Post Office Ltd — Strictly Confidential
RISK AND COMPLIANCE COMMITTEE
06'" September 2006 — Meeting Ref 09
Members:
Sir Mike Hodgkinson (Chair)
Alan Cook
Peter Corbett
lan Anderson
In Attendance
Keith Woollard
Martin Ferlinc
Dave Pardoe (Secretariat)
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SUMMARY ACTION POINTS
ITEM
0901
0903 To include a program of ongoing randomly selected branches in the ‘audit “Martin Ferlinc I
plan, to enable tracking of baseline risk.
0904 To analyse those branches where a financial irregularity has been revealed I Martin Ferlinc
during 2006/7, to ascertain if there are any common profiles.
0905 Artange for a presentation re: IMPACT/POLFS to Risk & Compliance I Peter Corbett
0906
0907
0908 Ensure Group Internal Audit update is included in subsequent Risk & I Keith Woollard
Compliance Committee Meetings.
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0909 Confirm with Head Of Security that appropriate links exists with specialist I Keith Woollard
Police Units on relevant matters.
1. MINUTES FROM LAST MEETING
Meeting Ref 08- minutes approved.
Matters arising :
Alan Cook requested and it was agreed that he remaina meiniber of the Committee.
Peter Corbett commented that the position on IMPACT and the POLFS accounting ‘system has
moved on considerably since the report in March. The Committee requested a final report for
its next meeting (new Action 0905)
2. STATUS OF ACTIONS FROM THE PREVIOUS MEETING
0802
i portand:tools:
Network Director to be invited to report
twicea
i
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ae
Irrelevant
Review grant usage to date — successes, failures and
improvement ideas. Feed results into future strategy and
control of grants.
Have requested from Head of Network Change. To be Closed
Brought.Forward From 8 November 2005 * ¢
:
(TEM [ACTION _ : is ~ TLEAD 4
0704 3
0605 “on outcome of Branch Audit Half Year
Report recommendation concerning ownership and analysis of
cash data.
Ultimate owner agreed as Peter Corbett: Additional MI activity I Closed
within the current ‘Retail Inventory” team in Operations is
explained in Appendix 3 to the briefing pack for the March
Committee and ‘résponds to a'recent series of: cash losses in.
Februaty.and March 2006.
Following OD (Organisational Design) changes to cash
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ownership will be. addressed by new responsibilities within
Finance.
3. MATTERS DISCUSSED AT THE MEETING AND NEW ACTIONS REQUESTED.
The issues-discussed included the following items (which are expanded on as shown):
3.1 Actioris from, previous'meetings
3.2 _ Investigation Activity Period 5 Report
3.3 Branch Audit Activity Period 4 Report
3.4 Regulatory compliance
3.5 Internal Controls
3.6 Organisational Design Review
31 Actions from previous meetings
All actions brought forward were agreed as closed with the exception of:
0605 Cash inventory accountability resolved in OD review-closed -
0704 Deferment:of Security Industry licencing for.RDT team—letter being drafted — ongoing.
0802 Quantify the costs:associated with cheques as-a method. of payment —.now to be carried
forward as part of a wider strategic review of methods of payment - closed.
0804 Network Director to be invited to attend the Committee meetings — ongoing awaiting
appointment .
0809-Reéview:grant usage'to'date'— review completed =Closed:
3.2 Investigation Activity Period 5:Report
Dave Pardoe presented.the key points from the monthly Investigation Team period 5 report. In
Particular, the report focused on the Accrington DMB £600K fraud, successes using Proceeds Of
Grime Act (POCA) initiatives and the better targeting of audit resource on dishonest branches.
Concerns about cheques as an appropriate method of payment (MOP) for DVLA transactions
were raised and some discussion was-generated surrounding the positioning regarding
acceptance. Likewise, issues were raised with the:existing Instant. Access Saver Account:(IASA)
and Travel card offers; in themselves solid offers that are spoilt by branch noh-conformiance.
Alan voiced an opinion that he was against modifying an offer (to the detriment of the
customer) in order to force. branch conformance and would rather expect steps to be taken to
drive conformance - by sanction if necessary.
Action 0901 Explore implications of reducing £9K banking fraud checks to £5K
Action 0902 Establish financial position with DVLA returned cheques
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3.3 Branch Audit Activity Period 4 Report
Martin Ferlinc:presented an overview of branch audit diagnostics up to and including period 4.
Diagnostics revealed that despite performance of reduced branch audits (against the same
Period in the last financial year) the numbers of shortages (by volume and value) had
increased. The key factor appeared to be the targeting of audit resource on branches that-had
Not responded to a request to return surplus:cash. This meant that the. picture presented should
not be extrapolated to the whole branch population.A sample of randomly selected branches
was also now 'being.done to get a more.representativé view.
Martin also presented an overview of compliance audit diagnostics. Alan Cook commented
that whilst improvements required continued focus, greater comfort was afforded in seeinga
gradual rise of the tested areas and especially around Home Phone. Positive comments were
also offered as regards the improvement in AML and FS areas.
Action 0903 Include a program of ongoing randomly selected branches‘in'the audit plan, to
enable tracking of baseline risk.
Action 0904 Analyse those branches where a financial irregularity has been revealed during:
a
2006/7, to ascertain if there are any common profiles. ” &
I i I I t i
3.5 Internal Controls
‘ The Internal Control brief was presented. Some discussion ensued about item (2) DVLA and the
exact detail of the-action status. The consensus of the meeting attendees was that branch
sanctions must be imposed, as appropriate, given the impacting nature of the costs incurred, to
the business, in settling lost licences.
The remainder of the brief was accepted without comment other than a suggestion that future
briefs contain some comment on the impact of on-line MVL applications.
Action 0906 Include in next Risk & Internal Control Team Activity Report findings on
deployment.of agreed actions in respect of Network Reinvention Investment Grants
Action 0907 Include in the next Risk & Internal Control Team Activity report an update on
the actions relating to DVLA discs.
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3.6 Organisational Design Review.
The verbally presented brief was accepted without comment.
40 AOB
It was proposed and accepted that a regular Risk and Compliance Committee agenda item
should be an update:on Group Internal Audit.activity planned and comipléted in POL.
Action 0908 Ensure Group Internal Audit update is included in subsequent Risk & Compliance
Committee Meetings.
Some debate took place around ensuring that sufficient links/ recognition existed between
specialist Police Units.and our own Security Team given especially the cash rich nature of our
branch estate.
Action 0909 Ensure.nécessaiy links exist with’specialist Police Units
5.0 DATE OF NEXT-MEETING
Thursday 7th December 2006 10.30 - 12.30
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