. The majority of these projects have provided only limited assurance and have highlighted a range of weaknesses, due to either the absence of or non compliance with key controls.

During the year a Landscape Review of the NILSC was published together with the NILSC’s detailed Action Plan which it is implementing.

The PSNI investigation into circumstances surrounding the acceptance of hospitality by two Court Service officials at the invitation of a prominent contractor concluded during the year and the Director of Public Prosecutions ordered that there should be no prosecution. The independent investigation into these events is proceeding and will reach its conclusion in the course of the incoming year. Pending the outcome of the independent investigation the two officers remain on precautionary suspension.

D A Lavery
Accounting Officer
26 June 2009


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THE CERTIFICATE AND REPORT OF THE COMPTROLLER AND AUDITOR GENERAL TO THE HOUSE OF COMMONS

I certify that I have audited the financial statements of the Northern Ireland Court Service for the year ended 31 March 2009 under the Government Resources and Accounts Act 2000. These comprise the Statement of Parliamentary Supply, the Operating Cost Statement and Statement of Recognised Gains and Losses, the Balance Sheet, the Cash Flow Statement and the Statement of Operating Costs by Departmental Aim and Objectives and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.

Respective responsibilities of the Accounting Officer and auditor

The Accounting Officer is responsible for preparing the Annual Report, which includes the Remuneration Report, and the financial statements in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions made thereunder and Article 8(4) (a) (iii) of the Criminal Injuries Compensation (Northern Ireland) Order 2002 and directions made thereunder by the Secretary of State for Justice and for ensuring the regularity of financial transactions. These responsibilities are set out in the Statement of Accounting Officer’s Responsibilities.

My responsibility is to audit the financial statements and the part of the Remuneration Report to be audited in accordance with relevant legal and regulatory requirements, and with International Standards on Auditing (UK and Ireland).

I report to you my opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with HM Treasury directions issued under the Government Resources and Accounts Act 2000 and directions made by the Secretary of State for Justice under Article 8(4) (a) (iii) of the Criminal Injuries Compensation (Northern Ireland) Order 2002. I report to you whether, in my opinion, the information which comprises the Director’s Report and the Management Commentary (excluding the Comparison of Outturn against Estimate section), included in the Annual Report, is consistent with the financial statements. I also report whether in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them.

In addition, I report to you if the Department has not kept proper accounting records, if I have not received all the information and explanations I require for my audit, or if information specified by HM Treasury regarding remuneration and other transactions is not disclosed.

I review whether the Statement on Internal Control reflects the Department’s compliance with HM Treasury’s guidance, and I report if it does not. I am not required to consider whether this statement covers all risks and controls, or to form an opinion on the effectiveness of the Department’s corporate governance procedures or its risk and control procedures.

I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises the unaudited part of the Remuneration Report and the Comparison of Outturn against Estimate section. I consider the implications for my certificate if I become aware of any apparent misstatements or material inconsistencies with the financial statements. My responsibilities do not extend to any other information.

Basis of audit opinions

I conducted my audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of financial transactions included in the financial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgments made by the Accounting Officer in the preparation of the financial statements, and of whether the accounting policies are most appropriate to the Department's circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and income have been applied to the purposes intended by Parliament and the financial transactions conform to the authorities which govern them. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Remuneration Report to be audited.

Opinions

In my opinion:

Opinion on Regularity

Report

I have no observations to make on these financial statements.

Amyas C E Morse

Comptroller and Auditor General
National Audit Office
151 Buckingham Palace Road
Victoria
London
SW1W 9SS

11 July 2009


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Statement of Parliamentary Supply

Summary of Resource Outturn 2008-09

Note 2008-09
£000
2007-08
£000
Estimate Outturn Net Total outturn compared with Estimate: saving/ (excess) Outturn Net Total
Gross Expenditure A-in-A Net Total Gross Expenditure A-in-A Net Total
Request for Resources 1 2 170,514 (25,000) 145,514 166,822 (24,772) 142,050 3,464 130,942
Total Resources 3 170,514 (25,000) 145,514 166,822 (24,772) 142,050 3,464 130,942
Non-operating cost A in A - - - - - - - -

Net cash requirement 2008-09

Note 2008-09
£000
2007-08
£000
Estimate Outturn Net Total outturn compared with estimate: saving/ (excess) Outturn
Net cash requirement 4 138,763 133,380 5,383 116,787

Summary of income payable to the Consolidated Fund.

In addition to appropriations in aid, the following income relates to the Department and is payable to the Consolidated Fund
(cash receipts being shown in italics)

Note Forecast 2008-09 £000 Outturn 2008-09 £000
Income Receipts Income Receipts
Excess appropriations-in-aid - - - -
Court imposed fines 5,150 5,150 6,092 6,092
Externally imposed fines 1,906 1,906
Other miscellaneous 350 350 254 254
5 5,500 5,500 8,252 8,252

Explanations of variances between Estimate and outturn are given in the Management Commentary.

The Department accepts payment for fines imposed in the Magistrates and Crown courts for onward transmission to the Consolidated Fund. Fines imposed in court can be cleared either by payment or by means other than payment, including committal to prison. Fines are deemed to be outside the scope of the Department’s activities until paid. On collection of fines the receipts are accounted for as a creditor to the Consolidated Fund until paid over. For 2008-09, the balance of fines outstanding was:

Court imposed Fines £000
Balance at 1 April 2008 7,904
Amounts imposed 8,295
Fines cleared by payment (6,092)
Fines cleared by means other than payment (2,552)
Balance at 31 March 2009 7,555

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Operating Cost Statement

for the year ended 31 March 2009

Note 2008-09 £000 2007-08 £000
Staff Costs Other Costs Income
Administration Costs
Staff costs 7 5,663 4,883
Other administration costs 8 10,533 6,709
Operating income 10 (24,772) (20,477)
Programme Costs
Staff costs 7 16,327 15,264
Programme costs 9 142,179 131,987
Income - -
Totals 21,990 152,712 (24,772) 138,366
Net Operating Cost 3 & 11 149,930 138,366

Statement of Recognised Gains and Losses for the year ended 31 March 2009

2008-09 £000 2007-08 £000
Net gain on revaluation of tangible fixed assets 31,693 14,190
Recognised gains and losses for the financial year 31,693 14,190

