Northern Ireland Courts and Tribunals Service
Trust Statement
For the year ended 31 March 2012

Laid before the Northern Ireland Assembly under section 11(2) of the Government Resources and Accounts Act (Northern Ireland) 2001 by the Department of Justice on 9 October 2013.

© Northern Ireland Courts and Tribunals Service copyright 2013.

ISBN : XXX

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Contents

Glossary

ARC Audit and Risk Committee
PBNI Probation Board for Northern Ireland
CJINI Criminal Justice Inspectorate Northern Ireland
CJOs Criminal Justice Organisations
DAO Dear Accounting Officer
DFP Department of Finance and Personnel
DOJ Department of Justice
DORS Driver Offender Retraining Scheme
DSM1 Causeway Data Sharing Mechanism
DVA Driver and Vehicle Agency
FCEP Fine Collection and Enforcement Programme
FCES Fine Collection and Enforcement Service
FCS Fine Collection Service
FEPG Fine Enforcement Project Group
FPNs Fixed Penalty Notices
FPO Fixed Penalty Office
FPPC Fixed Penalty Processing Centre
FReM Government Financial Reporting Manual
IAB Internal Audit Branch
IAS International Accounting Standard
ICOS Integrated Court Operations System
IFRS International Financial Reporting Standards
JARD Joint Asset Recovery Database
MEF Means Enquiry Form
MLA Member of Legislative Assembly
MPMNI Managing Public Money Northern Ireland
NICF Northern Ireland Consolidated Fund
NICHE PSNI operational information system
NICTS Northern Ireland Courts and Tribunals Service
NIO Northern Ireland Office
NIPS Northern Ireland Prison Service
NPIA National Policing Improvement Agency
OLCJ Office of the Lord Chief Justice
PBNI Probation Board for Northern Ireland
PentiP National system equivalent to the Vehicle Procedures/Fixed Penalty Office System
PPS Public Prosecution Service
PRISM Prison Record Information System
PSNI Police Service Northern Ireland
PUMA PSNI hand held mobile data project
SAO Supervised Activity Order
SOC Strategic Outline Case
SoFP Statement of Financial Position
SoRE Statement of Revenue and Expenditure
URN Unique Reference Number
VP/FPO Vehicle Procedures/Fixed Penalty Office

Part 1 Foreword

Background

Who we are

The Northern Ireland Courts and Tribunals Service (NICTS) is an Executive Agency of the Department of Justice (DOJ) of Northern Ireland. The NICTS is accountable to the Assembly through the Minister of Justice, David Ford MLA.

The role of the NICTS is to:

The NICTS maintain a sound system of internal control that supports the achievement of NICTS policies, aims and objectives, whilst safeguarding the public funds and assets. The Agency Framework Document sets out the arrangements for the effective governance, financing and operation of the NICTS. The Framework Document is available on our website (www.courtsni.gov.uk).

Legislative Requirements

This is the first Trust Statement for the NICTS following a new requirement from the Department of Finance and Personnel (DFP), introduced under Section 11(2) of the Government Resources and Accounts Act (Northern Ireland) 2001. The overall scope of the Trust Statement and form of the accounts are determined by Government Financial Reporting Manual (FReM) Chapter 13 and Annex F of DFP’s Accounts Direction, DAO (DFP) 01/12.

Purpose of accounts

The Trust Statement provides an account of the collection of revenues, which by statute or convention are due to the Northern Ireland Consolidated Fund (NICF) or other third parties and where the entity undertaking the collection is consequently acting as agent rather than principal.

The NICTS acts as an agent responsible for the collection of financial penalties which have been imposed by the Judiciary, the Police Service of Northern Ireland (PSNI) and the Driver and Vehicle Agency (DVA). These impositions include fixed penalty notices (FPNs), court imposed monetary penalties (namely fines, extra costs, other party costs, compensation for victims of crime and fixed penalty enforcement fines), and confiscation orders.

Previous reporting arrangements

Since the devolution of policing and justice powers to the Northern Ireland Assembly on 12 April 2010, the NICTS Agency Accounts have been consolidated into the DOJ Resource Accounts. Fine income and confiscation orders received by NICTS are not treated as accruing resources in the DOJ Resource Accounts. Rather they are disclosed in the summary of fine income payable to the NICF. They are disclosed in Note 12, Trade Payables and Other Current Liabilities, in the 2011-12 Agency Accounts.

Safety camera income however is treated as accruing resources in the DOJ Resource Accounts and is payable to the Road Safety Partnership via the PSNI. These receipts are recognised as income and the amounts payable to the PSNI are included as expenditure in the Consolidated Statement of Comprehensive Net Expenditure. Any receipts of safety camera income collected and not yet paid over to the PSNI at the year end are included in Note 12 in the 2011-12 Agency Accounts.

The requirement to produce a Trust Statement means that outstanding balances in relation to fines and penalties are no longer included as ‘Consolidated Fund extra receipts due to be paid to the Consolidated Fund’ within the Agency Accounts. They are now classified as ‘Other Payables’ in the 2011-12 Agency Accounts and disclosed at Note 12. The Trust Statement records all Income and Expenditure relating to these fines and penalties, and disbursements to third parties. Any outstanding balances will be classified as payments to the NICF or payments to other third parties depending on what the fine relates to.

Scope

The Trust Statement reflects the cash flows associated with the imposition and collection of fines, confiscation orders and fixed penalties. It also reflects the complex inter-dependencies between the NICTS and a number of other Departments and Agencies involved in the enforcement process, including the PSNI and the Public Prosecution Service (PPS).

The Trust Statement reflects income from fines and penalties, expenditure in the form of costs of collection and administration (where there is an express statutory provision for those costs to be deducted from the revenue collected) and any provision for uncollectible amounts in accordance with IAS 39.

The NICTS, as the agent, collects a number of different types of monetary penalties, which are described below:

  1. Fixed Penalty Notices (FPNs)
    FPNs are imposed by the PSNI and the DVA. FPNs are issued for traffic rule violations and other vehicle rule violations. FPNs that remain unpaid after 45 days are registered by the court as fines that are enforced by the NICTS.
  2. Court imposed monetary penalties
    Court imposed monetary penalties include fines, extra costs, other party costs, other party compensation and fixed penalty enforcement fines.
    • A fine is the most common court order in the Magistrates’ Court. A fine can be imposed at the Magistrates’ Court, the County Court (on appeals from the Magistrates’ Court), the Crown Court and the Court of Appeal (for Crown Court Appeals).
    • Extra costs and other party costs are awarded in court to cover prosecution costs such as summons server fees and court appearance fees.
    • Other party compensation is awarded in court to victims of crime or organisations who incurred costs due to a prosecution.
    • Fixed penalty enforcement fines are FPNs that have remained unpaid for 45 days and have been registered as a court imposed fine. These FPNs are uplifted by 50% of the value of the original fine when registered on the Integrated Court Operations System (ICOS).
  3. Confiscation Orders
    Confiscation orders are imposed under the Proceeds of Crime Act 2002 or the Proceeds of Crime (NI) Order 1996. A confiscation order is an order directing the payment of money obtained by a defendant as a result of his/her criminal conduct, to the Crown. In Northern Ireland only the Crown Court has the jurisdiction to make a confiscation order. Confiscation orders are generally larger in value than other monetary penalties but smaller in volume. Interest accrues at a rate of 8% per annum on those confiscation orders that have a balance remaining unpaid after the payment date has expired. The interest is calculated on the Joint Asset Recovery Database (JARD) which calculates the interest daily.
  4. Offender Levy
    From 6 June 2012 an offender levy will be imposed on fines and immediate custodial sentences for offences committed on or after that date. Imposition of the levy is a statutory requirement, with legislative provision made in Sections 1 to 6 of the Justice Act (Northern Ireland) 2011. The receipts obtained from the collection of these levies will be collected by the NICTS and transferred to the DOJ. These will then be used by the DOJ to fund victims’ services, and will therefore not be paid over to the NICF. As these amounts have only been collected from 6 June 2012 they are not relevant for this year’s Trust Statement but will be included in the 2012-13 Trust Statement.
  5. Penalty Notices
    From 6 June 2012, Sections 59 to 70 and Schedule 4 of the Justice Act (Northern Ireland) 2011 gave the PSNI the power to issue a defendant with a penalty notice for specified offences (e.g. disorderly behaviour). These penalty notices are issued as an alternative to a court prosecution. If a penalty notice remains unpaid for 30 days it will be uplifted by 50% and imposed as a fixed penalty enforcement fine. As a result of the offender levy legislation detailed above, a £5 offender levy is also imposed with each penalty notice. If the penalty notice remains unpaid for 30 days this levy will be uplifted to £7.50. As these amounts have only been collected from 6 June 2012 they are not relevant for this year’s Trust Statement but will be included in the 2012-13 Trust Statement.
  6. Council Fines
    The NICTS collected, on behalf of District Councils, fines for littering, dog licences and other dog offences which are recorded on ICOS. There have been recent changes to legislation which have directed that penalties are no longer payable to the Clerk of Petty Sessions. Since November 2011 there has been a significant reduction in the number of fines collected on behalf of these Councils and they will cease completely from April 2012.

    During 2011/12 a total of £0.02m was collected in relation to council fines. Due to the immateriality of the council fines and the fact that NICTS will cease collection of these from 1 April 2012, the fines have not been included in the Trust Statement and are instead recorded in the NICTS Agency Accounts.

For the purpose of the 2011-12 Trust Statement, the NICTS is responsible for the collection of FPNs, court imposed monetary penalties, and confiscation orders.

The Trust Statement reflects expenditure for the impairment of outstanding fines and confiscation orders. Subject to agreement, the NICTS is also permitted to retain an element of FPNs collected as income through the Safety Camera Scheme. The Explanatory Memorandum for the Criminal Justice (Northern Ireland) Order 2005 identifies that Article 20 allows fine revenue to be reinvested into the Safety Camera Scheme at each level of its operation therefore allowing organisations to recover costs associated with the scheme.

