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Second Sight’s Question
POL expert
1. Transaction anomalies associated
with CASH or STOCK Remittances
1.1. Please provide full details of the
following:
a)
¢)
e)
all procedures and controls in place to detect and prevent
damaged or counterfeit notes being issued to branches as
REMs;
all procedures and controls in place to detect damaged or
counterfeit notes in outward REMs sent from a branch to a
cash centre;
all procedures and controls in place that prevent notes
included in an outward REM from a branch being sent to
another branch as an inward REM without being counted or
checked for damaged or counterfeit notes;
all procedures and controls used to ensure that notes issued
as REMS for use in ATMs meet the relevant quality
standards;
all procedures and controls used in branch to detect
counterfeit notes;
Rod Ismay (or somebody in Rod's team)
4(d) - Phil Bowdery
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f)
8)
the procedures to be followed in branch when a
Subpostmaster detects counterfeit notes; and
who bears the loss associated with accepting counterfeit
notes?
2. Transaction anomalies
associated with Pensions and
Allowances 2.1. Please provide full
details of the following:
a)
b)
c)
data mining or similar techniques used to identify branches
which have processed unusual volumes of P&A vouchers or
have processed previously used P&A vouchers i.e.
‘Reintroduction’ fraud;
all procedures and controls used to detect ‘Reintroduction’
fraud;
any cases in the last 3 years where outgoing P&A vouchers
have been stolen or lost in transit;
who bears the loss associated with lost or stolen P&A
vouchers?
Rod Ismay (or someone in Rod's team)
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e) any cases in the last 3 years where P&A vouchers have
been re-presented at a branch by a person unconnected
with that branch;
f) any cases in the last 3 years where forged P&A vouchers
have been presented at a branch;
g) all procedures and controls used to detect forged P&A
vouchers,
h) who bears the loss associated with accepting forged P&A
vouchers?
2.2. Are branches required to ensure that the value of the cheques and
vouchers being remitted each week matches the value of benefit pay-
outs recorded on Horizon?
3. Transaction anomalies following
telecommunication or power failures
3.1. Please provide full details of the
following:
Andy Holt / Dave Hulbert - IT
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a)
¢)
any tests carried out that ensure that Horizon's screen-
based recovery instructions are visible to the person
looking at the branch terminal when a power failure or
telecommunications failure (or both at the same time) has
occurred or is occurring;
the information that needs to be entered by the user to
complete the screen-based recovery process;
any tests carried out that ensure that the backup mobile
telecommunications facility works effectively in all locations
and in all circumstances including busy, multi-position
branches; and
any tests carried out when a branch is upgraded to Horizon
Online that confirm that a reliable signal is available for the
backup mobile telecommunications facility.
Transaction anomalies associated with ATMs
4.2. Given the evidence that the Rejected Notes totals, in several 'Print
Totals' output reports by ATMs, have on occasions become
corrupted, on what grounds does Post Office assert that the
Dispensed Notes totals could not also be corrupted, thereby
showing that the ATM had dispensed fewer or more notes than it
Phil Bowdery - ATMs
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really had?
4,3. Is it a Post Office requirement that when an ATM is installed that
the branch immediately creates a separate stock unit for the
ATM? How is this policy monitored and enforced?
4.4. In circumstances where the Bank of Ireland generates incorrect ATM
cash dispensed figures for both the branch's ATM and in the figures
supplied directly to Post Office, please describe the controls and
procedures in place to detect and investigate this type of error.
4.5. Please explain why it is necessary for Sub-postmasters to manually
print and enter onto Horizon, the contents of the daily ‘16:30 - 16:30
ATM Reports’ when the same information is sent electronically to
the Bank of Ireland and then to Post Office.
4.6. Please provide full details of the following:
E) the guidance issued to Subpostmasters relating to the
"16:30 - 16:30 Print Totals Reports’ in circumstances where
the rear door of the ATM is located in a retail shop or other
non-secure area. Is the Subpostmaster required to close the
retail shop when obtaining the '16:30 - 16:30 Print Totals
Reports' in these circumstances? How does Post Office
monitor and enforce this policy?
G) how Post Office detects and deals with incorrect items
reported in the ATM '16:30 - 16:30 Print Totals Reports’ in
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circumstances when the incorrect figures have also been
reported electronically to Bank of Ireland. Please also
describe the accounting treatment of any loss that occurs
in these circumstances; and
5. Transaction anomalies associated with Lottery Terminal or
Scratchcards
5.2. Has Post Office ever issued an instruction that unused Scratchcards
must not be collected by Camelot representatives? Please provide
full details of the circumstances that gave rise to any such instruction
being issued.
5.3. Is it possible for a Camelot representative to activate a packs of un-
activated cards without the
knowledge or approval of the Subpostmaster? How would this
unauthorised activation be dealt with on Horizon?
5.4. Is it true that whenever a claim for a prize is made, in respect of at that
point an un-activated Scratchcard; the entire pack from which that card
was taken is automatically activated? Please describe the accounting
treatment of any Scratchcards that are activated in this manner.
Rod Ismay (or someone in Rod's team)
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6. Transaction anomalies associated with Foreign Currency I Rog Ismay (or someone in Rod's team)
1, Please provide full details of how the Forde Moneychanger (‘FM’)
system operates. Please explain in detail how FX deals were accounted for
and the instructions that were provided to Subpostmasters.