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Balance Sheet

as at 31 March 2009

Note 2008-09 £000 2007-08 £000
Fixed Assets:
Tangible assets 12 241,277 210,763
Intangible assets 13 53 65
241,330 210,828
Debtors falling due after more than one year - -
Current assets:
Debtors 14(a) 6,377 4,527
Cash at bank and in hand 15 3,913 8,996
10,290 13,523
Creditors (amounts falling due within one year) 16(a) (17,021) (20,555)
Net current assets (6,731) (7,032)
Total assets less current liabilities 234,599 203,796
Creditors (amounts falling due after more than one year) 16(a) (21,727) (22,816)
Provisions for liabilities and charges 17 (5,210) (3,133)
Pension liability 18 (367) (367)
207,295 177,480
Taxpayers' equity:
General fund 19 65,509 67,387
Revaluation reserve 20 141,786 110,093
207,295 177,480

D A Lavery
Accounting Officer
26 June 2009


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Cash Flow Statement

for the year ended 31 March 2009

Note 2008-09 £000 2007-08 £000
Net cash outflow from operating activities 21(a) (134,355) (122,452)
Capital expenditure and financial investment 21(b) (6,905) (1,759)
Receipts due to the Consolidated Fund which are outside the scope of the Department's activities 5 8,252 10,456
Payments of amounts due to the Consolidated Fund (7,470) (10,881)
Financing 21(d) 135,395 130,441
(Decrease)/Increase in cash in the period 21(e) (5,083) 5,805

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Statement of Operating Costs by Departmental Aim and Objectives

for the year ended 31 March 2009

Aim 2008-09 £000 2007-08 £000
Gross Income Net Gross Income Net
Objective 1 15,129 148 14,981 13,591 195 13,396
Objective 2 2,975 521 2,454 3,148 612 2,536
Objective 3 56,805 24,103 32,702 61,074 19,670 41,404
Objective 4 11,778 - 11,778 - - -
Publicly funded legal services 88,015 - 88,015 81,030 - 81,030
Net operating Costs 174,702 24,772 149,930 158,843 20,477 138,366

Objectives 2008-09

Objective 1 To modernise court business
Objective 2 To improve access to justice
Objective 3 To promote confidence in the justice system
Objective 4 To support an independent judiciary

See Note 22

Note: The Departmental Aim and Objectives for 2008-09 are published in the Corporate Plan 2008-2011 which can be found on the Court Service website at www.courtsni.gov.uk/publications.


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NOTES TO THE DEPARTMENTAL RESOURCE ACCOUNTS

1.0 Statement of Accounting Policies

The financial statements have been prepared in accordance with the 2008–2009 Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM follow UK generally accepted accounting practice for companies (UK GAAP) to the extent that it is meaningful and appropriate to the public sector.

In addition to the primary statements prepared under UK GAAP, the FReM also requires the Department to prepare two additional primary statements. The Statement of Parliamentary Supply and supporting notes show outturn against Estimate in terms of the net resource requirement and the net cash requirement. The Statement of Operating Costs by Departmental Aim and Objectives and supporting notes analyse the Department’s income and expenditure by the objectives agreed with Ministers.

Where the FReM permits a choice of accounting policy, the accounting policy which has been judged to be most appropriate to the particular circumstances of the Department for the purpose of giving a true and fair view has been selected. The Department’s accounting policies have been applied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting Convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of fixed assets.

1.2 Basis of Consolidation

These accounts incorporate the core activity of the Department.

The Department sponsors two executive non-departmental public bodies (NDPB’s). These are the Northern Ireland Legal Services Commission (NILSC) and the Northern Ireland Judicial Appointments Commission (NIJAC). These have been excluded from the Departmental boundary for the purposes of these resource accounts.

The NILSC was established on 1 November 2003 to operate the legal aid system, a function previously performed by the Legal Aid Department (LAD).

The NIJAC was established on 15 June 2005 to reform the system for the appointment of members of the judiciary and tribunals.

The funds invested by the Court Funds Office (Funds in Court) are specifically excluded from the departmental accounts following HM Treasury guidance. Third party monies are similarly excluded. The funds held on behalf of third parties by the Court Funds Office are included in Note 31.

Financial information about the Northern Ireland Legal Services Commission, the Northern Ireland Judicial Appointments Commission and the Funds in Court may be obtained from their separately published annual accounts.

1.3 Tangible Fixed Assets

The Department holds title to the freehold and leasehold land and buildings shown in the accounts.

Freehold and leasehold land has been included within the balance sheet on the basis of open market value for existing use. Due to the specialised nature of courthouses they are included within the balance sheet at depreciated replacement cost. Other buildings are included within the balance sheet on the basis of existing use value. Land and buildings surplus to requirements are valued on the basis of open market value less any directly attributable selling costs. Antiques are professionally valued every five years and were revaluated at the 31st March 2009 by Hugh Boyd BSc (Econ.) M.I.P.A.V. All other assets are included at depreciated replacement cost.

Professional valuations of land and buildings take place at least once every five years in accordance with FRS 15 and appropriate indices are applied to revalue in intervening years. Land and buildings were valued by the Land and Property Service (LPS) of the Department of Finance and Personnel at 31 March 2009.

Other tangible fixed assets have been stated at their value to the business by reference to Office of National Statistics (ONS) indices. The indices for other tangible fixed assets were obtained from ONS MM17 Price Index Numbers for Current Cost Accounting as at March 2009.

Assets costing more than the prescribed capitalisation level of £1,000 are treated as capital assets.

1.4 Intangible Fixed Assets

Purchased computer software licences are capitalised as intangible fixed assets where expenditure of £1,000 or more is incurred. Software licences are amortised over the shorter of the term of the licence and the useful economic life.

1.5 Depreciation

Tangible fixed assets are depreciated at rates calculated to write them down to estimated residual value on a straight-line basis over their estimated useful lives. Assets in the course of construction are depreciated from the point at which the asset is brought into use. A further adjustment is made for any backlog depreciation arising from the Treasury requirement to value fixed assets by reference to current costs. No depreciation is provided on freehold land since it has unlimited or very long estimated useful life.

Useful lives are normally in the following ranges:

Land - Freehold Not depreciated
- Leasehold Not depreciated
Buildings - Freehold Individually assessed
- Leasehold Period of lease
Furniture and Fittings 10 years
Plant and machinery 5 years
Computer equipment 3-7 years
Intangible Assets – Software licences 3 years
Computer Software 3 years
Motor vehicles 3 years
Antiques (non-operational) Not depreciated

Additions to fixed assets will be depreciated from the month of acquisition. Disposals from fixed assets will not be depreciated in the month of disposal.

Antiques (non-operational) are included in the Furniture & Fittings section in the Fixed Asset note.

1.6 Stocks

Stocks of consumable stores held by the Department are not considered material and are written off in the operating cost statement as they are purchased.

Assets seized by the Enforcement of Judgments Office are not included in stocks on the basis that they are not owned by the Department, but are held for resale in settlement of third party creditors. Third party assets held by the Enforcement of Judgments Office at the year-end are disclosed in Note 31.