FPNs (apart from the element collected via the Safety Camera Scheme), fines and confiscation order receipts are surrendered to the NICF. Extra costs are paid to the PPS. Other party costs and other party compensation receipts are paid to the appropriate third party, including other Government departments and victims of crime. Revenue collected through the Safety Camera Scheme is reinvested in the scheme via payment to the PSNI and are therefore not payable to the NICF. These remittances are reflected through the disbursements disclosed in the Statement of Revenue and Expenditure (SoRE).

The role of the Trust Statement is to reflect the balance at the year end due to the NICF. The nature of the Trust Statement means that all income is offset by expenditure and disbursements to third parties. In the simplest of cases all income would be disbursed to the NICF, however in the case of this Trust Statement this value is impacted by disbursements to other third parties.

Current Systems

There are two systems used to record the transactions that are reflected in the Trust Statement, ICOS and Vehicle Procedures/Fixed Penalty Office (VP/FPO). These two systems are detailed below.

ICOS

All monetary penalties imposed by a court in Northern Ireland are recorded on ICOS, the NICTS key line of business computer system. ICOS and the management information reports produced from ICOS provide accurate, timely and meaningful information on all court fines and confiscation orders imposed, collected and outstanding.

As part of the court confirmation process, when a court decision is confirmed, a debtor account for the case is automatically created on ICOS. When imposing the monetary penalty the Judge will direct payment terms (the payment due date or instalment terms) and confirms default conditions (the imprisonment period) as detailed on the order book. This information is recorded on ICOS. A Divisional Court judgment delivered in March 2013 will radically change the way default periods are set by a Judge.

All monetary penalties are collected and enforced through ICOS. Monetary penalties can be receipted on ICOS at any of the 21 Court Offices in Northern Ireland, the NICTS centralised Customer Service Centre in Londonderry Courthouse or online via the NICTS secure website. When fine monies are received, the NICTS records these on ICOS. The receipt is allocated against the specific account for the case for which the fine imposed is being paid. All monies received into each court office are collected from the office on a daily basis and lodged into the relevant NICTS bank account.

On a daily basis there is an interface between ICOS and the NICTS accounting system. Daily reconciliations are carried out by the NICTS Finance Branch to ensure that the information has been correctly recorded on the accounting system.

The key features of the ICOS control framework are:

VP/FPO

The VP/FPO system provides a fully integrated, systematic approach to the processing of vehicle offences issued by the PSNI and the DVA. It uses a single database to support both the Fixed Penalty Processing Centre (FPPC) in the PSNI which is responsible for recording and processing fixed penalty offences, and the Fixed Penalty Office (FPO) in the NICTS which deals with fixed penalty payments.

When an offence is detected by camera devices the information is uploaded to the VP/FPO system via an interface, while if it is detected by a police officer or a DVA Enforcement Officer the information is recorded on a ticket and sent to the FPPC for manual input onto the VP/FPO system. If a police officer issues the ticket via a hand held device then the information will be automatically uploaded onto the VP/FPO system.

When an individual is detected within specified speed criteria, details are passed to the National Policing Improvement Agency (NPIA) Driver Offender Retraining Scheme (DORS) to check if a driver is eligible to attend a Safety Awareness Course as an alternative to the imposed penalty. Where individuals are not eligible or decline an invitation to attend the offence will be processed as normal on the VP/FPO system.

The VP/FPO system can accept payment of a fixed penalty in a number of ways including cash, cheque, and debit/credit card. Payments can be made via post, the telephone or in person at the FPO counter in Laganside Courthouse. When a payment is receipted onto VP/FPO the status of the ticket is automatically updated.

The system also includes an interface to the NICTS ICOS system for tickets that remain unpaid for 45 days and are required to be registered as a court fine.

The key features of the VP/FPO control framework are:

Challenges and Issues

Recent Fines and Confiscation Judicial Reviews

Two judgments were given by the Divisional Court on 22 March 2013 in relation to five judicial review applications that had been lodged challenging the arrangements for imposing and enforcing fines and confiscation orders. The Divisional Court found that a number of long established processes failed to comply fully with the legislative provisions in a number of respects, namely:

NICTS has been working closely with the Office of the Lord Chief Justice (OLCJ) to develop more detailed arrangements which reflect the process outlined by the Divisional Court in relation to proceedings to enforce the payment of fines. The judiciary have raised concerns regarding their powers to implement `default hearings` for Magistrates’ Court cases. To progress these matters a dual approach has been adopted:

The same issues or concerns do not exist in Crown Court cases and the Recorder has agreed to commence a process in Belfast to bring back cases to court following default.

These new processes will be interim arrangements until reforms in relation to the collection and enforcement of fines are introduced through the Fines and Enforcement Bill which will include the establishment of a new civilian fine enforcement service within this Assembly mandate. The new service will have an enhanced range of powers to collect and enforce fines and other monetary penalties. The proposed implementation date for the creation of a civilian fine enforcement service is currently April 2015.

Given the volumes involved (approximately 1,800 fine warrants issued a month relating to 1,200 defendants), the introduction of a ‘default hearing’ will have significant resource implications for the courts, both in terms of administration and judicial time until a new civilian enforcement service is legislated for.

Although the validity of the fines themselves is not in question, it is clear from the judgments that no further enforcement action can be taken in respect of these monetary penalties until the defects in the process have been remedied.

At the time of the judgment there were approximately 36,000 warrants outstanding with PSNI with a value of £7.56m. Since the judgment these outstanding warrants have been recalled from PSNI and a process has been agreed with the judiciary for reviewing all recalled warrant cases to determine whether seeking to enforce the penalties is appropriate or proportionate. As at the end of August 2013 there were 42,865 fines that had passed their payment due date and remained unpaid, equating to a value of £11.4m and this value will continue to rise until new processes in relation to default hearings for Magistrates’ Court cases are clarified and put in place.

Although the Divisional Court held that the warrants in the five cases before it were unlawfully issued, it did not make any determination in relation to liability. These cases have been passed to the Queen’s Bench Division to determine issues around liability and if any damages are payable. The cases have been listed for the 12 November 2013 for review. Liability will be denied on the basis of Crown immunity pursuant to section 2(5) of the Crown Proceedings Act 1947. The potential liability for damages is significant and will have major financial implications for NICTS and the Department of Justice (DOJ).

One of the Minister’s priorities is to reform fine collection and enforcement and to introduce new legislation within the current Assembly mandate to make provision for a wider range of fine collection powers including deduction from benefits and income. These new processes are now being refined in light of the judgments. A Fine Collection and Enforcement Programme Board has been established by the DOJ to take forward three projects in relation to fine enforcement.

Outstanding Warrants

One key challenge facing the criminal justice system historically has been the number and age of outstanding warrants that remain unexecuted by the PSNI.

A detailed warrant reconciliation exercise was completed in September 2011 between the PSNI and the NICTS records. This involved reviewing warrant statuses, offence types and outstanding amounts. This reconciliation was commissioned at the request of the Fine Enforcement Project Group (FEPG). At 31 March 2012, a total of 26,571 cases1 had warrants outstanding with a total value of £8.4m. (at 31 March 2011, 26,218 cases with a value of £6.7m).

This reconciliation proved extremely beneficial and has allowed for identified discrepancies to be investigated. These investigations resulted in the outstanding warrants balance being reduced by approximately 2,000. Due to the benefits derived from this exercise, it has been agreed that this reconciliation should be completed annually.

As mentioned above, following the judgments, NICTS has recalled the 36,000 unexecuted fine default warrants (relating to approximately 20,000 defendants) from PSNI. A decision on whether or not to take further enforcement action on each warrant is ultimately a judicial one. However, NICTS is currently working with PSNI to provide information on past enforcement activity and the judiciary to agree a process to review these outstanding fines and the appropriate follow up action required. The process for Crown Court imposed fines has been agreed with the judiciary and will be implemented in September 2013.

An analysis of the 36,000 recalled warrants shows that:

Progress on the work on the outstanding monetary penalties will be reported to the newly established Fine Default and Warrant Enforcement Project Board.

VP/FPO System

Another key challenge is that the VP/FPO system is an old system with limited reporting functions especially in relation to financial information. The system was not designed to produce and report the financial information now required for the Trust Statement as its principal operational function was to enable the processing and receipting of fixed penalty notices. In preparation for the completion of the 2011-12 Trust Statement, the PSNI engaged the VP/FPO IT system provider to enable the necessary reports to be produced from the system. As a result of this a new suite of reports has been developed which document, at an individual ticket level, the number of penalties imposed and how these have been dealt with (e.g. paid, cancelled). These reports have been used to provide the information required for the Trust Statement.

Fine Enforcement Developments and Initiatives

Criminal Justice Inspectorate Report

In March 2010 the Criminal Justice Inspectorate Northern Ireland (CJINI) issued a report on the enforcement of fines in Northern Ireland. A follow up review on Fine Enforcement in Northern Ireland was published in July 2012. The March 2010 report made ten recommendations and the July 2012 report provides an update on progress against these ten recommendations.

Of the ten recommendations, three have been achieved, five partially achieved and two not achieved. The Inspectors accepted the complexity of the issues surrounding the enforcement of fines and acknowledged that much work has been undertaken, in particular the work of the NICTS which has significantly reduced the number of warrants issued to the police. In addition the DOJ programme, as mentioned above, has been established to take forward fine enforcement in the criminal justice agencies. Initiatives to reform and improve fine enforcement are contained in the following sections.

Fine Collection and Enforcement Programme Board

A newly established Fine Collection and Enforcement Programme (FCEP) Board has been created by the DOJ which has responsibility for the oversight of three specific projects:

The main aim of the FCEP is to maintain confidence in the use of fines as a credible deterrent to crime by substantially improving collection and enforcement arrangements for unpaid criminal court imposed fines in Northern Ireland, bringing them to a comparable standard to those already operated within jurisdictions in the remainder of the United Kingdom.

It is planned that all three projects contained within the programme mandate should be completed by 1 April 2015. Progress on delivery will be reported to the Criminal Justice Board.

