Officials pay supplier invoices – then raise purchase orders

This morning the National Audit Office has published a report that says the Equality and Human Rights Commission, in up to 35% of cases, raises its purchase order after it gets the invoice from suppliers.

It’s unlikely that any private sector company could survive if it didn’t know what it owed, didn’t know what it had bought, and had to wait for an invoice from the supplier to raise the purchase order.

Amyas Morse, the head of the NAO, says in his report today:

“While I welcome the considerable improvements that the Commission has made in its controls over procurement, there are still areas where it needs to make improvements. In particular, up to 35% of the Commission’s purchase orders are still not raised until after the Commission has received an invoice for goods and services.

“This means that Commission staff are committing funds without going through proper processes and are avoiding some of the checking processes. Consequently the Commission does not have an accurate understanding of its committed expenditure at any one point in time.

“The Chief Executive has made it clear that he takes noncompliance with these processes seriously such that in cases of repeated non-compliance delegations will be withdrawn.”

A common practice? 

Is this absence of proper accounting worryingly common in central government and its agencies, particularly on IT contracts?

Auditors told us that in the case of NPfIT contracts they found some invoices that were paid when they came in, awaiting reconciliation with any past paperwork.

This, perhaps, ties in with the experiences of Conservative MP Richard Bacon, a member of Public Accounts Committee who, when asking civil servants for a breakdown of IT spending has, in the past, been referred to the department’s IT supplier.

On the C-Nomis IT project for prisons, the National Offender Management Service paid £161m without keeping any record of what the payments were for.

The Cabinet Office wants to cut the £17bn or so spent every year on public sector IT. But before departments, agencies and other organisations cut their costs they’ll need to know what those costs are. Maybe they should ask their major IT suppliers? We wonder if the domination of GovIT by a small number of suppliers has got to the stage where it’s the suppliers managing the civil service IT budgets. If that’s the case it is not the fault of suppliers.

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One response to “Officials pay supplier invoices – then raise purchase orders

  1. If you want to see the pantomime of “Your money and how they spend it“, you should watch BBC2 next Wednesday at 9 p.m. Meanwhile, for those who can stomach the truth, Tony Collins, Richard Bacon and Amyas Morse seem to be doing a pretty good job right here.

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