1.7 Operating Income

Operating income is income that relates directly to the operating activities of the Department. Operating income comprises fees and charges for services provided to external customers, rents receivable, and miscellaneous receipts. It includes operating income appropriated-in-aid of the Estimate.

Income is accrued and accounted for in the period in which it is earned in the operating cost statement. Operating income is stated net of VAT.

1.8 Administration and Programme Expenditure

The Operating Cost Statement is analysed between administration and programme income and expenditure. The classification of expenditure and income as administration or as programme follows the definition of administration costs set by HM Treasury.

1.9 Capital Charge

A charge, reflecting the cost of capital utilised by the Department, is included in operating costs. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the average carrying amount of all assets less liabilities except for:

1.10 Operating Leases

Rentals under operating leases are charged to the operating cost statement on a straight line basis over the lease term.

1.11 Pensions

Past and present employees are covered by the provisions of the Principal Civil Service Pension Schemes that are described at Note 7. The defined benefit elements of the schemes are unfunded and are non-contributory, except in respect of dependants’ benefits. The Department recognises the expected cost of these elements on a systematic and rational basis, over the period during which it benefits from employees’ services, by payment to the Principal Civil Service Pension Schemes (PCSPS) of amounts calculated on an accruing basis. Liability for payment of future benefits is a charge on the PCSPS. In respect of the defined contribution schemes, the Department recognises the contributions payable for the year.

1.12 Early Departure Costs

The Department meets the additional costs of benefits beyond the normal PCSPS benefits in respect of employees who retire early by paying the required amounts annually to the PCSPS, over the period between early departure and normal retirement date. The Department provides for this in full, when the early retirement programme becomes binding on the Department, by establishing a provision for the estimated payments discounted by the Treasury discount rate of 2.2% in real terms.

Pension liabilities may arise in respect of provisions for lump sum early departure costs and the balance of any unpaid ASLC.

1.13 Value Added Tax (VAT)

Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

1.14 Private Finance Initiative (PFI) Transactions.

PFI transactions have been accounted for in accordance with Technical Note No.1 (Revised), entitled “How to account for PFI Transactions”, as required by the FReM. Where the balance of the risks and rewards of ownership of the PFI property are borne by the PFI operator, the PFI payments are recorded as an operating cost. Where the Department has contributed assets, a prepayment for their fair value is recognised and amortised over the life of the PFI contract.

Where the balance of risks and rewards of ownership of the PFI property is borne by the Department, the property is recognised as a fixed asset and the liability to pay for it is accounted for as a finance lease. Contract payments are apportioned between an imputed finance lease charge and a service charge.

Further details of current ongoing agreements are shown in Note 25 to the accounts.

1.15 Grants Payable

Grants payable are recorded as expenditure in the period that the underlying event or activity giving entitlement to the grant occurs. Receipt of a claim for funding acts as the underlying event in normal circumstances.

1.16 Provisions

The Department provides for legal or constructive obligations, which are of uncertain timing or amount at the balance sheet date, on the basis of the best estimate of the expenditure required to settle the obligation. Where the effect of the time value of money is significant, the estimated risk-adjusted cash flows are discounted using the real rate set by HM Treasury (currently 2.2%).

1.17 Contingent Liabilities

In addition to contingent liabilities disclosed in accordance with FRS 12, the Department discloses for parliamentary reporting and accountability purposes, certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote, but which have been reported to Parliament in accordance with the requirements of Managing Public Money.

Where the time value of money is material, contingent liabilities, which are required to be disclosed under FRS 12, are stated at discounted amounts and the amount reported to Parliament separately noted. Contingent liabilities that are not required to be disclosed by FRS 12 are stated at the amounts reported to Parliament.

1.18 Third Party Assets

The Department holds as custodian or trustee, certain assets belonging to third parties. These are not recognised in the accounts since neither the Department nor Government has a direct beneficial interest in them.

1.19 Changes to Estimation Techniques

There were no material changes in estimating techniques introduced during the financial year.

1.20 Financial Instruments

A financial instrument is defined as any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. A financial instrument is recognised when, and only when, the entity becomes a party to the contractual provisions of the instrument. A previously recognised financial asset is derecognised when, and only when, either the contractual rights to the cash flows from that asset expire, or the entity transfers the asset such that the transfer qualified for derecognition. A financial liability is derecognised when, and only when, it is extinguished.

The Department has financial instruments in the form of trade receivables, cash and cash equivalents. In accordance with FRS 26 Financial Instruments: Recognition and Measurement, these are classified as “loans and receivables” that are initially measured at fair value and subsequently measured at amortised cost using the effective interest method less any impairment.

The Department also has financial instruments in the form of trade payables that are classified in accordance with FRS 26 as “other financial liabilities”. These are initially measured at fair value, net of transaction costs, and subsequently measured at amortised cost using the effective interest method.

The Department assesses at each balance sheet date whether there is any objective evidence that a financial asset or group of financial assets classified as loans and receivables is impaired. The Department measures the amount of the loss as the difference between the carrying amount of the asset and the present value of estimated future cash flows from the asset discounted at the effective interest rate of the instrument at initial recognition.

Impairment losses are assessed individually for financial assets that are individually significant and individually or collectively for assets that are not individually significant. In making collective assessment of impairment, financial assets are grouped into portfolios on the basis of similar risk characteristics. Future cash flows from these portfolios are estimated on the basis of the contractual cash flows and historical loss experience for assets with similar risk characteristics.

Impairment losses are recognised in the Operating Cost Statement and the carrying amount of the financial asset or group of financial assets reduced by establishing an allowance for impairment losses. If in a subsequent period the amount of the impairment loss reduces and the reduction can be ascribed to an event after the impairment was recognised, the previously recognised loss is reversed by adjusting the allowance.

When a financial asset is deemed unrecoverable the amount of the asset of reduced directly and the impairment loss is recognised in the Operating Cost Statement to the extent that a provision was not previously recognised.

2. Analysis of net resource outturn by section

2008-09 £000 2007-08 £000
Outturn Estimate Prior-year outturn
Admin Other Current Grants Gross Resource Expenditure A in A Net Total Net Total Net Total Outturn Compared with Estimate
Request for resources 1:
Supporting the effective and efficient administration of justice in Northern Ireland
Central Government spending
Court and other legal services 16,196 62,146 25 78,367 (24,772) 53,595 56,974 3,379 49,675
Legal Services Commission - - 86,983 86,983 - 86,983 87,000 17 79,861
Judicial Appointments Commission 1,472 1,472 - 1,472 1,540 68 1,406
Total 16,196 62,146 88,480 166,822 (24,772) 142,050 145,514 3,464 130,942
Resource Outturn 16,196 62,146 88,480 166,822 (24,772) 142,050 145,514 3,464 130,942

The main reasons for the variance in spending on Court and other legal services were:

Detailed explanations of the variances are given in the Management Commentary.