The establishment of the FCEP Board replaces the previous Fine Enforcement Project Group. The new Programme Board is led by the DOJ and comprises senior officials from NICTS, PSNI, NIPS and Probation Board Northern Ireland. The Board is chaired by the Deputy Director, Criminal Justice Development Division, DOJ who has been designated Senior Responsible Owner for the programme.

Consultations

In 2008 a consultation on fine default in Northern Ireland was issued. This was led by the Northern Ireland Office (NIO) and was supported by the NICTS. As a result of this consultation a number of initiatives were taken forward. These are detailed below.

Fine Collection Scheme

In May 2009 the Fine Collection Scheme (FCS) was implemented within the NICTS in an effort to increase the amount of fine monies received and to reduce the number of fine warrants issued to the PSNI for execution. Figures from the FCS at 31 March 2012 show that Fine Officer intervention has resulted in 28.4% (£3.6m) more debtors making payment against a target of 16%. There has also been a 28.25% reduction in the number of warrants issued to the PSNI against a target of 26.5%. The FCS is part funded by the PSNI with the remainder being funded by NICTS.

All outstanding monetary penalties enter the FCS once their payment due date has passed. Fine Collection Officers, who are located in Laganside Courts, telephone debtors and send two reminder letters within a ten day period requesting full payment or for the debtor to contact the Fine Collection Officers to discuss a payment plan. If after ten days no payment has been received or payment plan requested then a warrant is issued to the PSNI for execution. An additional £5 warrant fee is automatically imposed on issue of a warrant for Magistrates’ Court cases. No warrant fee is imposed on Crown Court cases.

The performance of the FCS is monitored on a monthly basis and is reported internally within the NICTS. Following the fine judgment the FCS still continues to operate successfully and fine collection reminder letters have been amended to reflect the new interim arrangements.

Means Enquiry Forms

Article 29(3) of the Criminal Justice (Northern Ireland) Order 1996 enables the court to formally ask a defendant to provide their financial details. In March 2011 a revised Means Enquiry Form (MEF) was introduced. Completed MEFs are submitted by the defendant to the NICTS prior to the court hearing or are brought to court by the defendant on the day of court. In the event of a defendant being convicted of an offence, the Judge will review any MEF lodged. A copy of the MEF is also shared with the Fine Collection Team. The return rate on MEFs is very low at less than 1%. This has been highlighted in the Criminal Justice Inspectorate follow up review on Fine Enforcement issued in July 2012.

Fine Payment History Record

In April 2011 the NICTS introduced a new Fine Payment History Record which collates information on how a defendant has paid any fines over the past three years. This record is produced from ICOS and is provided on request by a Judge following conviction. The record enables the Judge to consider a defendant’s propensity to pay a fine including, whether he was committed to custody for non-payment within the last three years.

Supervised Activity Orders

A pilot project commenced in Newry Magistrates’ Court in January 2012 in respect of SAOs for a twelve month period and a second SAO pilot commences in Lisburn in October 2012 and concluded in April 2013. SAOs can be imposed by virtue of Article 45 of the Criminal Justice (Northern Ireland) Order 2008, they require a defendant (over the age of 18) to undertake community based activities instead of being committed to prison for the non-payment of a monetary penalty. Once a SAO comes into force the fine is discharged and cannot be reinstated. An evaluation of the SAO pilot project is currently being completed by DOJ. The main purpose of this evaluation is to assess the strengths and weaknesses of the SAOs as an alternative to imprisonment for fine default and to identify any areas for improvement in advance of any wider rollout of the scheme throughout Northern Ireland.

Fines and Enforcement Bill

One of the key enforcement initiatives being taken forward by the DOJ is a Fine Enforcement Strategy which aims to improve the effectiveness and efficiency of the fine default and enforcement system.

In July 2011 the DOJ issued a further consultation paper on fine default in Northern Ireland which identified four key areas for improvement. This followed on from the previous consultation paper issued by NIO/NICTS in 2008. The Fine Enforcement Strategy is built around four key themes which are:

The strategy contains a series of short and longer term initiatives including improved information provision to sentencers, the commencement of SAOs, and, for the last three years, the encouragement of fine payment by the FCS.

The DOJ is currently developing the required legislative changes to facilitate these potential changes, which will be included in a new Fines and Enforcement Bill. The current schedule is for the Fines and Enforcement Bill to be introduced to the Assembly in early 2014 with a target to have the provisions in law with Royal Assent by February 2015. This should permit the introduction of a civilian fine collection and enforcement service in April 2015.

Legislative plans include:

Other Developments

Issue of Fine Warrants via Causeway

The introduction of the Causeway Data Sharing Mechanism (DSM1) in November 2009 has improved the sharing of fine warrant information between the NICTS, PSNI and Northern Ireland Prison Service (NIPS). Causeway enables Criminal Justice Organisations (CJOs) to share information electronically with the aim of speeding up the justice process.

Since November 2009, fine warrants are no longer printed and posted to the PSNI but are shared electronically from the NICTS ICOS system to the PSNI NICHE system and NIPS PRISM system via the Causeway data sharing mechanism. A warrant alert is then set as a task on the PSNI NICHE system for execution by a Police Officer. Warrants can also be tracked electronically between the NICTS, PSNI and NIPS systems which facilitates reconciliations between individual CJOs and Causeway for outstanding warrants.

Causeway has also introduced the use of unique identifiers, a party Unique Reference Number (URN), for a defendant progressing through the criminal justice system. The URN enables the PSNI to access a list of all outstanding fine warrants for a particular defendant (debtor) which will assist in the execution of fine warrants. There are approximately 2,000 new fine warrants issued to the PSNI for execution each month. These outstanding fines pass through the FCS before the warrant is issued.

Processing of Committal Receipts from NIPS

Since January 2013 a new procedure has been implemented between NIPS and NICTS for the processing of committal receipts. Since January, it has been agreed that NIPS is no longer required to send paper committal receipts to NICTS Customer Service Centre for processing. Instead NICTS Customer Service Centre staff use the electronic warrant message received from NIPS via Causeway to clear the debtor account on ICOS. This change in processing has provided benefits to both NICTS and NIPS and has reduced delays in having accounts cleared following committal. To improve this change further an ICOS change was implemented in September 2013 to automate the process and clear the account on receipt of the Causeway message.

Payment Methods

The NICTS continue to promote additional payment methods for the payment of fines. In January 2010, the NICTS implemented a new online fines service via the NICTS secure website where debtors can pay their fines online, in additional to being able to pay their fine by post, by telephone or in any court office. In August 2011 further upgraded the credit/debit card processing system to accept a wider range of debit cards and added additional security (verified by VISA).

During 2011-12, 30.8% of monies received were paid by debit/credit card.

Confiscation Orders

To aid the enforcement of confiscation orders, in June 2012 the NICTS commenced issuing statements of accounts to confiscation debtors which include the outstanding balance on their confiscation order. The statements are issued eight weeks before the order is due to be paid in full. In 2012-13 this process was also extended to include the subsequent issue of statements to defendants after the payment due date has expired. In January 2013 new improved procedures were agreed with PPS in relation to the notification of receiver fees for confiscation orders. This new process, which enables court staff to surrender confiscation monies without having to check each individual case with PPS, has streamlined the surrender of confiscation monies and has quickened up the release process to the consolidated fund, making funds available quicker in relation to confiscation receipts.

Project PUMA

PUMA is an on-going project, which aims to allow police officers greater access to information at the roadside using portable electronic recording devices. Project PUMA allows for FPNs to be dealt with electronically and will reduce the time taken for issued notices to be fully recorded on VP/FPO therefore enabling speedy justice and at the same time ensuring a much more robust process from start to end. Project PUMA will also enable the police to issue penalties without requiring them to carry around a number of separate ticket books. Graduated FPNs (where the penalty imposed varies according to the severity of the offence) will not initially be able to be recorded on the portable devices however this is being considered for the future.

A phased rollout commenced in April 2012 with the PSNI Road and Armed Support Unit and it is expected that the roll out to all policing districts will be concluded upon in the later part of 2013.

PentiP

Currently there is a UK wide on-going project to replace the current VP/FPO system, which is used by 45 police forces and the courts, with a national system called PentiP. Currently, there has been no agreed strategic plan formalised for the PSNI to move to PentiP and it will therefore continue to use the VP/FPO system for the foreseeable future. However in the meantime PSNI plan to engage with its IT provider to ascertain whether they can link into the national system and therefore use PentiP. Affordability will be a key matter in any final decisions taken by the PSNI. PSNI will need to ensure that the needs of NICTS in preparing the annual Trust Statement are considered and met in any strategic decisions to move from the VP/FPO system to PentiP.

Lean Review

The FPPC in the PSNI was subject to a Lean Review in 2012 which was carried out by the Business Consultancy Services in DFP. The Lean Review critically examined the systems and processes of fixed penalty and safety camera offences from end-to-end with the objective of streamlining those systems and processes where possible. The key aim was to enhance processing times and eradicate unnecessary processes. As a result, practical changes to some key processes were implemented during the latter part of 2012 resulting in an improvement in compliance.

Results for the Year and Financial Position

Results for the Year (Statement of Revenue and Expenditure)

The SoRE details the income collected by the NICTS acting as an agent on behalf of the NICF and other third parties and shows the associated expenditure.

During 2011-12 the total impositions increased by £0.2m (1.5%) to £13.9m in 2011-12 (2010-11: £13.7m). The value of fines and penalties imposed decreased by £0.5m (4.5%) to £10.5m (2010-11: £11.0m) while the value of confiscation orders increased by £0.7m (25.9%) to £3.4m (2010-11: £2.7m).

Expenditure has increased by £2.3m (100.0%) to £4.6m in 2011-12 (2010-11: £2.3m) mainly as a result of the year on year movements in the impairment provision.

The SoRE shows an overall net revenue position for the NICF of £9.2m in 2011-12 (2010-11: £11.4m).

Financial Position (Statement of Financial Position)

The Statement of Financial Position (SoFP) primarily consists of outstanding fine balances at the year end. The value of fines (less impairment provision) outstanding at the 31 March 2012 remained in line with the 2010-11 at £12.9m (refer to note 6).

