The Ministry of Justice has been told by the Public Accounts Committee that it must improve its financial management as it prepares to make massive cuts to its budget.
In a report on the department's financial management, the committee said that the Ministry of Justice lacked a "consistent approach" to overseeing its finances and unless matters improve there is a risk that it "will not achieve best value for money and will not understand properly the impact of cost reductions on frontline services" when it begins making cuts.
Newly elected committee chair Margaret Hodge MP said: "If the Ministry of Justice is to minimise the impact on its frontline services of its tough spending settlement, it must fully understand the cost and value of those services. But the ministry and its arm's length bodies currently lack that detailed information.
"It is simply not acceptable that, after two years' work, the ministry still does not fully understand the cost of its staff activities in its largest executive agency. This is indicative of the poor state of financial management in this ministry."
She added: "We do not share the view of the ministry that there is little it can do to influence the behaviour of its arm's length bodies. Improvement is badly needed here, as it is in the area of fee recovery and fines collection."
The chancellor George Osborne announced in the government's spending review in October that the Ministry of Justice's budget is to be cut by 23% from around £9.5 billion to £7 billion over four years.
In November Justice Secretary Kenneth Clarke revealed that family law could be amongst the areas of law that will suffer the most after he announced that legal aid funding for family private law cases will be cut.
Responding to the committee's report, a spokesman for the department said: "The Ministry of Justice notes the criticisms in the PAC report, which is based on data from 2008 and 2009.
"Since then, as the report states, significant progress has been made in the way that the department manages its finances. We will carefully study the report's findings and formally respond to Parliament in detail on its recommendations."