3. Reconciliation of outturn to net operating cost and against Administration Budget

3(a). Reconciliation of net resource outturn to net operating cost

Note 2008-09 £000 2007-08 £000
Outturn Supply Estimate Outturn compared with Estimate Outturn
Net Resource Outturn 2 142,050 145,514 3,464 130,942
Non-supply income (CFERs) 5 - - - -
Non-supply expenditure 19 7,880 5,166 (2,714) 7,424
Net operating cost 149,930 150,680 750 138,366

3(b). Outturn against final Administration Budget

2008-09 £000 2007-08 £000
Budget Outturn Outturn
Gross Administration Budget 23,493 16,196 11,592
Income allowable against the Administration Budget - -
Net outturn against final Administration Budget 23,493 16,196 11,592

4. Reconciliation of resources to cash requirement

Note Estimate £000 Outturn £000 Net total outturn Compared with estimate: saving/ (excess) £000
Resource Outturn 2 145,514 142,050 3, 464
Capital
Acquisition of fixed assets 12,13 8,200 8,132 68
Investments - - -
Non operating A in A
Proceeds of fixed asset disposals - - -
Accruals adjustments
Non-cash items 8, 9 (14,951) (18,532) 3,581
Changes in working capital other than cash - 301 (301)
Changes in creditors falling due after more than one year 16 - 1,089 (1,089)
Use of provision 17 - 340 (340)
Excess cash receipts surrendered to the Consolidated Fund 5 - - -
Net cash requirement 138,763 133,380 5,383

Explanation of the variance between Estimate net cash requirement and Outturn net cash requirement:

The underspend in the net cash requirement is due to:

  1. Resource Outturn – underspend against RfR1 estimate as detailed and explained in Note 2;
  2. Non-cash items – underspend is due to actual deprecation and cost of capital being greater than the estimated. In addition early departure provision created within the year was not included in the estimate (note 17);
  3. Changes in working capital other than cash – this reflects the movement in Debtors less than one year (note 14) and creditors due less than one year (note 16); and
  4. Changes in creditors falling due after more than one year – this relates to the movement in the imputed finance lease element of the on balance sheet PFI Contract as detailed in note 16.

5. Analysis of income payable to the Consolidated Fund

In addition to appropriations in aid, the following income relates to the Department and is payable to the Consolidated Fund (cash receipts being shown in italics):

>
Note Forecast 2008-09 £000

Outturn 2008-09 £000

Income Receipts Income Receipts
Operating income and receipts - excess A in A 6 - - - -
Other operating income and receipts not classified as A in A 6 - - - -
- - - -
Non-operating income and receipts - excess A in A 350 350 - -
Other non-operating income and receipts not classified as A in A - - - -
Other amounts collectable on behalf of the Consolidated Fund 5,150 5,150 8,252 8,252
Excess cash surrenderable to the Consolidated Fund - - - -
Total income payable to the Consolidated Fund 5,500 5,500 8,252 8,252

6. Reconciliation of income recorded within the Operating Cost Statement to operating income payable to the Consolidated Fund

Note 2008-09 £000 2007-08 £000
Operating income 10 24,772 20,477
Adjustments for transactions between RfRs - -
Gross income 24,772 20,477
Income authorised to be appropriated-in-aid 24,772 20,477
Operating income payable to the Consolidated Fund 5 - -

7. Staff numbers and related costs

Staff costs comprise:

2008-09 £000 2007-08 £000
Total Permanently employed staff Others Ministers Special advisors Total
Wages and salaries 18,374 17,691 683 - - 17,093
Social security costs 1,109 1,075 34 - - 1,018
Other pension costs 3,354 3,292 62 - - 2,995
Sub Total 22,837 22,058 779 - - 21,106
Less recoveries in respect of outward secondments (847) (847) - - - (959)
Total net costs 21,990 21,211 779 - - 20,147

The Principal Civil Service Pension Scheme (PCSPS) is an unfunded multi-employer defined benefit scheme but the Northern Ireland Court Service is unable to identify its share of the underlying assets and liabilities. A full actuarial valuation was carried out at 31 March 2007. Details can be found in the resource accounts of the Cabinet Office: Civil Superannuation (www.civilservice-pensions.gov.uk).

For 2008-2009, employers’ contributions of £3,292K were payable to the PCSPS (2007-08: £2,990K) at one of four rates in the range 17.1% – 25.5% (2007-08: 17.1% to 25.5%) of pensionable pay, based on salary bands. The scheme’s Actuary reviews employer contributions every four years following a full scheme valuation. From 2009-10, the rates will be in the range 16.7% to 24.3%. The contribution rates are set to meet the cost of the benefits accruing during 2008-09 to be paid when the member retires and not the benefits paid during this period to existing pensioners.

Employees can opt to open a partnership pension account, a stakeholder pension with an employer contribution. Employer contributions are age-related and range from 3% to 12.5% (2007-08 3% to 12.5%) of pensionable pay. Employers also match employee contributions up to 3% of pensionable pay. In addition, employer contributions of 0.8% of pensionable pay are payable to the PCSPS to cover the cost of the future provision of lump sum benefits on death in service and ill health retirement of these employees. During 2008-09, no employees of the Department opted for a partnership pension account.

Judicial office holders are mainly covered by the provisions of the Judicial Pensions Scheme. The terms of most of the pension arrangements are set out in (or in some cases are analogous to), the provisions of two Acts of Parliament, the Judicial Pensions Act 1981 and the Judicial Pensions & Retirement Act 1993 (JUPRA).

The Judicial Pension Scheme (JPS) is an unfunded public service scheme, providing pensions and related benefits for members of the judiciary. Participating Judicial Appointing or Administering Bodies make contributions known as accruing superannuation liability charges (ASLCs), to cover the expected cost of benefits under the JPS. ASLCs are assessed regularly by the Scheme’s Actuary – The Government Actuary’s Department.

The contribution rate required from the Judicial Appointing or Administering Bodies to meet the cost of benefits accruing in the year 2008-09 has been assessed as 32.15% of the relevant judicial salaries. This includes an element of 0.25% as a contribution towards the administration costs of the scheme. A contribution rate of 32.15% has been recommended for the year commencing 1 April 2009.