The outstanding fine balances are shown net of any impairment provisions. To allow the outstanding balances to be assessed they were split into two categories - debt for which a warrant had issued (2011-12: £8.4m and 2010-11: £6.7m) and debt for which no warrant had issued (2011-12: £10.6m and 2010-11: £11.1m). Each category was individually considered by grouping balances into similar risk categories to help determine an appropriate level of impairment. The net debt position is disclosed at note 6.

The net assets recorded in the SoFP are represented by the balance owed to the NICF. This balance decreased by £0.9m (7.0%) to £11.9m in 2011-12 (2010-11: £12.8m).

Auditors

The Trust Statement is audited by the Comptroller and Auditor General in accordance with the Government and Resources and Accounts Act (Northern Ireland) 2001.

So far as the Accounting Officer is aware, there is no relevant audit information of which the auditors are unaware and the Accounting Officer has taken all the steps that she ought to have taken to make herself aware of any relevant audit information and to establish that the auditors are aware of that information.

The audit fee for the 2011-12 Trust Statement is £36,000. This is charged on a notional basis and is recognised in the Accounts of the NICTS.

J Durkin
Accounting Officer
30 September 2013

Part 2 Trust Statement 2011-12

Statement of Accounting Officer’s Responsibilities

Under section 11(1) and (2) of the Government Resources and Accounts Act (Northern Ireland) 2001, the DFP has directed the NICTS to prepare for each financial year, a Trust Statement in the form and on the basis set out in the Accounts Direction. The Trust Statement is prepared on an accruals basis and must give a true and fair view of:

In preparing the Trust Statement, the Accounting Officer is required to comply with the requirements of the FReM and in particular to:

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 NICTS’s assets, are set out in the Accounting Officers’ Memorandum and in ‘Managing Public Money Northern Ireland’(MPMNI) issued by the DFP.

The Chief Executive is responsible for the maintenance and integrity of the information on the NICTS’s website.

Statement on Internal Control

Scope of responsibility

As NICTS Accounting Officer, I am responsible for maintaining a sound system of internal control that supports the achievement of NICTS policies, aims and objectives, whilst safeguarding the public funds and assets for which I am personally responsible, in accordance with the responsibilities assigned to me in MPMNI.

I am responsible to the sponsor Directorate and the Principal Accounting Officer, Permanent Secretary, in the DOJ for the running, management, performance and development of the NICTS.

I am supported by the NICTS Board, which is comprised of non-executive and executive members and members of the Judiciary in attendance. The Board is responsible for the leadership and broad direction of the NICTS. I am responsible for the day-to-day operation of NICTS and the leadership of its staff.

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 on-going process designed to identify and prioritise the risks to the achievement of Departmental and NICTS 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 for the year ended 31 March 2012 and up to the date of approval of the NICTS Trust Statement for the year 2011–12, in accordance with DFP guidance.

Capacity to handle risk

There is a strong risk management ethos throughout the organisation. I acknowledge my overall responsibility for the effective management of risk throughout the NICTS. I can confirm that leadership was given to the risk management process through the NICTS Senior Management Team and that staff were trained and equipped to manage risk in a way appropriate to their authority and duties.

I led on the management of risk within the NICTS and I have been supported during 2011-12 by a management structure that included:

The risk and control framework

A risk and control framework was in place to identify, monitor, manage and report the risks or threats to the achievement of the NICTS’s objectives. Key features in addition to those already identified earlier in this Trust Statement included a risk management policy and framework consistent with that in operation throughout the wider DOJ. The policy set out formal processes for identifying, evaluating, managing and reporting risk, including to the DOJ when appropriate.

The NICTS had in place an organisation-wide system of internal control to facilitate the management of risk in accordance with DFP requirements. The NICTS system of internal control included established governance structures to support the risk management framework; and a range of internal control processes to provide management with financial and operational assurance, including:

Review of effectiveness

As Accounting Officer I have responsibility for reviewing the effectiveness of the system of internal control. My review was informed by the work of IAB and the executive managers within the NICTS who had responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in their reports. I have been advised on the implications of the result of my review of the effectiveness of the system of internal control by the NICTS Board and the ARC and plan to address weaknesses and ensure continuous improvement of the system in place.

The NICTS Board were updated on the NICTS risk profile and the effectiveness of the systems of internal control through the receipt of minutes and reports from the ARC.

Business Managers provided me with bi-annual Stewardship Statements on internal control, which included issues raised by central and regional management teams which were escalated and reviewed by the senior management team. These statements included reporting on sources of internal control assurance and this in turn provided assurance of managements’ compliance with operational policies, procedures and established key risks and controls.

NICTS is responsible for the collection of FPNs, fines, and confiscation orders imposed by the court, PSNI and DVA. As Accounting Officer, I have a duty to ensure that there are appropriate accounting records and internal controls over the elements of the systems governing these FPNs, fines, and confiscation orders that I have responsibility for. Details are as follows:

  1. Court Imposed Payments (issued by NICTS and processed through ICOS)
    The court imposed payments are processed by ICOS. These payments represent approximately 80% of all amounts detailed in the Trust Statement. The ICOS system has a number of embedded internal controls to ensure that all receipts are accounted for and reconciled, including an interface utilised by Finance Branch to carry out daily reconciliations to the financial system.
  2. Fixed Penalty Notices (issued by PSNI and DVA and are processed on the VP/FPO system)
    The PSNI/DVA imposed penalties are processed on the VP/FPO. These penalties represent approximately 20% of all amounts detailed in the Trust Statement. The FPO has a number of embedded controls in relation to processing payments through the VP/FPO system to ensure that receipts are accounted for and reconciled.

    The end to end process in relation to FPNs is the responsibility of PSNI with the exception of processing payments. The NICTS carries out the fixed penalty payment activity (with payment being possible through a variety of methods). As part of the work carried out in the preparation of this Trust Statement, effort was made to reconcile the information contained in the PSNI reports with NICTS data on the amounts collected. The information has been effectively reconciled except for a very small amount which is not considered to be material.

I am not accountable for systems, processes and controls operated and owned by the PSNI which have been relied upon in drafting this Trust Statement, I am wholly reliant on the assurances provided by the PSNI Accounting Officer, the Chief Constable, over the information included in the Trust Statement sourced from PSNI. The PSNI Accounting Officer has provided assurances over the data supplied to produce the 2011-12 Trust Statement. He has stated that to the best of his knowledge the data provided to NICTS is complete and, to the best of PSNI testing, accurate for the years 2009-10 to 2011-12.

Internal Audit Branch

IAB carried out a comprehensive programme of internal audits across NICTS activities, operating to Government Internal Audit Standards. IAB submitted regular reports, including the Head of Risk and Assurance’s independent opinion on the adequacy and effectiveness of the NICTS’s governance, control and risk management arrangements together with recommendations for improvement. The Head of IAB has provided me with satisfactory assurance over the court imposed fine process and ICOS, the system used to record fines. He has also given satisfactory assurance over NICTS fixed penalty collection via the VP/FPO system. IAB are not in a position to give any assurance over the part of the VP/FPO system under the control of the PSNI, only in relation to the work carried out by the NICTS Fixed Penalty Office.

Significant internal control issues

The following issues have been identified as significant to the NICTS during 2011-12 as a result of the assurance activity. Each of the control issues have been reviewed and plans are in place to address the identified weaknesses.

Issues arising from the judgments in the fine and confiscation Judicial Reviews and the impact on the significant number of unexecuted warrants

There were a significant number of outstanding unexecuted warrants. At 31 March 2012, a total of 26,571 cases had warrants outstanding with a total value of £8.4m. The FEPG was considering options to address this backlog however five recent judicial review applications have challenged the arrangements for imposing and enforcing fines and other monetary penalties which will potentially impact the collectability of debt. The two judgments, delivered in March 2013 by the Divisional Court relating to the five judicial review applications, found that the outstanding warrants had been unlawfully issued and that no further enforcement action could be taken until procedures were in place to bring defendants back to court for the setting of default periods. Following the judgments, all outstanding warrants have been recalled from PSNI and no further fine warrants have issued, except for forthwith warrants.

The Judicial Reviews sought to challenge various aspects of the current arrangements for imposing and enforcing fines and other monetary penalties which will potentially impact on the collectability of existing debt. The Divisional Court found in March 2013 that a number of long established processes failed to comply fully with legislative provisions in a number of respects, namely:

Although the Divisional Court held that the warrants in the five cases before it were unlawfully issued, it did not make any determination in relation to liability. The issues around liability will be considered by the Queen’s Bench Division of the High Court and in particular potential immunity under the Crown Proceedings Act 1947. If the Judge makes an award for damages NICTS would invite the Court to use these five test cases to establish some sort of scale which could be applied to future claims thereby avoiding the need for unnecessary litigation. It is not anticipated that the test cases will be concluded before autumn 2013.

The judgments given following the Judicial Review applications fundamentally changes the way fine default and warrant issue is addressed by the courts. NICTS have been working closely with the Office of the Lord Chief Justice to develop more detailed arrangements which reflect the process outlined by the Divisional Court in relation to proceedings to enforce the payment of fines. The judiciary have raised concerns regarding their powers to implement `default hearings` for Magistrates’ Court cases. To progress these matters a dual approach has been adopted:

The same issues or concerns do not exist in Crown Court cases and the Recorder has agreed to commence a process in Belfast to bring back cases to court following default.

At the time of the judgment there were 36,000 warrants outstanding with PSNI in respect of 20,000 defendants with a value of £7.5m.  Since the judgment these outstanding warrants have been recalled from PSNI and a process has been agreed with the judiciary for reviewing all recalled warrant cases to determine whether seeking to enforce the penalties is appropriate or proportionate. At the end of August 2013 the value of fines that have passed their payment due date and remain unpaid currently equates to a value of £11.4m. This value will continue to rise until new processes in relation to default hearings for Magistrates’ Court cases are clarified and put in place.

One of the Minister’s priorities is to reform fine collection. Therefore a Fine Collection and Enforcement Programme (FCEP) Board has been established by DOJ to take forward three projects in relation to Fine Enforcement. The NICTS Chief Executive and the Head of Internal Audit are both members of this board.

