The committee noted that the MoJ’s own accounts were delivered late for 2010-11 and there were “significant problems” with two of its “arm’s length bodies”. Both the Legal Services Commission and HM Courts Service’s Trust Statement had their accounts qualified at audit.

It found the MoJ tended to under-recover costs in the family courts and over-recover probate fees, and did not have a proper basis for its current fee structure in the civil courts. Its impact assessment on the proposed legal aid reforms did not cover the full impact of the cuts. There had been a big increase in the amount owed to the government under confiscation orders and the MoJ admitted that 60% of the £1.25bn owed may never be recovered.

The MoJ needs to make £2bn savings by the year 2014-15.

Committee chair, Margaret Hodge, said financial management had improved since the last report but that the MoJ’s inability to file accurate accounts on time was “unacceptable and undermines public confidence in the ministry’s stewardship of public funds”.

She added: “Given the workload pressures it is under, including those largely outside its control such as increases in the prison population, it has its work cut out. Without full information on its costs, there is a risk that savings will be made through unnecessary cuts to frontline services essential to the poorest in the community, rather than through genuine improvements in the ministry’s efficiency.”

An MoJ spokesperson said: “The government has significantly improved the way fines and confiscation orders are collected. We have increased deductions from benefits, introduced asset seizures and begun programmes of targeted blitzes. Already we’re seeing results, with £282m fines collected in the last financial year. We are also taking steps to recover the full costs of court services by introducing simpler fees and, where necessary, changing court costs.”