The liability for future payment is not chargeable to the Northern Ireland Court Service but is a charge on the Judicial Pension Scheme. The Northern Ireland Court Service is unable to identify its share of the underlying assets and liabilities. There is a separate scheme statement for the JPS as a whole and a full actuarial valuation was carried out as at 31 March 2005. Details of the Resource Accounts of the Ministry of Justice: Judicial Pensions Scheme can be found on the Ministry of Justice website (www.justice.gov.uk).

Average number of persons employed

The average number of whole-time equivalent persons employed during the year was as follows:

Objective 2008-09 Number 2007-08 Number
Total Permanent staff Others Ministers Special advisors Total
1 28 25 3 - - 31
2 39 39 - - - 34
3 670 659 11 - - 685
4 16 15 1 - - -
Total 753 738 15 - - 750

8. Other Administration Costs

>
Note 2008-09 2007-08
£000 £000 £000 £000
Rentals under operating leases:
Hire of plant and machinery 30 9
Rentals for accommodation 1,053 702
Interest charges:
Finance leases - - -
On-balance sheet PFI contracts - -
PFI service charges
Off-balance sheet contracts 723 717
Non-cash items
Depreciation 12 708 712
Amortisation 13 6 1
Permanent diminution in value 12 74 128
Cost of capital charge 1,831 1,662
Auditors' remuneration and expenses 54 46
Provision provided for in year 17 1,980 77
Unwinding of discount on provisions 17 12 11
4,665 2,637
Other expenditure 4,062 2,644
Total 10,533 6,709

9. Programme Costs

> > >
Note 2008-09 2007-08
£000 £000 £000 £000
Publicly funded legal services: Grant 80,022 73,735
Grant in Aid 6,961 6,126
Criminal Appeals 1,032 1,169
NI Judicial Appointments Commission: Grant in Aid 1,472 1,406
Queen's University of Belfast: Grant in Aid 25 25
Rentals under operating leases
Hire of plant and machinery 54 27
Rentals for accommodation 450 553
PFI service charges:
Off-balance sheet contracts 5,323 5,194
Service element of on-balance sheet contracts 3,779 3,414
Non-cash items
Depreciation 12 8,520 7,440
Amortisation 13 16 1
Cost of capital charges 4,906 4,455
Provision provided for in year 17 325 -
Interest 17 100 346
13,867 12,242
Other expenditure 14,972 12,969
Judicial costs (Non-consolidated fund)
Judicial costs 3,897 5,071
Judicial pensions 2,693 2,632
Consolidated Fund standing services
Judicial wages and salaries 6,848 6,657
Judicial social security costs 784 767
Total 142,179 131,987

10. Income

2008-09 £000 2007-08 £000
RfR1 Total Total
Income from external customers 25,000 23,384 19,866
Income from other departments - 1,388 611
25,000 24,772 20,477

An analysis of fees and charges from civil business services provided to external and public sector customers is as follows:

2008-09 2007-08
Income £000 Full Cost £000 Surplus/ (deficit) £000 Income £000 Full Cost £000 Surplus/ (deficit) £000
Court Service -Civil Business 22,440 22,725 (285) 17,851 26,220 (8,369)
22,440 22,725 (285) 17,851 26,220 (8,369)

Income shown is in respect of civil fee earning business and has been accounted for in accordance with HM Treasury Fees and Charges Guide.

The Department is committed to achieving full cost recovery for the services it provides in respect of civil court business. The income for 2008-09 represents 99% of cost recovery. Further information on the Civil Fees Review can be found in the Management Commentary.

The civil business fee recovery target, above is based on expenditure net of exemptions and remissions. Applicants in receipt of certain means-tested benefits are entitled to automatic fee exemption. Remission of fees is considered on an individual basis and is granted in cases of hardship. Total fees remitted during 2008-09 amounted to £4.5k.

11. Analysis of net operating cost by spending body

2008-09 £000 2007-08 £000
Estimate Outturn Outturn
Spending body:
Core department 62,115 61,450 57,074
Legal Services Commission 87,000 86,983 79,861
Judicial Appointments Commission 1,540 1,472 1,406
Queen's University of Belfast 25 25 25
Net Operating Cost 150,680 149,930 138,366

12. Tangible fixed assets

Land & Buildings £000 Information Technology £000 Plant & Machinery £000 Furniture & Fittings £000 Total £000
Cost or valuation
At 1 April 2008 259,575 8,089 429 2,589 270,682
Additions 6,167 1,661 111 183 8,122
Disposals - - - - -
Revaluations 31,668 (179) 23 57 31,569
At 31 March 2009 297,410 9,571 563 2,829 310,373
Depreciation
At 1 April 2008 52,931 5,290 214 1,484 59,919
Charged in year 7,296 1,613 69 250 9,228
Disposals - - - - -
Revaluations - (106) 12 43 (51)
At 31 March 2009 60,227 6,797 295 1,777 69,096
Net book value at 31 March 2009 237,183 2,774 268 1,052 241,277
Net book value at 31 March 2008 206,644 2,799 215 1,105 210,763
Asset financing:
Owned 191,458 2,774 268 1,052 195,552
On-balance sheet PFI contracts 45,725 - - - 45,725
Net book value at 31 March 2009 237,183 2,774 268 1,052 241,277

Notes

Freehold and leasehold land and buildings were valued as at 31 March 2009 by the Land and Property Service. The valuation was carried out by the LPS in accordance with the RICS Appraisal and Valuation Manual. Indices for assets other than land and buildings were obtained from ONS MM17 Price Index Numbers for Current Cost Accounting as at March 2009.

Antiques have been included in the Fixtures and Fittings and are professionally valued every five years The valuation was carried out at the 31st March 2009 by Hugh Boyd BSc (Econ.) M.I.P.A.V. 13. Intangible fixed assets

Intangible fixed assets comprise purchased software licences for the Department. ere authorised to be issued on 11 July 2009.

2008-09 £000
Cost or valuation
At 1 April 2008 67
Additions 10
Disposals -
Revaluations -
At 31 March 2009 77
Amortisation
At 1 April 2008 2
Charged in year 22
Disposals -
Revaluations -
At 31 March 2009 24
Net book value at 31 March 2009 53
Net book value at 31 March 2008 65

14. Debtors

14(a) Analysis by type

Amounts falling due within one year: 2008-09 £000 2007-08 £000
Deposits and advances 6 6
Value Added Tax 1,069 837
Other debtors 1,115 1,022
Prepayments and accrued income 4,187 2,662
6,377 4,527

There are no debtor amounts falling due after more than one year.

There are no amounts included within debtors that will be due to the Consolidated Fund.