In July 2013, PSNI Internal Auditors issued a report on the PSNI processes linked with fine enforcement and collection. A number of issues have been identified by PSNI Internal Auditors around the controls over the collection and reconciliation of fines by PSNI and limited overall assurance has been provided. An agreed action plan has been put in place to address the concerns raised, however PSNI has advised that nothing can be progressed until the outcome of the current issues about collections is resolved.

VP/FPO system weaknesses

Issues with the VP/FPO system’s accounting module have been apparent since its introduction and repeated attempts have been made to address these both at national user group level and locally with direct contact with the system support supplier. The system is limited in terms of reporting functions especially in relation to financial information as it was originally procured to facilitate the acceptance of payments and to record tickets issued. Substantial time has been invested by PSNI and NICTS to find a resolution to the accounting issues. To compensate for the system weaknesses manual work-around processes have been established to facilitate the completion of the Trust Statement. The work-around consists of monthly reconciliations between NICTS and PSNI data to ensure completeness and accuracy of the information used to produce the annual Trust Statement.

A Service Level Agreement between NICTS and PSNI has been drafted and will be agreed with PSNI. This incorporates information required to produce monthly financial information and the year-end Trust Statement.

Audit Recommendations

The Comptroller and Auditor General has qualified his regularity opinion on the Trust Statement and produced a report. This report has indicated a limitation of scope on the collection of cash warrants. The account has been qualified on the basis that there is insufficient evidence to substantiate that material fraud has not occurred during 2011-12 in the collection of cash on outstanding warrants through cash being collected by PSNI but not lodged.

The current process only allows for payment of warrants to be made in cash to PSNI and sufficient controls have not been identified in the systems used to match warrants executed against cash collected. There is insufficient evidence to support the amount of debt impaired in the period and whether this impairment is the result of an inability or unwillingness to pay.

The process of cash collection of warrants is one that is operated by the PSNI and as such is the responsibility of the PSNI Accounting Officer.

With the aim of improving the effectiveness and efficiency of the fine default and enforcement system the following actions are being progressed:

There is one outstanding priority one recommendation from the PSNI Internal Audit Review of Process for Execution of Fine Warrants:

The DOJ Internal Audit branch carried out a review of the arrangements over the NICTS Fixed Penalty Office and fine collection process as part of the 2013-14 audit programme of work. The draft audit report was issued for management response in September 2013.

J Durkin
Accounting Officer
30 September 2013

The Certificate of the Comptroller and Auditor General to the Northern Ireland Assembly

I certify that I have audited the financial statements of the Northern Ireland Courts and Tribunals Services Trust Statement for the year ended 31 March 2012 under the Government Resources and Accounts Act (Northern Ireland) 2001. The financial statements comprise the Statement of Revenue and Expenditure, Statement of Financial Position, Statement of Cash Flows and the related notes. These financial statements have been prepared under the accounting policies set out within them.

Respective responsibilities of the Accounting Officer and auditor

As explained more fully in the Statement of Accounting Officer’s Responsibilities, the Chief Executive as Accounting Officer is responsible for the preparation of the financial statements and for being satisfied that they give and true and fair view. My responsibility is to examine, certify and report on the financial statements in accordance with the Government Resources and Accounts Act (Northern Ireland) 2001. I conducted my audit in accordance with International Standards on Auditing (UK and Ireland). Those standards require me and my staff to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the NICTS’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Northern Ireland Courts and Tribunals Service; and the overall presentation of the financial statements. In addition I read all the financial and non-financial information in the Foreword to identify material inconsistencies with the audited financial statements. If I become aware of any apparent material misstatements or inconsistencies I consider the implications for my certificate.

In addition, I am required to obtain evidence sufficient to give reasonable assurance that the revenue and expenditure reported in the financial statements have been applied to the purposes intended by the Assembly and the financial transactions conform to the authorities which govern them.

Basis for Qualified Opinion on Regularity

My examination found material weaknesses in controls over debts relating to outstanding warrants which have reduced the revenue recognised in the period by £1.3m. The Northern Ireland Courts and Tribunals Service, in conjunction with the Police Service Northern Ireland, were unable to obtain sufficient evidence over this debt to enable me to conclude that a material amount of fraud or error did not exist. There were no additional procedures that I could have undertaken to provide me with assurance as to the regularity of this revenue. The scope of my audit was therefore limited in this respect.

Opinion on Regularity

Except for the regularity issue outlined above, in all other respects the revenue and expenditure have been applied to the purposes intended by the Assembly and the financial transactions conform to the authorities which govern them.
Opinion on Financial Statements

In my opinion:

Opinion on other matters

In my opinion, the information given in the Foreword for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which I report by exception

In respect solely to the limitation in my work, regarding the de-recognition of revenue for warrants collectable referred to above, adequate accounting records have not been kept and I have not received all of the information and explanations that I require for my audit. I have nothing to report in respect of the following matters which I report to you if, in my opinion:

Other matters

Northern Ireland Courts and Tribunals Services were not required to prepare accruals based accounts for 2010-11. However, in preparing for the Trust Statement 2011-12 financial statements, accruals based accounts for 2010-11 were compiled and are presented as comparative information. Although the 2010-11 figures are unaudited, I obtained sufficient appropriate audit evidence that the opening balances do not contain material misstatements affecting the 2011-12 financial statements.

My detailed observations are included in my report.

KJ Donnelly
Comptroller and Auditor General
Northern Ireland Audit Office
106 University Street
Belfast
BT7 1EU

4 October 2013

Statement of Revenue and Expenditure

for the year ended 31 March 2012

  Note 2011-12 £’000 Unaudited 2010-11 £’000
Revenue
Fixed Penalty Notices   2,525 2,725
Court Imposed Fines   6,357 6,787
Extra Costs   64 52
Confiscation Orders   3,361 2,659
Other Party Criminal   1,572 1,470
Total Revenue   13,879 13,693
Expenditure
Credit Losses 2 (2,219) (169)
Revenue retained by the NICTS under statute 3 (99) (95)
Total Expenditure   (2,318) (264)
Disbursements
Amounts paid to Other Parties   (1,450) (1,299)
Amounts paid to Safety Camera Scheme   (877) (726)
Total   (2,327) (2,025)
Total Expenditure and Disbursements   (4,645) (2,289)
Net Revenue for the Consolidated Fund   9,234 11,404

There were no recognised gains or losses accounted for outside the above Statement of Revenue and Expenditure.

The notes form part of this statement.

Statement of Financial Position

as at 31 March 2012

  Note 2011-12
£’000
Unaudited
2010-11
£’000
Non-current Assets
Receivables falling due after more than one year 4 596   1,047  
Total non-current assets     596   1,047
Current Assets
Receivables 5 12,305   11,806  
Cash and Cash Equivalents 7 323   1,327  
Total current assets     12,628   13,133
Total assets     13,224   14,180
Current Liabilities
Payables 8 (1,336)   (1,338)  
Total current liabilities     (1,336)   (1,338)
Total Assets less Current Liabilities     11,888   12,842
Represented by:
Balance on Consolidated Fund Account 9   11,888   12,842

The notes form part of this statement.

J Durkin
Accounting Officer
30 September 2013

Statement of Cash Flows

for the year ended 31 March 2012

  Note 2011-12
£’000
Unaudited
2010-11
£’000
Net cash flow from operating activities A below 9,184 11,071
Cash paid to the Consolidated Fund 9 (10,188) (10,359)
Increase/(Decrease) in cash in this period   (1,004) 712
Notes to the Cash Flow Statement
A: Reconciliation of Net Cash Flow to Movements in Net Funds
Net Revenue for the Consolidated Fund 9 9,234 11,404
Increase in non-cash assets   (48) (425)
(Decrease)/Increase in non-cash liabilities   (2) 92
Net Cash Flow from operating activities   9,184 11,071
B: Analysis of Changes in Net Funds
Increase/(Decrease) in cash in this period   (1,004) 712
Net Funds at 1st April   1,327 615
Net Funds at 31st March 7 323 1,327

The notes form part of this statement.

Notes to the Trust Statement

1. Statement of Accounting Policies

1.1 Basis of Accounting

The Trust Statement is prepared in accordance with the Accounts Direction issued by the DFP Annex F of DAO (DFP) 01/12, in accordance with Section 11(1) and (2) of the Government Resources and Accounts Act (Northern Ireland) 2001. The Trust Statement is prepared in accordance with the accounting policies detailed below and these have been developed with reference to the 2011-12 FReM, in particular Chapter 13 which deals with Trust Statements and Accounting for Consolidated Fund Revenue. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector context.

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

The income and associated expenditure contained in these statements are those flows of funds which the NICTS handles, on behalf of the NICF and other entities, where it is acting as an agent rather than as principal. The sense in which these financial statements elements are used is described within the Foreword.

Unless otherwise stated, the financial information contained in the statements and in the notes is rounded to the nearest £’000.

1.2 Accounting Convention

The Trust Statement has been prepared in accordance with the historical cost convention. Receivables and payables have been accounted for on an accruals basis in accordance with the DFP’s accounts direction and the FReM.

1.3 Revenue Recognition

Fines and penalties are recognised as revenue in accordance with IAS 18 and Chapter 13 of the FReM. They are measured at the fair value of amounts received or receivable net of judicial remissions. Revenue is recognised when a penalty is validly imposed and an obligation to pay arises. Where, on appeal, or for other legal reasons, the penalty is cancelled, the amount receivable is derecognised at the date of the successful appeal. Where a penalty is imposed, but with an alternative of a non-financial penalty (including imprisonment or undertaking a training course), the penalty is recognised initially, but is derecognised when and if the option of the non-financial penalty is taken up.

1.4 Expenditure

Section 20 of the Criminal Justice (Northern Ireland) Order permits the NICTS to recover costs associated with the operation of the Safety Camera Scheme. These amounts are recovered from the Safety Camera Scheme via the PSNI and are accounted for as expenditure. This treatment is required by the FReM where legislation permits that part of the revenue collected be retained by the entity. The associated impositions are therefore recorded gross within revenue.

