The Final Account “settlement”: A Shortcut to getting public projects done, can now get you done too!

Lets shake on it, and the team will complete the paperwork!

Do you recognise this scenario; The finish line of a long, bruising public project is finally in sight. The ribbon has been cut, the service is running, but one final, monstrous hurdle remains: the final account. It’s a tangled mess of claims and counter-claims, variations that were never quite documented properly, and a mountain of paperwork that threatens to keep the lawyers fed for another year. The pressure from all sides is immense. The contractor wants its money, the client wants to close the books, and everyone, frankly, just wants to move on. And then, a tempting solution emerges from the haze. A quiet chat, a 'commercial' discussion. A number is agreed upon—one that both sides can live with. It’s not quite what the contract says, but it feels fair. The only problem is the paper trail.

To make this pragmatic deal a reality, the facts need a little… massaging. Claims are re-characterised, costs are re-allocated, and a narrative is carefully constructed to make the payment look like a perfectly normal, contractually compliant settlement. It’s an exercise in creative accounting, designed to achieve a final account in an expeditious timescale. What’s the harm in a bit of pragmatism to get the job done?

As it turns out, a great deal. This tempting shortcut, this final account fudge, isn't a clever solution. It’s a trap, baited with expediency, that can lead to personal, organisational, and even criminal disaster.

The Illusion of Compliance

Let’s be clear what I'm talking about. This isn’t about outright fraud in the traditional sense. It’s more subtle. It’s about taking a settlement figure agreed in a "back room" by senior representatives and then working backwards, reverse-engineering a justification that fits neatly into the contract’s payment clauses. It’s about creating the appearance of compliance.

The appeal is obvious. It avoids a protracted and costly formal dispute. It allows Project Managers to report a "successful" closure and move resources to the next pressing issue. The Contractor gets paid, the client gets closure. On the surface, everyone wins. But beneath this carefully constructed façade, the foundations are rotten.

The fundamental problem is that public money isn't private money. It comes with a non-negotiable set of duties, beautifully articulated in HM Treasury’s ‘Managing Public Money’ guidance (HM Treasury, 2023). Every pound spent must satisfy the tests of regularity, propriety, and value for money. Our creative settlement fails on all three counts. It isn't regular, because it doesn't flow from the actual terms of the contract. It isn't proper, because it relies on a manufactured and misleading paper trail, a clear breach of the principles of openness and honesty that underpin public life (House of Commons Library, 2022). And you cannot possibly demonstrate value for money when the justification for the payment has been fabricated after the fact.

This isn't just an abstract governance issue. The responsibility for upholding these standards rests personally on the shoulders of one individual: the Accounting Officer (Institute for Government, 2014). It is their signature on the accounts, and their neck on the line when the Public Accounts Committee (PAC) comes calling (UK Parliament, 2022). Approving a massaged settlement isn't a calculated risk; it's a knowing breach of their personal duty to Parliament.

The New Game-Changer: A Criminal Time Bomb

If the threat of a grilling by the PAC wasn't enough, the landscape has recently become far more treacherous. The Economic Crime and Corporate Transparency Act (ECCTA) 2023 has introduced a new corporate offence of ‘failure to prevent fraud’ (Macfarlanes LLP, 2024). And this is where the final account "settlement" goes from being an administrative headache to a potential corporate crime.

The offence works like this: if a person ‘associated’ with the client organisation (which unequivocally includes any one or all of the Client team and Service Suppliers, the Project Manager, and the Contractor) commits a fraud offence intending to benefit the client organisation, and they can’t prove they had ‘reasonable procedures’ to prevent it, the organisation itself is criminally liable for an unlimited fine (HM Government, 2024).

Let’s connect the dots. The contractor submits the massaged final account application. That application, containing creatively re-characterised costs, could easily be seen by a prosecutor as a ‘base fraud’, such as false accounting (The Law Society, 2025). The contractor is clearly an ‘associated person’. The final, crucial element is whether this was done with the intent to benefit the public body.

And here’s the rub. The "benefit" isn't the money paid out. A prosecutor would argue the benefit is the very thing that made the settlement so tempting in the first place: the avoidance of a messy dispute, the burying of project failures, the protection of reputations, and the achievement of a quick, quiet closure. The fact that the settlement was engineered to look like something it wasn't is the strongest possible evidence of an intent to conceal, and that concealment is the illicit benefit (Sidley Austin LLP, 2025).