14(b) Intra-Government Balances

Amounts falling due within one year £000 Amounts falling due after more than one year £000
2008-09 2007-08 2008-09 2007-08
Balances with other central government bodies 1,595 2,626 - -
Balances with local authorities - - - -
Balances with NHS Trusts - - - -
Balances with public corporations and trading funds - - - -
Subtotal: intra-government balances 1,595 2,626 - -
Balances with bodies external to government 4,782 1,901 - -
Total debtors at 31 March 6,377 4,527 - -

15. Cash at bank and in hand

2008-09 £000 2007-08 £000
Balance at 1 April 8,996 3,191
Net change in cash balances (5,083) 5,805
Balance at 31 March 3,913 8,996
The following balances at 31 March were held at:
Office of HM Paymaster General 3,571 8,655
Commercial banks and cash in hand 342 341
Balance at 31 March 3,913 8,996

16. Creditors

16(a) Analysis by type

>
2008-09 £000 2007-08 £000
Amounts falling due within one year
Taxation and social security - -
Trade creditors (60) (203)
Other creditors (770) (630)
Early departure costs - (116)
Accruals and deferred income (11,711) (10,609)
Imputed finance lease element of on-balance sheet Consolidated Fund (567) -
Amounts issued from the Consolidated Fund for supply but not spent at year end (2,382) (8,248)
Consolidated Fund extra receipts due to be paid to the Consolidated Fund
received (1,531) (749)
receivable - -
(17,021) (20,555)
Amounts falling due after more than one year
Imputed finance lease element of on-balance sheet PFI contracts (21,727) (22,816)
(21,727) (22,816)

16(b) Intra-Government Balances

Amounts falling due within one year £000 Amounts falling due After more than one year £000
2008-09 2007-08 2008-09 2007-08
Balances with other central government bodies (5,215) (11,100) - -
Balances with local authorities (28) (9) - -
Balances with NHS Trusts - (1) - -
Balances with public corporations and trading funds - - - -
Subtotal: intra-government balances (5,243) (11,110) - -
Balances with bodies external to government (11,778) (9,445) (21,727) (22,816)
Total creditors at 31 March (17,021) (20,555) (21,727) (22,816)

17. Provisions for liabilities and charges

Early departure costs £000 Legal claims £000 Other £000 Total £000
Balance at 1 April 2008 (118) (15) (3,000) (3,133)
Provided in the year (1,582) (398) (325) (2,305)
Provisions not required written back - - - -
Provisions utilised in the year - 15 77 92
Provision settled from the Consolidated Fund - - 248 248
Interest - - (100) (100)
Unwinding of discount (12) - - (12)
Balance at 31 March 2009 (1,712) (398) (3,100) (5,210)

17.1 Early departure costs

The Department meets the additional costs of benefits beyond the normal PCSPS benefits in respect of employees who retire early by paying the required amounts annually to the PCSPS over the period between early departure and normal retirement date. The Department provides for this in full when the early retirement programme becomes binding by establishing a provision for the estimated payments discounted by the Treasury discount rate of 2.2% in real terms.

17.2 Legal claims

Provision has been made for various legal claims against the Department. The provision reflects all known claims where legal advice indicates that it is more than 50% probable that the claim will be successful and the amount of the claim can be reliably estimated. The amount provided is on a percentage expected probability basis. Expenditure is likely to be incurred over a period of 5 years. The provision is based on the estimated cash flow. No reimbursement will be received in respect of any of these claims. Legal claims, which may succeed but are less likely to do so or cannot be estimated reliably, are disclosed as contingent liabilities in Note 28.

17.3 Other

Provision has been made for a long service award for members of the judicial pension scheme. The purpose of the long service award is that, subject to any future changes in legislation, the award will compensate for any tax or National Insurance charges on lump sums payable from the deregistered judicial pension schemes on retirement, whatever the personal circumstances of the judge or his other pension benefits.

18. Pension liability

2008-09 £000
Balance at 1 April 2008 (367)
Movement in provision -
Balance at 31 March 2009 (367)

Previously, the Department was responsible for the administration of an individual personal pension determination in respect of one judicial office-holder. Defined benefits accrued in line with the PCSPS in an approved scheme. These benefits were then enhanced by one third through an unapproved scheme. The pension provision was unfunded and non-contributory, except in respect of dependants benefits.

On 4 April 2006, the judicial office-holder transferred to the Judicial Pensions Scheme. The provision represents the value of the pension liability at that date, based on the calculation prepared by the Government Actuary’s Department (GAD) in April 2006.

19. General Fund

The General Fund represents the total assets less liabilities of the Department, to the extent that the total is not represented by other reserves and financing items.

2008-09 £000 2007-08 £000
Balance at 1 April 67,387 75,380
Net Parliamentary Funding
Drawn Down 135,763 125,034
Consolidated Fund Standing Services 7,880 7,424
Year end adjustment

Supply Creditor - current year

(2,382) (8,248)
Net Transfer from Operating Activities
Net Operating Cost (149,930) (138,366)
Non Cash Charges
Cost of Capital 6,737 6,117
Auditors' remuneration 54 46
Balance at 31 March 65,509 67,387

20. Revaluation Reserves

The revaluation reserve reflects the unrealised element of the cumulative balance of indexation and revaluation adjustments.

2008-09 £000 2007-08 £000
Balance at 1 April 110,093 95,903
Arising on revaluation during the year (net) 31,693 14,190
Balance at 31 March 141,786 110,093

21. Notes to the Cash Flow Statement

21(a) Reconciliation of operating cost to operating cash flows

Note 2008-09 £000 2007-08 £000
Net operating cost 11 149,930 138,366
Adjustments for non-cash transactions (18, 532) (14,879)
Increase/(Decrease) in Debtors 1,851 (1,198)
Less movements in debtors relating to items not passing through the OCS - -
Decrease/(Increase) in Creditors 4,623 (5,946)
Less movements in creditors relating to items not passing through the OCS:
Balances with the consolidated fund (5,084) 5,921
Movement in Capital Accruals 1,227 -
Use of provisions 17 340 188
Net cash outflow from operating activities 134,355 122,452

21(b) Analysis of capital expenditure and financial investment

Note 2008-09 £000 2007-08 £000
Tangible fixed asset additions 12 8,122 1,692
Intangible fixed asset additions 13 10 67
Proceeds of disposal of fixed assets - -
Movement in capital accruals (1,227) -
Net cash outflow from investing activities 6,905 1,759

21(c) Analysis of capital expenditure and financial investment by Request for Resources

Capital expenditure £000 Loans etc £000 A in A £000 Net total £000
Request for resources 1 8,132 - - 8,132
Net movement in debtors/creditors - - - -
Movement in Capital Accruals (1,227) (1,227)
Total 2008-09 6,905 - - 6,905
Total 2007-08 1,759 - - 1,759

