Legal body missing£98m fraud rating

Auditor General Kieran Donnelly also found “insufficient evidence to support the estimation technique used to calculate outstanding liabilities at the year-end for unbilled services provided by legal practitioners.”

Huge amounts of money have been paid out to local law firms over the past five years to represent poor defendants.

In the past five years, for example, £14m in legal aid payments was forked out to seven firms across Londonderry and Strabane.

Mr Donnelly made his comments regarding the lack of estimates on the likely level of fraud generally across Northern Ireland as he once again qualified the Northern Ireland Legal Services Commission’s (NILSC) financial statements for 2011-12.

The body’s accounts have been qualified every year since the Commission’s formation in 2003.

Mr Donnelly stated that: “I am pleased NILSC has been able to produce more timely financial statements for 2011-12. I reported on the previous year’s accounts only in March of this year.

“My qualifications on legal aid expenditure continue again in 2011-12 as they have since the formation of the Commission in 2003. My concerns relate to two areas.

“Firstly, the controls in place to prevent and detect fraud do not provide me with the assurance I need to establish the level of fraud or error. NILSC has no estimate of the likely level of fraud or error relating to legal aid expenditure of £98m in 2011-12.

“Secondly, there is insufficient evidence to support the estimation technique used to calculate outstanding liabilities at the year-end for unbilled services provided by legal practitioners.”

He strongly recommended improvements be made to controls over civil legal aid.

And although he welcomed actions being taken by NILSC to date, particularly in relation to criminal legal aid reforms he said: “NILSC and its sponsor, the Department of Justice, acknowledge that it will take some time to put sufficient mechanisms in place to provide me with the assurance I need to provide an unqualified report on these accounts.”

The accounts of the NILSC, which record the payment and use of legal aid funds (‘the Grant Account’) have been qualified every year since it was established due to a lack of sufficient audit evidence on the level of potential fraud and the amount of legal aid liabilities.

Mr Donnelly said it is important to recognise that the nature of the legal aid scheme, in making payments to legal advisors for services which are directly provided to Legal Aid claimants, creates difficulties for NILSC in checking the accuracy of claims.

In addition, means tested Legal Aid also carries a risk that Legal Aid is granted to individuals who are not eligible if income details are misstated on initial application, or if changes in financial circumstances that arise during the case are not reported by the claimant.

Statute requires NILSC to depend significantly upon third parties to verify the eligibility of Legal Aid applications.