1.5 Receivables

Receivables are shown net of impairments in accordance with the requirements of the FReM and IAS 39.

1.6 Payables

Payables are accounted for on an accruals basis. They represent the value of impositions that have been collected and are due to be paid to parties other than the NICF.

1.7 Disbursements

Disbursements are accounted for on an accruals basis and represent the value of impositions for the year payable to parties other than the NICF.

1.8 Net Revenue for the Northern Ireland Consolidated Fund

Net Revenue for the NICF is the value of impositions for the year (net of impairment) that are payable to the NICF for those categories of imposition applicable, including fixed penalties, fines, and confiscation orders.

1.9 Critical accounting judgments and estimates

The preparation of this statement in conformity with IFRS requires the use of accounting estimates and assumptions. It also requires management to exercise its judgement in the process of applying the NICTS’s accounting policies. We continually evaluate our estimates, assumptions and judgements based on available information and experience. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates. The estimates and assumptions which have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below.

  1. Credit Losses
    Administratively the NICTS do not have the ability to write off debt as this can only be carried out on Judicial Authority. During the year the Judiciary have written off a number of fine debts. The value of debts written off is disclosed in Note 2.
  2. Impairment of debt and methodology
    In accordance with IAS 39, the receivables balances that remain unpaid at the year end were assessed for impairment. To assess the outstanding balance, the receivables were split into two key groups namely, those which no warrant had issued against and those balances against which a warrant had issued. Within the two key groups the balances were split further into collective financial assets.

When assessing the balances the evidence available on the ICOS system was used to consider if there had been a significant event which suggested that the balance was impaired.

Within each group there was also a ‘general’ category which consisted of those balances which could not be included in the more specific categories. Individually these balances were deemed insignificant but when grouped were deemed to be significant. When considering this debt the historical evidence from ICOS was used to determine if there is a need to impair any of the debt. For example reports on how long debtors get to pay their debt and amounts collected by the FCS when the debtor does not pay their balance by the due date set by the judge were considered. For debt which proceeded to warrant, historical evidence on PSNI recovery was also considered. For example amounts that were recovered by cash payment and non-cash alternatives, i.e. by a debtor serving a time in prison. From the evidence available a number of key assumptions were made, and percentages were calculated and used to determine the estimated impairment of this debt.

The key assumptions that were used in the impairment methodology are detailed below.

Receivables for which no warrant had issued:

Receivables for which a warrant had issued:

1.10 Financial Instruments

In accordance with the provisions set out under Chapter 9 of the FReM, any financial instruments that are not held in furtherance of the NICTS objectives but that are held on behalf of Government more generally are accounted for in this Trust Statement.

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 in the Statement of Financial Position when the entity becomes a party to the contractual provisions of the instrument.

Interest accrues at a rate of 8% per annum on those confiscation orders that have a balance remaining unpaid after the payment date has expired. Interest does not accrue on any other receivables.

Financial Assets

Credit Risk Assessment
The Trust Statement has financial instruments in the form of ‘trade receivables’.

In accordance with IAS 39 Financial Instruments: Recognition and Measurement, trade receivables are classified as ‘receivables’. Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. In accordance with IAS 39, receivables are initially recognised at fair value.

The NICTS assesses at each Statement of Financial Position date whether there is any objective evidence that a financial asset or group of financial assets classified as receivables is impaired. This includes an assessment of the risk associated with the recoverability of the different groups of receivables. The assessment of recoverability and the assumptions used in the impairment methodology have been documented in Note 6.

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 Statement of Revenue and Expenditure 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 is reduced directly and the impairment loss is recognised in the Statement of Revenue and Expenditure to the extent that a provision was not previously recognised.

Financial Liabilities

The Trust Statement also has financial instruments in the form of ‘trade payables’ that are classified in accordance with IAS 39 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 credit risk assessment on the financial liabilities identified no liquidity risk in respect of these liabilities.

1.11 First time reporting

This is the first Trust Statement prepared by the NICTS as required by DFP and in line with the Accounts Direction DAO (DFP) 01/12. Some of the comparative figures were previously reported within the NICTS Annual Report and Resource Accounts 2010-11.

2. Credit Losses

  Note 2011-12
£’000
Unaudited
2010-11
£’000
Debts written off by Judicial authority 2.1 897 1,159
Increase/(decrease) in value of impairment 2.2 1,322 (990)
    2,219 169

2.1 Debts written off by Judicial authority

  2011-12
£’000
Unaudited
2010-11
£’000
Fines 561 656
Extra Costs 2 1
Confiscation Orders 275 272
Other Party Criminal 59 230
  897 1,159

2.2 Increase/(decrease) in value of impairment

  2011-12
£’000
Unaudited
2010-11
£’000
Balance as at 1 April 5,145 6,135
Change in estimated value of impairment 1,322 (990)
Balance as at 31 March 6,467 5,145

3. Revenue retained by the NICTS under statute

  2011-12
£’000
Unaudited
2010-11
£’000
Safety Camera Scheme 99 95
  99 95

The NICTS is entitled under statute to retain elements of the Safety Camera Scheme penalties collected as revenue. The costs associated with running the scheme are charged as expenditure in the Trust Statement.

4. Receivables falling due after more than one year

  2011-12
£’000
Unaudited
2010-11
£’000
Instalment Orders 703 1,129
less Impairment Provision (107) (82)
  596 1,047

5. Current receivables

  2011-12
£’000
Unaudited
2010-11
£’000
Instalment Orders 1,264 1,135
Other receivables 17,401 15,734
less Impairment Provision (6,360) (5,063)
  12,305 11,806

6. Receivables

The table shows a breakdown of the receivables balance at 31 March 2012

  Fixed Penalty Notices
£’000
Court Imposed Fines
£’000
Extra Costs
£’000
Confiscation Orders
£’000
Other Party Criminal
£’000
Total
£’000
Receivables
At 1 April 2011 138 8,348 45 7,271 2,196 17,998
Imposed 2,525 7,596 67 3,361 1,912 15,461
Cleared by committal1 - (1,239) (3) - (340) (1,582)
Total Revenue 2,525 6,357 64 3,361 1,572 13,879
Total 2,663 14,705 109 10,632 3,768 31,877
Cleared by payment (2,300) (5,730) (66) (2,130) (1,386) (11,612)
Written off - (561) (2) (275) (59) (897)
At 31 March 2012 363 8,414 41 8,227 2,323 19,368
Impairment (provision for uncollectable amounts)2
At 1 April 2011 - 3,668 18 622 837 5,145
Increase/(decrease) in year - 245 - 983 94 1,322
At 31 March 2012 - 3,913 18 1,605 931 6,467
Net book value at 31 March 2012 363 4,501 23 6,622 1,392 12,901
Net book value at 31 March 2011 138 4,680 27 6,649 1,359 12,853

Aged analysis of receivables at 31 March 2012
  Fixed Penalty Notices
£’000
Court Imposed Fines
£’000
Extra Costs
£’000
Confiscation Orders
£’000
Other Party Criminal
£’000
Total
£’000
Receivables with no warrant
Less than one year2 363 1,860 11 1,211 506 3,951
Greater than one year and less than five years - 660 2 4,880 339 5,881
Greater than five years - 20 - 5 24 49
Net book value at 31 March 2012 363 2,540 13 6,096 869 9,881
Receivables with warrant
Less than one year - 178 1 - 40 219
Greater than one year and less than five years - 1,551 8 517 424 2,500
Greater than five years - 232 1 9 59 301
Net book value at 31 March 2012 - 1,961 10 526 523 3,020
Net book value at 31 March 2012 363 4,501 23 6,622 1,392 12,901

Notes

1. The balances cleared by committal to prison have been derecognised from income in line with Section 13.3.6 of Chapter 13 in FReM which states that “Fines and penalties are recognised at the time that the fine or penalty is imposed and becomes receivable by the entity. Where, on appeal, or for other legal reasons, the penalty is cancelled, the amount receivable is derecognised at the date of successful appeal.”

2. The age of the receivable is based on the date that the amount was imposed.

7. Cash and cash equivalents

  2011-12
£’000
Unaudited
2010-11
£’000
Balance at 01 April 1,327 615
Net change in cash and cash equivalent balances (1,004) 712
Balance at 31 March 323 1,327
The following balances were held at
Commercial banks and cash in hand 323 1,327
Balance at 31 March 323 1,327

The Trust Statement does not hold individual bank accounts and instead utilises the three bank accounts used by NICTS.

On a monthly basis fines and confiscation order receipts will be transferred from the NICTS to the DOJ who will pay the monies over to the NICF.

8. Current payables

  2011-12
£’000
Unaudited
2010-11
£’000
Amounts due to be paid to the PPS 23 27
Amounts due to be paid to Other Parties 1,313 1,311
  1,336 1,338

9. Balance on Consolidated Fund Account

  2011-12
£’000
Unaudited
2010-11
£’000
Balance on Consolidated Fund as at 1 April 12,842 11,797
Net revenue for the Consolidated Fund 9,234 11,404
less amount paid to the Consolidated Fund (10,188) (10,359)
  11,888 12,842

10. Related-party transactions

The NICTS is an executive Agency of the DOJ. The DOJ is regarded as a related party. During the year the NICTS has had various transactions in respect of this Trust Statement with the Department, and with other entities for which the DOJ is regarded as the parent Department, namely the PSNI and the NIPS.

In addition, the NICTS had various transactions in respect of this Trust Statement with other government departments including the PPS, DVA and DFP.

11. Events after the reporting period

Two judgments were given by the Divisional Court on 22 March 2013 in relation to five judicial review applications that had been lodged challenging the arrangements for imposing and enforcing fines and other monetary penalties which will potentially impact the collectability of debt. The Divisional Court found that a number of long established processes failed to comply fully with Human Rights Act provisions in a number of respects and these judgments will result in fundamental changes to how the court considers fine default and issues warrants.