21(d) Analysis of financing

Note 2008-09 £000 2007-08 £000
From the Consolidated Fund (Supply) - Current year 19 135,763 125,034
To the Consolidated Fund (Supply) - prior year (8,248) (2,017)
From the Consolidated Fund (non-Supply) 19 7,880 7,424
Capital element of payments in respect of Finance leases and on-balance sheet PFI contracts - -
Net financing 135,395 130,441

21(e) Reconciliation of Net Cash Requirement to increase/(decrease) in cash

Note 2008-09 £000 2007-08 £000
Net cash requirement 4 (133,380) (116,787)
From the Consolidated Fund (Supply) - current year 21(d) 135,763 125,034
To the Consolidated Fund Supply – prior year 21(d) (8,248) (2,017)
Amounts due to the Consolidated Fund - received in a prior year and paid over (749) (1,174)
Amounts due to the Consolidated Fund received and not paid over 16(a) 1,531 749
(Decrease)/Increase in cash (5,083) 5,805

22. Notes to the Statement of Operating Costs by Departmental Aim and Objectives

Resources per cost centre have been allocated to strategic objectives based on information obtained from managers within the Department. Common overheads have been apportioned to departmental cost centres on the basis of staff numbers.

Programme grants and other current expenditure have been allocated as follows:

2008-09 £000 2007-08 £000
Objective 1 – To modernise court business 15,122 13,591
Objective 2 – To improve access to justice 797 766
Objective 3 – To promote confidence in the justice system 54,574 51,864
Objective 4 - Supporting an independent judiciary - -
Publicly funded legal services 88,015 81,030
Total 158,508 147,251

Capital Employed by Departmental Aim and Objectives at 31 March 2009

2008-09 £000 2007-08 £000
Objective 1 – To modernise court business - -
Objective 2 – To improve access to justice 82 476
Objective 3 – To promote confidence in the justice system 206,701 177,007
Objective 4 – Supporting and independent judiciary - -
206,783 177,483

23. Capital commitments

2008-09 £000 2007-08 £000
Contracted capital commitments at 31 March 2009 for which no provision has been made - -

24. Commitments under leases

24.1 Operating leases

Commitments under operating leases to pay rentals during the year following the year of these accounts are given in the table below, analysed according to the period in which the lease expires.

2008-09 £000 2007-08 £000
Obligations under operating leases comprise:
Land and buildings:
Expiry within 1 year 111 283
Expiry after 1 year but not more than 5 years 430 199
Expiry thereafter 505 796
1,046 1,278

24.2 Operating leases (continued)

2008-09 £000 2007-08 £000
Other:
Expiry within one year - -
Expiry after 1 year but not more than 5 years 47 44
Expiry thereafter - -
47 44

24.3 Finance leases

The Department had no finance leases operating during the year.

25. Commitments under PFI contracts

25.1 Off-balance sheet

IS/IT Services

In January 2000, the Department entered into a 10 year IS/IT Service Provision Agreement with Fujitsu Services. The contract is due to expire on 31st December 2009. The estimated capital value of the agreement is £8m at 1999 prices. The agreement is based on Private Finance Initiative and will enable the Court Service to develop modern information systems to support the administration of justice. To date the following services have been successfully delivered –

Significant progress has been made in the development of the Integrated Court Operations System (ICOS) that will support the business processes across all court tiers. The application is being rolled out in a modular and incremental manner; with the following modules becoming operational

The scheme also includes the provision of hardware and software support services, training services, legacy support services and help desk support services.

The agreement provides for technology refresh between years 3 and 5 of the agreement. The technology refresh was completed in July 2005.

The PFI property is not an asset of the department. This contract is treated as a contract for services and the operating cost statement will be charged with the service costs in the period to which they relate.

The computer equipment assets held by the Department were transferred to the provider and therefore were treated as a disposal in the 1999-2000 financial statements.

25.2 On-balance sheet

Laganside Complex

During February 1999, the Department entered into a Public Private Partnership (PPP) agreement with a private sector provider for the provision and maintenance of a high quality new court complex in Belfast.

In accordance with the agreement, service charges became payable with effect from February 2002 to December 2026 and these are charged to the operating cost statement. The new court complex has been accounted for as an asset of the Department.

The PFI property is included in the Department’s accounts as a fixed asset. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements, imputed finance lease charges and service charges. The imputed finance lease obligation is as follows:-

>
2008-09 £000 2007-08 £000
Imputed finance lease obligations under on-balance sheet PFI contracts comprises:
Rentals due within 1 year 2,012 2,006
Rentals due after 2 to 5 years 8,058 8,032
Rentals due thereafter 25,755 26,213
35,825 36,251
Less interest element (13,531) (13,435)
22,294 22,816

25.3 Charge to the Operating Cost Statement and future commitments

The total amount charged in the operating cost statement in respect of off-balance sheet PFI transactions and the service element of on-balance sheet PFI transactions was £9,824,045 (2007-08: 9,324,976); and the payments to which the Department is committed during 2009-10, analysed by the period during which the commitment expires, are as follows.

2008-09 £000 2007-08 £000
Expiry within 1 year 6,200 -
Expiry within 2 to 5 years - 6,664
Expiry within 6 to 10 years - -
Expiry within 11 to 15 years - -
Expiry within 16 to 20 years 3,919 3,840
Expiry within 21 to 25 years - -
10,119 10,504

26. Other financial commitments

There are no contracted non-capital commitments at 31 March 2009 for which no provision has been made.

27. Financial instruments

FRS 29 Financial Instruments: Disclosures requires disclosure that enables evaluation of the significance of financial instruments for the Department’s financial position and performance, the nature and extent of risks arising from financial instruments to which the Department is exposed during the period and at the reporting date, and how the Department manages those risks. As a result of the non-trading nature of its activities and the way in which Government Departments are financed, the Northern Ireland Court Service is not exposed to the degree of financial risk faced by business entities.

The Department has no powers to borrow or invest surplus funds. Financial assets and liabilities are generated by day-to-day operational activities and are not held to change risks facing the Department in undertaking its activities.

Classification of financial instruments

All departmental financial instruments are measured at amortised cost. The Department’s financial assets are classified as receivables and comprise trade and other debtors (Note 14) and cash at bank and in hand (Note 15). The Department’s financial liabilities comprise creditors excluding tax assets, accruals and deferred income (Note 16). The carrying value of these financial assets and liabilities, as disclosed in the notes to the accounts, approximates to fair value because of their short maturities. The Department recognises the components of net gain/loss through the Operating Cost Statement.

Risk Management

Financial risks include credit risk, liquidity risk and market risks (interest rate and currency).

