Post Office Horizon accounting and alleged thefts

Over the past few years a recurring theme in my cases are allegations of theft, fraud or false accounting made against Postmasters or Post Office employees.  Such an allegation usually arises as a result of discrepancies found (or confirmed) on visits of internal auditors to sub-Post Offices.

In order to obtain a conviction for theft, fraud or false accounting the prosecution have to prove (or the defendant has to admit) dishonesty.  Often the defendant will say that discrepancies have arisen through innocent errors or as a result of a problem of some sort with the accounting procedures or software.

The Post Office uses a software suite known as 'Horizon' for its accounting.  Post Office counters are equipped with touch-screen terminals running the software.  The managing director of Post Office Ltd, Alan Cook, recently stated on public record that the Horizon accounting system "has proved to be very robust", is "subject to rigorous testing", and that "there has never been any evidence found that shows that the Horizon system has caused accounting errors".

That having been said, the terminology used by Horizon, including such expressions as "rem-in" and "rem-out", may be unfamiliar to many accountants who have postmasters among their clients.  It could be said that the design and layout of the Horizon input touch-screens is unhelpful and that an innocent error (made perhaps as a result of selecting the wrong screen-menu item) may not be immediately spotted and corrected by counter staff.

Perhaps surprisingly, the Post Office requires that sub-postmasters 'balance' only at weekly, rather than daily, intervals.  The Post Office accounting week ends on Wednesday and it is at the close of business each Wednesday that the 'balance' is performed.  This involves reconciling cash and stock, including stock of stamps, postal orders, etc., etc. Completing the 'balance' may be quite a task because of the range of stock held reflecting the different types of Post Office transactions.

Because the 'balance' is only weekly there have been cases of enterprising fraudsters who have managed to conceal thefts over a long period by entering false transactions straddling the end of the accounting week.  So postmasters need to be alert to the unusually 'helpful' member of staff who never, ever, misses work on a 'balance' day!

Particular difficulties may arise in relation to the sale of National Lottery tickets and, especially, scratchcards.  These arise in two areas. Firstly the procedures for receiving scratchcards into stock and for selling them involve some complex transactions both on the Horizon system and on the Camelot terminal.  Secondly the National Lottery products are accounted for as if they have been sold over the Post Office counter but, in reality, are usually sold off-counter - for example in a retail store operating in the same premises.  This will mean that initially the cash from such sales will be placed in the shop till rather than the Post Office counter drawer.

Discrepancies which might arise between the records on the Horizon system and those on the Camelot terminal will be investigated by internal auditors and may result in the postmaster being formally interviewed under caution by Post Office inspectors and subsequently prosecuted through the criminal courts.

Typically the postmaster will speak to the inspectors in such interviews waiving the right to legal representation.  That may be a mistake as anything said may be used in evidence in criminal proceedings.  An admission by a postmaster to the inspectors that he realises he has not done his accounting properly may be viewed in court as an admission of dishonesty, rather than an admission of lack of understanding, incompetence or error.

If you are aware of a client facing such difficulties do urge them to involve a solicitor in the initial interview under caution - even though the client may be adamant that he has done nothing wrong and so has no reason to seek legal assistance!

The effect on the client of being suspected of dishonesty is severe because it will be likely to involve the closure of his Post Office, temporally at least.  I have myself dealt with a case in which, sadly, the Post Office never re-opened and the accompanying shop also failed - with considerable financial loss to the postmistress.  See the case study "Irene" on my website at http://tr.im/aeltdcases.

It might be worth having a chat with your Post Office clients to see if they would welcome your assistance in sorting out any issues which may be worrying them in relation to correctly operating the Horizon accounting system.

David

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