Since the judgments, NICTS have recalled all outstanding warrants from PSNI and no further warrants have been issued, except for forthwith warrants. A decision on whether or not to take further enforcement action is ultimately a judicial decision and NICTS is currently working with the judiciary to agree a process to review the outstanding fines where warrants have been recalled taking into account the value and age of the debt. Progress on the work in relation to outstanding monetary penalties is being reported to the Fine Default and Warrant Enforcement Project Board.

Although the Divisional Court held that the warrants in the five cases before it were unlawfully issued, it did not make any determination in relation to liability. The issues around liability and if any damages are payable will be considered by the Queen’s Bench Division of the High Court in the autumn of 2013.

The judgments given following the Judicial Review applications fundamentally changes the way fine default and warrant issue is addressed by the courts. Currently, NICTS and DOJ officials are working closely with the Office of the Lord Chief Justice to develop procedures which reflect the processes outlined by the Divisional Court. NICTS have initiated a Judicial Review which may provide clarity on the authority of the District Judges (MC) with the current legislative framework, however, urgent legislative changes may be required. In relation to Crown Court fines, the Recorder of Belfast has agreed a process for the review and relisting of outstanding fines.

New procedures for fine default are being taken forward within the DOJ led FCEP with the NICTS Accounting Officer acting as Senior Responsible Owner for one project within this programme, the Fine Default and Warrant Enforcement project.

The FCEP has replaced the Fine Enforcement Project Board. The new Programme Board comprises senior officials from NICTS, PSNI, Probation Board for Northern Ireland (PBNI), NIPS and DOJ. This programme has responsibility for the oversight of three specific projects:

There were no other material events post the statement of Financial Position for the year ended 31 March 2012.

The Accounting Officer authorised these financial statements for issue on 4 October 2013.

1 Warrants are issued at a charge level and therefore there could be more than one warrant issued for each case.

Report of the Comptroller and Auditor General to the Assembly on the Northern Ireland Courts and Tribunals Service (NICTS) Trust Statement for the year ended 31 March 2012

Introduction

  1. The Northern Ireland Courts and Tribunals Service (NICTS)1 acts as an agent for the collection of financial penalties imposed by the Judiciary, the Police Service of Northern Ireland (PSNI) and the Driver and Vehicle Agency (DVA). Financial penalties include fixed penalty fines, court imposed monetary penalties and confiscation orders. The revenue collected is paid to the Northern Ireland Consolidated Fund after deduction of some allowable costs incurred in collecting the fines. Fines can be cleared in a number of ways including settlement in full, payment by instalments, clearance through an appeals process, serving a prison term, a decision of the court or by Supervised Activity Orders (SAOs) 2.
  2. This is the first time the NICTS Trust Statement3 has been produced by NICTS and audited by me. The previous reporting arrangements within NICTS’s financial statements are described in the Foreword to the accounts (page 9). These disclosures were audited as part of the NICTS audit. The main benefit of the new reporting requirements is that the accounts disclose the level of outstanding debts for the first time. I welcome this increased disclosure and accountability. Total debts were £19.3 million at 31 March 2012. This level of debt is extremely high when viewed against annual revenue income of some £13.8 million. The debt is broken down as follows:
  Debt
£m
Impairment4
£m
Revised Debt
£m
Outstanding Warrants 8.4 5.4 3.0
Confiscation Orders 6.4 0.6 5.8
Court Fines 2.7 0.5 2.2
Instalment Orders 1.8 0.0 1.8
Total 19.3 *6.5 12.8

*£6.5 million of the £19.3 million debt in the Trust Statement is judged to be impaired and which NICTS do not anticipate will be recovered.

  1. Similar accounts have been prepared since 2010-11 by HM Courts and Tribunals Service, an agency of the Ministry of Justice.

Purpose of the Report

  1. As the appointed statutory auditor, I am required to examine, certify and report on the NICTS Trust Statement. The purpose of this report is to explain the background to my qualification on the NICTS Trust Statement for the year ended 31 March 2012.

Background

  1. Producing the accounts in this format for the first time has proved challenging. I understand that data extractions and reconciliations needed to prepare the accounts were time consuming due to data being held in two separate systems, neither of which were designed for accounting purposes. For the purpose of the preparation of the accounts, a data extraction exercise and a reconciliation of the financial information in the two systems were needed which had not been prepared previously. The two systems are:
    • the PSNI’s Vehicle Procedures/Fixed Penalty Office database for the issue of fines by PSNI and DVA; and
    • the NICTS ICOS system which records the receipts collected and the court imposed fines and confiscation orders.
  2. The extraction and comparison of records in the two systems was an extensive exercise and highlighted discrepancies with records dating back to 1981. NI Prison Service (NIPS) records were also used in the reconciliation as a notification is sent from NIPS to NICTS when an offender has served a prison sentence and consequently the outstanding fines are then cleared5.
  3. NICTS does not have full access to the PSNI’s VP/FPO system and therefore relies on co-operation from PSNI to extract data to produce the Trust Statement. An assurance on the accuracy and completeness of the data provided by PSNI to NICTS was received from the PSNI Accounting Officer.
  4. Fixed penalties issued by PSNI and DVA that remain unpaid after 45 days are recorded as court imposed fines and transferred to the NICTS’s ICOS system. If these court imposed fines have not been cleared from ICOS after 28 days then a summons is sent to the debtor and the case is listed for a hearing to allow a warrant6 to issue. The ICOS system also records all financial penalties imposed in court including confiscation orders and provides management information on them.
  5. Fines passing their due date are passed to the NICTS Fine Collection Scheme Office7. If the follow up process is unsuccessful then a warrant will be issued by the court which is then forwarded to PSNI for enforcement. Responsibility for enforcing warrants under Article 92 of the Magistrates’ Courts (NI) Order 1981 currently falls to PSNI. At this point the fine can be cleared by either:
    • a cash payment to police officers serving the warrant;
    • serving a prison term; or
    • clearance by the court.
    Clearance by the court requires the outstanding warrant to be brought back to court by PSNI as unexecuted and the court can then cancel the warrant and clear the debt or have it re-issued. The court must have evidence of any attempt or attempts at executing the warrant.
  6. One of the main challenges in preparing these accounts was in identifying and valuing outstanding debt and, in particular, outstanding warrants of which there are a considerable number unpaid. Debts are valued net of impairments, that is, an estimate is made to reduce the amount outstanding to the amount that is likely to be collected. The level of impairment tends to increase the longer the debt is outstanding and the age depends on the ability or willingness to pay and the effectiveness of the collection process.
  7. NICTS has debtors of £19.3 million at 31 March 2012, including outstanding warrants of £8.4 million. Against warrants is an impairment of £5.4 million, the amount of debtors which NICTS anticipate will not be recovered as a result of a number of factors, primarily the inability or unwillingness of an offender to pay or weaknesses in the systems for collection.

Limitation in scope arising from insufficient evidence to satisfy myself that material fraud and error did not exist within receivables (debtors)

  1. I have limited the scope of my regularity opinion8 as I am concerned that there is insufficient evidence to substantiate that material fraud has not occurred during 2011-12 in the collection of cash on outstanding warrants through cash being collected but not lodged.
  2. This is the first time I have been able to audit the balance in outstanding warrants of £8.4 million, at 31 March 2012. My regularity opinion, however relates solely to the transactions in the year of account. Consequently, I do not consider that there is sufficient evidence over the regularity of the amount of debt that has been impaired in the period of £1.3 million, as I am unable to substantiate how much of this impairment could be due to fraud where cash is collected but not banked rather than issues with offenders settling their debts. If I had audited this balance in previous years, I would also have been unable to obtain sufficient evidence to substantiate that material fraud had not occurred in the cumulative balance to date of £5.4 million.
  3. My audit examination found material weaknesses in controls over outstanding warrants issued by the courts and the safe-keeping of cash received on their collection. At 31 March 2012, there were 26,571 cases had outstanding warrants with a value of £8.4 million (at 31 March 2011, 26,218 cases totalled £6.7 million) recorded as unpaid, and of these warrants £6.0 million related to those outstanding balances which were imposed between one and five years, and £1.9 million related to those outstanding balances which were imposed over five years ago.
  4. Due to the way the existing process is designed, PSNI can only collect payment for warrants in cash. PSNI hold the cash in a secure safe for a period before being lodged. Warrants collected are sent to NICTS and the ICOS system is updated once the matching receipt is received into NICTS’s bank account. PSNI carry the risk of cash receipts not being properly recorded or lodged. There is an inherent risk in any cash collection system, which is difficult to eliminate. My concern is that warrants could be collected but the cash and details of the fines not recorded. I have been notified of a suspected fraud in this area and I have been advised that an investigation is on-going.
  5. I have not identified sufficient controls to give me assurance over the completeness of the systems used to match warrants served against cash collected. My staff have not been able to obtain sufficient assurance that material fraud or error has not occurred. I recognise the inherent difficulty in controlling the requirement to collect warrants in cash.
  6. In conclusion, I have limited the scope of my opinion as I am concerned that the current system provides insufficient evidence to substantiate that material fraud has not occurred in the collection of cash on outstanding warrants. I do not consider that there is sufficient evidence over the regularity of the amount of debt that has been impaired in the period of £1.3 million, as I am unable to substantiate how much of this impairment is as a result of fraud rather than being unrecoverable due to an inability or unwillingness to pay. While the requirement to collect warrant debt in cash means that it is difficult for PSNI to provide me with sufficient evidence that all cash collected has been banked, I would recommend that the current control environment is reviewed in light of the risk of potential fraud.