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Department is not exposed to significant credit risk and manages its exposure via credit risk management policies which require review of the credit history of the organisations that the department wishes to trade with. Publicly available credit information from recognised providers is utilised for this purpose where available. The maximum exposure to credit risk is represented by the carrying amounts of the trade debtors carried in the balance sheet.

Liquidity risk

The Department’s net revenue resource requirements are financed by resources voted annually by Parliament, as is its capital expenditure. It is not, therefore, exposed to significant liquidity risks.

The Department’s financial assets of £3,913,000 (2008: £8,996,000) are non-interest bearing financial assets and comprise of cash at bank and in hand. Cash at bank and in hand is held in sterling and is available on demand.

Currency Risk

Currency risk is the risk that the fair value of future cashflows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Department acts as an agent in transferring funds from HM Treasury to the Northern Ireland Consolidated Fund in respect of European Union (EU) grants. However payments are only made by the Department based on the sterling value of funding received and there was therefore no exposure to currency risk. The Department does not have the authority to manage currency risk through hedging.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. All of the Department’s financial assets and liabilities carry nil or fixed rates of interest. The Department is therefore not exposed to any interest rate risk.

Embedded Derivatives

In accordance with FRS 26, ‘Financial Instruments and measurement’ the Department has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet certain requirements set out in the standard. In relation to the departments Laganside PFI contract there is a payment mechanism that determines the charge the department will pay from 2009 to 2026 which is based on the UK retail price index (RPI) and UK Gross Domestic Product Index (GDP). The embedded derivative is deemed to be closely related to the host contract as the amounts charged are in relation to the economic environment within which the department operates.

28. Contingent liabilities disclosed under FRS 12

There is an estimated contingent liability of £1,518k.

2008-09 £000
Legal cases pending 281
Criminal appeals 1,237
1,518

The amount for criminal appeals represents the amount of claims before the Taxing Master pending judicial direction. The Taxing Master is a Supreme Court judge and has complete discretion in deciding how much should be paid out in respect of claims put before him. As each case is assessed on an individual basis, it is not possible to predict the financial outcome of these claims. The department has therefore treated these as contingent liabilities in accordance with FRS 12.

There are further contingent liabilities upon which it is not possible to put a value. In particular, claims have been made under past contracts. It is the Department’s assertion that these claims are unsubstantiated.

29. Losses and special payments

During the year, there were no losses or special payments that required disclosure.

30. Related-party transactions

During the year the Department provided funding to the Northern Ireland Legal Services Commission (NILSC) and the Northern Ireland Judicial Appointments Commission (NIJAC). These bodies are regarded as related parties with which the Department has had various material transactions during the year.

In addition, the Department has had a small number of transactions with other government departments and other central government bodies.

No minister or other related parties have undertaken any material transactions with the Department during the year.

Finance Director and Board Member, David Thompson, is an appointee, recruited via Interchange from PricewaterhouseCoopers (PWC). The total amount paid to PWC in 2008-09 for services in addition to the services of the Finance Director amounted £404,045 (excl. vat). This includes £34,556 paid by the Northern Ireland Court Service on behalf of the Northern Ireland Legal Services Commission.

31. Third-party assets

The Department holds as custodian or trustee certain assets belonging to third parties.

The Court Service, through the Court Funds Office, continues to provide a banking and investment service for funds that are deposited in court. The investment service is carried out by an external service provider. Examples of the types of funds include monies held for minors until they attain the majority, certain assets of some mental health patients, payments into court in satisfaction of a claim as well as statutory deposits and unclaimed balances in court.

These are not departmental assets and are not included in the accounts. The assets held at the balance sheet date to which it was practical to ascribe monetary values, comprised monetary assets such as bank balances and monies on deposit, and listed securities. They are set out in the table immediately overleaf

31 March 2008 £000 Net inflows £000 31 March 2009 £000
Monetary assets such as bank balances and monies on deposit 125,726 20,419 146,145
Listed securities 110,137 (25,622) 84,515

The Official Solicitor may be appointed to act as a financial controller for persons deemed by the courts to be incapable of managing their financial affairs and assets. In such capacity the Official Solicitor acts as custodian of a number of property assets. Title deeds for property may also be held by the court service as security or bails in relation to legal actions.

Other significant assets held at the balance sheet date to which it was not practical to ascribe monetary values comprised:

31 March 2009 Number 31 March 2008 Number
Property assets 161 131

32. Entities within the departmental boundary

The departmental boundary incorporates only the core department of the Northern Ireland Court Service.

During the year the Department held responsibility for the granting of funds to the Northern Ireland Legal Services Commission (NILSC) and the Northern Ireland Judicial Appointments Commission (NIJAC). As executive NDPB’s the NILSC and NIJAC are outside the departmental boundary for the purposes of these resource accounts.

The funds invested by the Court Funds Office are specifically excluded from the departmental boundary, following HM Treasury guidance. Third party monies are similarly excluded.

The Northern Ireland Legal Services Commission, Northern Ireland Judicial Appointments Commission and Court Funds Office publish separate audited financial accounts.

33. Criminal Injuries Compensation Appeals Panel Northern Ireland

The administrative functions of the Criminal Injuries Compensation Appeals Panel Northern Ireland (CICAPNI) transferred from the Secretary of State for Northern Ireland (SOSNI) to the Secretary of State for Justice (SOSJ) in the 2007/08 financial year and were delivered by a Machinery of Government letter on 1st December 2007. A PES transfer from NIO to Court Service provides the funding for the tribunal. As a consequence of this transfer CICAPNI ceased to be an NDPB.

The SOSJ has directed a statement of accounts in accordance with the 2002 Order and the Scheme, requiring that he only requires a simple statement providing the full cost of CICAPNI for the year, given as a Note to the Court Service accounts.

This direction is in accordance with The Criminal Injuries (NI) Order 2002 (“the 2002 Order”) and with the Northern Ireland Criminal Injuries Compensation Scheme 2002 (“the Scheme”) which established the CICAPNI. Both the 2002 Order and the Scheme provide that the Secretary Of State may direct the accounts of the CICAPNI.

This accounting note has been prepared in accordance with the accounts direction issued by the Secretary of State for Justice on 22 February 2008.

CICAPNI STATEMENT OF ACCOUNT AS AT 31 MARCH 2009

2008/09 2007/08
£ £ £ £
Income - -
Staff Costs
Staff Payroll costs (212,439) (199,346)
Judicial Payroll costs (210,033) (221,565)
Total Payroll costs (422,472) (420,911)
Other operating costs (279,514) (248,457)
Net cost of operations (701,986) (669,368)

34. Post Balance Sheet events

There were no material post balance sheet events, for the year ended 31 March 2009.

The annual report and accounts were authorised to be issued on 11 July 2009.