The only defence is to prove the client had ‘reasonable procedures’ in place (Hogan Lovells, 2024). But the act of massaging the facts is, by definition, a deliberate decision to circumvent those procedures. The client is actively dismantling its only legal defence at the very moment it is creating the criminal risk.

The Inevitable Reckoning

Sooner or later, the knock on the door will come. Not from the police, initially, but from the National Audit Office (NAO). Their job is to scrutinise public spending on behalf of Parliament, and they are experts at spotting irregularities (National Audit Office, 2025). An unusual, high-value payment at the end of a contract, supported by a suspiciously neat paper trail, will stand out like a sore thumb.

The result is predictable: a qualified audit opinion and a public report to Parliament detailing the irregular payment. This report is the starting gun for a full-blown inquiry by the Public Accounts Committee (National Audit Office, 2025). The Accounting Officer will be summoned to a televised hearing to explain why they authorised a payment based on a fiction. There is no hiding place. And action under the ECCTA 2023 is the next logical outcome - unlimited fine and catastrophic reputational damage - for the client, the professionals and the contractor - in it together!!!

The irony is that the desire for an expeditious outcome leads to a far more painful and prolonged process of investigation and public censure. The proper routes—a lawfully documented contract modification under the Procurement Act (Browne Jacobson, 2024) or, if necessary, formal dispute resolution—may seem slower, but they are transparent, defensible, and auditable. They protect the organisation and the individuals within it.

The final account settlement is a fool’s bargain. It trades short-term convenience for long-term, catastrophic risk. In the world of public money, the only thing a creative paper trail will get you is creatively prosecuted. The desire to get the project ‘done’ can very quickly get you, and your organisation, done for.

References

Browne Jacobson. (2024). Modification of contracts existing before the Procurement Act 2023. [Online] Available at: https://www.brownejacobson.com/insights/modification-of-contracts-existing-before-the-go-live-date-of-the-procurement-act-2023 (Accessed: 20 September 2025).

HM Government. (2024). Failure to Prevent Fraud Guidance. [Online] Available at: https://assets.publishing.service.gov.uk/media/67f8ef1845705eb1a1513f35/Failure+to+Prevent+Fraud+Guidance+-+English+Language+v1.6.pdf (Accessed: 20 September 2025).

HM Treasury. (2023). Managing Public Money. [Online] Available at: https://www.gov.uk/government/publications/managing-public-money (Accessed: 20 September 2025).

Hogan Lovells. (2024). The clock is ticking: UK Government publishes guidance on new Failure to Prevent Fraud offence. [Online] Available at: https://www.hoganlovells.com/en/publications/the-clock-is-ticking-uk-government-publishes-guidance-on-new-failure-to-prevent-fraud-offence (Accessed: 20 September 2025).

House of Commons Library. (2022). The Seven Principles of Public Life. [Online] Available at: https://commonslibrary.parliament.uk/research-briefings/cdp-2022-0156/ (Accessed: 20 September 2025).

Institute for Government. (2014). Following the pound: accounting officers in central government. [Online] Available at: https://www.instituteforgovernment.org.uk/sites/default/files/publications/Following%20the%20pound%20-%20accounting%20officers%20in%20central%20government.pdf (Accessed: 20 September 2025).

Macfarlanes LLP. (2024). A new chapter: The UK’s Economic Crime and Corporate Transparency Act 2023. [Online] Available at: https://www.macfarlanes.com/what-we-think/102eli5/a-new-chapter-the-uk-s-economic-crime-and-corporate-transparency-act-2023-102jnrq/ (Accessed: 20 September 2025).

National Audit Office. (2025). About us. [Online] Available at: https://www.nao.org.uk/about-us/ (Accessed: 20 September 2025).

Sidley Austin LLP. (2025). The New UK Corporate Offence of Failure to Prevent Fraud. [Online] Available at: https://www.sidley.com/en/insights/newsupdates/2025/01/the-new-uk-corporate-offence-of-failure-to-prevent-fraud (Accessed: 20 September 2025).

The Law Society. (2025). Economic Crime and Corporate Transparency Act. [Online] Available at: https://www.lawsociety.org.uk/topics/anti-money-laundering/economic-crime-and-corporate-transparency-act (Accessed: 20 September 2025).

UK Parliament. (2022). Improving the Accounting Officer Assessment process. [Online] Available at: https://committees.parliament.uk/work/6764/improving-the-accounting-officer-assessment-process/ (Accessed: 20 September 2025).