Accounting fiasco costs council Pounds 1/2m

Problems with a new accounting system cost the Council for the Central Laboratory of the Research Councils almost Pounds 500,000, according to a National Audit Office report out this week.

More than 500 overpayments were made to staff and suppliers - some of which cannot be recovered. At one time the council faced a cash discrepancy of Pounds 1 million.

Although the NAO has passed the CCLRC's accounts for 1997-98, the report points to continuing inadequacies in the new system and weaknesses in the council's contract planning and project management procedures.

The CCLRC introduced a new financial accounting and management information system in 1997. It estimates that problems on the initial contract, valued at Pounds 544,000, cost it Pounds 458,000. The council is criticised for its decision not to run the old and new accounts systems in parallel initially, as is accepted practice. The NAO calls the decision a "high-risk approach".

The report says the council encountered problems from the outset. Due to be operational by April 1 1997, the system started late, and input errors and teething troubles resulted in an increasing backlog in payments to suppliers and expense claims. Under pressure from creditors, the council paid a number of bills manually, resulting in a "significant number of duplicate and erroneous payments", with 243 suppliers being overpaid by some Pounds 178,000. The NAO says this was caused by the council's failure to put in place adequate controls from the outset, although most overpayments have now been recovered.

The NAO report identifies overpayments to staff and visitors to the CCLRC in over 290 instances, totalling Pounds 91,000. Of this some Pounds ,000 remained outstanding in December 1998, of which half went to council staff and half to academic users of the council's facilities. The report says that although the council expects to recover all overpayments to staff, it does not expect to recover all those to academic users "as a minority of these are untraceable and the costs of continuing to seek recovery from some others may exceed the amounts involved".

Almost two years after introduction, the NAO report says, there are continuing inadequacies in the system, including non-year 2000 compliance for the software.

The House of Commons Public Accounts Committee will review the report on March 15, when it will hear from the CCLRC.