Missing warrants

  1. The position on outstanding warrants (see paragraph 15) was reviewed again at 31 August 2012. At this time £6.4 million of warrants were outstanding relating to 34,226 in number, owed by 20,807 offenders. Of the outstanding warrants, 6,682 warrants with a value of £1.2 million were identified by PSNI as missing paper warrants.
  2. Outstanding warrants are made up of unserved warrants and missing warrants. Unserved warrants are those where a warrant has been issued but has either not been actioned by PSNI or where PSNI officers have not been able to “serve” the warrant on the offender, often after several attempts. The DOJ told me that the serving of warrants needs to be considered in conjunction with other operational requirements and priorities of the PSNI on an on-going basis. The DOJ noted that it will take forward with PSNI any matters relevant to this issue. As noted in paragraph 10 above, outstanding warrants cannot be cleared without being put before a judge. A judge will decide whether or not to pursue the offender further after consideration of evidence of attempt(s) at executing the warrant.
  3. Missing warrants totalling £1.2 million are in the main older paper warrants which I understand cannot be reissued. These mainly date from 6 April 1981 to 21 October 2009. There are no agreed protocols in place with PSNI regarding the enforcement of warrants. For example, I would normally expect to see agreed monthly targets on serving of warrants, and a prioritisation protocol that responds to the age of the warrant, the number of warrants outstanding against a single offender, and the monetary value of warrants.
  4. Although not a matter requiring me to qualify my opinion on the Trust Statement due to the amount having occurred in prior years, I am concerned there is insufficient evidence to support the value of £1.2 million attributed to the significant number of paper warrants missing.

Judicial Review Challenges to Imprisonment as a result of Warrant Default

  1. There were recently five separate judicial review challenges relating to arrangements for imposing and enforcing fines and other monetary penalties in Northern Ireland. The main grounds of challenge related to:
    • whether a person should be sentenced to imprisonment for an unpaid monetary fine without first appearing in court before a judge;
    • the application of discretion from a judge on the length of sentence to be served for a fine default;
    • the pronouncement of the fine in open court; and
    • the length of time appropriate to execute a warrant before it is returned to court for further judicial consideration.
  2. Judgments were delivered on 22 March 2013 and a further hearing on 3 May decided that the five cases will be put before the Queen’s Bench Division. The judgments delivered in March found the current processes to be flawed in the following respects:
    • the court should not consider how to deal with default at the point of sentence but should only do so after the default has occurred;
    • the defendant should be given notice of the date of the ‘default hearing’ and should be given the opportunity to attend and make representations;
    • when using the imprisonment option, the court must correctly apply its discretion to determine the appropriate period and should not automatically select the band maximum. It must also articulate this period in court for the sentence to be valid; and
    • where a court issues a fine default it should specify a period of time (of up to 12 months) within which the warrant must be executed. If this period expires the police should return the warrant to the court to allow a Judge to determine if the warrant should be reissued or cancelled.
  3. There are a number of implications from this judgment, including:
    • A new ‘default hearing’ will have significant resource implications for the courts in terms of administration and judicial time. It also has implications for legal aid costs in representing persons being heard in court.
    • Consideration must now be given on how to deal with monetary penalties currently outstanding. At the time of the judgment (March 2013) there were 36,000 warrants with a value of £7.6m and 22,000 monetary penalties with a value of £10.5m that had not yet reached the default/warrant stage. The validity of these fines is not disputed however enforcement action, if needed, cannot be taken without the cases being taken before a court.
    • There is also an implication that some sentences applied in lieu of fine default could now be unlawful. As a result, damages may be due if it can be demonstrated that the process was flawed.
  4. It is currently anticipated that a Queen’s Bench Judge will consider these cases and conclude on these issues by the autumn of 2013.

The Enforcement of Fines

  1. The Criminal Justice Inspector of the Criminal Justice Inspection Northern Ireland (CJI) reviewed the enforcement of fines in March 2010 and made ten recommendations. These included the need to reduce the number of warrants issued, the need for PSNI to continue to deal with persistent defaulters and a new stricter regime for the payment of fines which would maximise compliance and reduce recourse regarding police enforcement and imprisonment. The original report noted that;
“There is some confusion in the management of the enforcement process. The different agencies do not keep their records in a compatible way, their computers do not talk to one another and there are paper receipts swirling around the system, which often go astray”.
  1. A follow up Review was carried out in July 2012 and concluded that;
“The original inspection report highlighted the need to have a robust and effective enforcement process in place to deal with people who default on the terms of a court order. It also focused attention on the current system which was an inappropriate and expensive use of police and prison resources, and that there was a need for substantial changes to the enforcement process, and a stricter regime for the payment of fines to maximise compliance and minimise recourse to police enforcement and imprisonment.
So, despite the work which has been undertaken and a number of the recommendations being achieved or partially achieved, the statistics relating to the number of warrants and the number of fine defaulters being committed to prison remains significant.”
“The current situation remains inappropriate and ‘unsustainable’. Work needs to be urgently taken forward to introduce the stricter regime, as envisaged in the original inspection report, which will produce a system of enforcement which addresses the current issues of public confidence in the justice system, the social and financial cost of short-term sentences for fine defaulters, and the operational impact on the NICTS, the PSNI and the Northern Ireland prisons.”
  1. The NICTS Fine Collection Scheme9 has been successful in improving the collection of fines, however the number of warrants requiring to be issued remains significant and this has cost implications in terms of police involvement in their enforcement and also in prison costs for those who will not or cannot pay their fine.
  2. There are no formal targets set for the enforcement of warrants in terms of time or value collected, nor is there a formal Service Level Agreement in place between NICTS and PSNI to monitor warrant enforcement. PSNI’s procedures for collecting warrants require two officers to visit the recipient of the warrant, and on some occasions more officers are required. This is very resource intensive for PSNI especially at a time when police resources are already stretched. The CJI March 2010 report noted that:
“... this approach to enforcement is widely seen as outdated. The PSNI regard it as a poor use of a police officer’s time to be collecting small fines.”
  1. The Department of Justice is seeking to reform the system that deals with fine defaulters. In February 2012, the Department announced that it intended to:
    • develop a civilianised enforcement service based on a “Fines Officer” model largely removing police from fines enforcement;
    • provide Fines Officers with statutory powers under court authority to manage and collect fines;
    • expand the ways in which people can pay and manage their fines including taking monies directly from income (from both earnings and benefits);
    • increased opportunities for community-based penalties instead of imprisonment including:
      - expanding the use of Supervised Activity Order; and
      - providing the Supervised Activity Order as an immediate option for the court as opposed to only being available when default occurs.
  2. The Department of Justice has established a Programme, sponsored by the Criminal Justice Board, to take forward fine enforcement reforms. The Fine Collection and Enforcement Programme Board (the Board) membership includes representatives from DOJ, NICTS, PSNI, NIPS and PBNI. The Board has developed a governance and delivery framework to connect three main projects:
    • Fine Default and Warrant Enforcement Project responsible for tackling the outstanding warrants position and developing new arrangements for default in consultation with the judiciary;
    • Fine Collection and Enforcement Service Project responsible for establishing a new Civilian Enforcement Service similar to that operating in England, Wales and Scotland; and
    • Community Based Alternative Activity Project responsible for rolling out Supervised Activity Orders as an alternative to imprisonment.
  3. This is a challenging work programme and its success depends upon close co-operation and harmonised working between several justice partners. I welcome the work the Board has set out to achieve and the joint working initiatives proposed.
  4. DOJ told me that the Fine Collection and Enforcement Programme consists of three interrelated projects and is being sponsored by the Criminal Justice Board. The Programme has been designed to maintain confidence in the use of fines as a credible deterrent to crime by substantially improving collection and enforcement arrangements for unpaid criminal court imposed fines, bringing them to a comparable standard to those already operated within jurisdictions in the remainder of the United Kingdom. Subject to availability of funding and the introduction of new legislative powers, the Programme is designed to introduce a new Fines Collection and Enforcement Service and implement Supervised Activity Orders as an alternative to prison by April 2015. The Programme Vision and Mandate were approved by the Criminal Justice Board in May 2013 and the first project - to tackle current fine default and warrant enforcement - was initiated in June 2013.
  5. I am concerned that funds of over £8 million are at risk of not being collected and there is a loss to the Northern Ireland exchequer as a result. The cash based systems of warrant collection are out of date and there are insufficient prevention and detection controls. The fallout from the recent judicial reviews will mean a further loss to the public purse both in terms of fines collectable and the potential compensation costs for unlawful imprisonment. Along with the Criminal Justice Inspector, I too am concerned that there is additional cost to the Exchequer from an inefficient process that ties up precious justice resources in PSNI pursuing warrants and in NIPS housing offenders that do not pay.
  6. I welcome the promotion of joint working between partners within the Department of Justice family, and I look forward to DOJ implementing the Criminal Justice Inspection’s recommendations in full over the next few years.
  7. I expect that the issues I have outlined will continue in these financial statements until a new regime is operated and the outstanding warrant position resolved.

KJ Donnelly
Comptroller and Auditor General
Northern Ireland Audit Office
106 University Street
Belfast
BT7 1EU

4 October 2013

1 The NICTS is an executive agency of the Department of Justice (DOJ) and its accounts are also consolidated into the Department of Justice’s Resource Accounts.

2 The use of Supervised Activity Orders (SAOs) has been piloted in Newry and Lisburn Court districts and is currently being evaluated. Under the proposed approach, SAOs give the courts the power to impose a community based alternative for non payment of a fine rather than a prison sentence.

3 The NICTS Trust Statement is prepared and audited under section 11 of the Government Resources and Accounts Act (Northern Ireland) 2001.

4 Impairment is a technical term defined by IFRS 36 and IFRS 39. In this case the impairment is the difference between the amount of fines or penalties imposed and amount of fines or penalties likely to be collected.

5 Some £ 1.6 million of debts were cleared in this way in 2011-12.

6 A warrant is a legal instrument issued by a court authorising an officer to carry a judgment into action.

7 The Fines Collection Scheme Office was established in May 2009 by NICTS and recommendations were made in the CJINI report to strengthen the effectiveness of the Scheme which have been implemented.

8 The legislation requires the C&AG to provide an explicit and separate opinion on whether the expenditure and income have been applied in accordance with the Assembly’s intentions and governing authorities.

9 The Fine Collection Scheme was introduced in May 2009 in an effort to increase the amount of fine monies received and to reduce the number of fine warrants issued to the PSNI for execution. See page 16 of the Foreword to the Trust Statement for performance information.

Northern Ireland Courts and Tribunals Service
Laganside House
23-27 Oxford Street
Belfast
BT1 3LA

www.courtsni.gov.uk