NAO on ARA

The conspiracy theories surrounding the announcement on the future of the Assets Recovery Agency seem to have died away.. meanwhile the Irish Examiner points to a National Audit Office report[pdf file] released today, press notice here, which helps provide a more detailed background to the ARA’s operational difficulties.From the report’s Executive summary – also available as a pdf file

Overall conclusions on value for money

3. The Agency was created to deal with a new and often complex area of activity but no feasibility study was carried out to assess its likely performance or devise appropriate targets. Since it became operational, it has devoted much of its efforts to recruiting staff, developing systems, building relationships with referring agencies and testing the law on civil recovery and taxation. During this period, the Agency has established important case law in respect of the Human Rights Act 1998, which should deter further challenges to its powers of civil recovery. In addition, it has been successful in freezing assets and issuing tax assessments and has effectively delivered training courses, for which it has received positive feedback from attendees, although it has not effectively monitored the Continuing Professional Development of Financial Investigators. In respect of the recovery of assets, the Agency has collected £23 million against cumulative costs of £65 million.

4. Problems in recovering assets have been due to poor quality referrals – particularly in the early days; defence representations, including a few cases relating to the Human Rights Act 1998; and weaknesses in the Agency’s internal processes. The Agency needs to address these weaknesses, both in its assets recovery role and in its monitoring of Financial Investigators’ Continuing Professional Development, if it is to achieve value for money:

Despite efforts by the Agency to encourage bodies to refer cases, four police forces and most local authorities and Trading Standards Offices have yet to refer cases to the Agency. Relationships with referring bodies are largely based on personal contact and there is some confusion about the role of the Agency among the Councils and Trading Standards Offices that have not referred cases.

The Agency’s case management information is poor. It does not have a single central database of cases and staff refer to different databases that hold contradictory and incomplete information. We had great difficulty in compiling a comprehensive list of cases and tracking their value and progress.

Since it was set up, the Agency has experienced a high turnover of staff. In the year to the end of September 2006 almost a quarter of the Agency’s staff had left, including almost half the legal staff, and over 40 per cent of training and development personnel.

Staff do not record their time and therefore the Agency cannot measure the resources deployed on each case. There is no effective case management and no consistent use of targets and deadlines to incentivise staff to progress cases.

In some cases the Courts appoint receivers to manage restrained assets. Receivers’ fees, which are paid by the Agency, are expected to total £16.4 million by the end of 2006-07. In twelve of the seventy nine cases managed by receivers, the value of the fees is expected to exceed the assets managed by the end of March 2008.

In a significant proportion of cases, the training provided, and in the case of the police, funded by the Agency is not fully utilised by Financial Investigators’ employing organisations; at least 30 per cent of Financial Investigators retired or moved on from financial investigation shortly after completing their training. Although the Agency requires trained Financial Investigators to complete formal Continuing Professional Development activities, it is not effectively monitoring their performance as required under the Proceeds of Crime Act 2002.

The Agency’s revised expectation that it will break even by 2009-10 cannot be supported by financial modelling given the relatively short period of operation and the irregular flow of receipts, which preclude the modelling of a reliable trend. On current performance, therefore, there is a risk that the Agency will not achieve self-financing by that date.

And, while noting the annoucement by the Home Office, the report goes on to make some recommendations

Recommendations

On 11 January 2007 the Home Secretary announced that the asset recovery functions of the Assets Recovery Agency would, subject to parliamentary approval, transfer to the Serious Organised Crime Agency, and the training functions would transfer to the new National Policing Improvement Agency, with effect from April 2008 at the earliest. Our recommendations will apply equally to the new bodies responsible for the Agency’s current functions.

a. All the Agency’s Memoranda of Understanding with referral partners should name a single point of contact within both the Agency and the referral partner. This would help to develop and improve relationship management with referral partners, including providing a framework to allow formal feedback to improve the quality of referrals.

b. The Agency should, as a matter of urgency, develop a Case Management System that contains all relevant management information and includes a time recording system to monitor the use of staff resources. Once this is established, the Agency should use the data collected to help inform case selection and prioritisation and to review its performance measurement regime so that it incorporates targets that are measurable, challenging and achievable, such as reducing the cost and time per case. This will also help with a smooth transfer of case work to the Serious Organised Crime Agency.

c. The Agency should develop its formal management review of cases to incorporate a timetable for each stage in the progression of a case, to which Senior Financial Investigators, Financial Investigators and lawyers are held accountable.

d. The Agency should compare regularly the standard rates charged by receivers to identify those that provide the best value for money and monitor the hours billed to determine the reasonableness of the claim.

e. The Agency should provide an incentive to police forces, to send only those individuals on the Agency’s training courses that are likely to continue to use their financial investigation skills, by putting into practice its intention to extend charging for courses to cover police forces, as well as other sponsoring bodies.

f. In order to fulfil its statutory role of monitoring the accreditation of Financial Investigators, the Agency should update its database, follow up individuals who have not complied with professional development requirements and, if necessary, remove their accreditation. It should also include targets for monitoring accreditation in its performance measurement regime.

The full report contains some other interesting data.. [pdf file]

The PSNI, uniquely from what I can gather, had established formal procedures with a single point of contact for all liaison with the Agency.

The Police Service of Northern Ireland has a formal arrangement with the Agency for case referral

The Police Service of Northern Ireland (PSNI) refers cases to, and liaises with, the Agency through a single point of contact, a small team in the Economic Crime Bureau and channels referrals to the Agency from District Command Units. The single point quality assures all referrals, carries out additional enquiries or intelligence searches, and acts a firewall for the release of intelligence to the Agency. There are procedures in place to ensure PSNI informs the Agency of any additional intelligence or information relating to
ongoing cases. PSNI and the Agency have also carried out joint training for officers and Police staff. PSNI liaison goes through the Agency’s Intelligence Cell which strengthens the firewall for intelligence before it is released to the Agency’s Financial Investigators, and ensures all requests for information from the Agency are managed and signed off when completed.

And was one of the most enthusiastic partners with the ARA.. despite the apparent reluctance noted elsewhere.

2.2 Forty one police forces referred over 200 cases, accounting for 30 per cent of all referrals and twenty two per cent of assets recovered by the Agency, while the
Police Service of Northern Ireland was responsible for 14 per cent of the Agency’s referrals and thirteen per cent of assets recovered. HM Revenue & Customs (HMRC) accounted for some 16 per cent of referrals but their cases have resulted in some sixty per cent of the Agency’s recoveries.

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