6.2. Also, how does the FM system, and Horizon, account for the
difference between a transaction carried out at a Special FX rate and
the expected Normal FX rate? As an example, if a customer was
given €150,000 in exchange for £100,000, whereas the Normal FX
rate would have only given him €145,000, how did the FM and
Horizon systems account for the €5,000 difference? What flexibility
was or is available to Subpostmasters when agreeing to non-
standard FX rates?
6.3. Allegations have been made about unauthorised access to transaction
data by staff located at the Fujitsu office in Bracknell. As previously
requested and agreed, please provide the email archives in PST or
NSF format for Post Office staff working in Bracknell during 2008.
7. Transaction anomalies associated with Bank / GIRO / Andy Winn
Cheques
7A.
We are aware that every night, a data file is sent to every bank into
which its customers’ have deposited funds, and from which its
customers have withdrawn funds. It is then those banks that bear the
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7.2.
76.
responsibility to reconcile Post Office's record of what has taken place
with their own records of the entries that have been processed each
day into their customers’ accounts.
It follows that each of those banks is expected by Post Office to take
action where (for example due to telecommunications interrupts
between a customer's bank and a branch's Horizon system) a
customer's account has not been debited or credited by the bank when
Post Office's records show that it should have been, or where a
customer's account has been debited or credited by the bank when
Post Office's
records show that it should not have been. The bank would then
usually use this data to correct its errors and remove the
additional deposits from the customer's bank.
We are aware that the November 2008 phasing out of two-part paying-
in slips increased the possibility of error or fraud impacting
Subpostmasters. Please state what compensating controls were
implemented as a result of this process change and describe the
consultative process that was used prior to implementation.
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7.8. We note that cheques not covered by a Cheque Guarantee Card
were not an acceptable Method of Payment for certain transactions
e.g. the sale of Foreign Currency. Please confirm whether or not
Horizon is programmed to reject unacceptable Methods of Payment
in these circumstances. Also, if a branch has systematically been
accepting cheques in amounts that exceed approved limits, is there
a process whereby those repeated errors are detected and
corrected?
7.9. We are aware that in some circumstances Horizon does not
record transactions accurately. Specific examples include:
a) where, during Horizon's recovery mode processing, some
transactions, that were not processed, or were only partially
processed, may not be properly corrected when the system
invites the counter clerk to correct the errors or omissions
and, if the screen instructions to the counter assistant are
interrupted (as would be likely to happen where there are
telecommunications or power interrupts) then discrepancies
may ensue;
b) — where misalignment of screen icons results in the
inadvertent execution of the wrong type or value of
transaction;
c) where Foreign Currency transactions have been incorrectly
accounted for through interaction between the Forde
Moneychanger System and Horizon (Note: we regard the
FM system as a component part of 'Horizon’); and
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d) where system-to-system interface problems result in
incomplete transaction processing e.g. where a PINpad,
PayStation or other piece of equipment fails to complete
its part of a transaction.
7.10. Please provide full details of the controls and procedures that will
detect these types of error and describe the accounting procedures
that apply in these circumstances.
7.12. We are aware that some Subpostmasters routinely accept high-
value cheques from customers that are in excess of the monetary
limits set by Post Office. Please describe the procedures that were
followed prior to determining these limits and state the accounting
treatment of losses that occur in these circumstances.
7.14. Please describe the controls and processes that detect one-sided
transactions in circumstances such as when a customer withdraws
funds from an account at the branch counter but, although he has
received the cash, the account never gets debited.
8. Transaction anomalies associated with Stamps, Postage
8.1. We are aware that occasionally postage labels are purchased by
customers, but the printer fails to print correctly. Please describe the
procedure whereby the Subpostmaster can recover the cost of the
Andy Winn
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missing label in circumstances where the missing label has not been
processed as a reject’.
9. Hardware issues e.g. printer problems, PIN pads, touch
screens and PayStation
We are aware that occasionally branch Touchscreens get "out of
alignment" and that in these circumstances touching one icon
generates a system response associated with another icon. Please
provide full details of the controls and procedures in place that detect
or prevent this type of problem.
9.1.
Andy Holt / Dave Hulbert - IT
10. Failure to follow correct procedures or mis-advice by POL's
Helpline
10.1. A number of applicants have reported that Helpline staff have said
"don't worry, the problem will sort itself out"
10.2. Please provide full details of the actions taken to investigate these
allegations and confirm whether or not Helpline staff have been instructed
to never say "don't worry, the problem will sort itself out", or similar words.
10.3. Please provide details of Post Office's Policy and Standard
Operating Procedures in regard to those situations where customers
leave parcels and come back some days later to settle their
accounts. Specifically, what is Post Office's position in regard to the
credit risk that Subpostmasters take, and the potentially ‘false
10.1 and 10.2 — Kendra Dickinson
10.3 — Andy Winn
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accounting’ issues that those Subpostmasters risk, when they
routinely allow customers (such as eBay Sellers) to drop off large
quantities of parcels that are then dispatched by settling the labels to
‘Fast Cash' (even though no cash has at that point been received
from the customer) and then reversing all those Fast Cash payments
to cheque when the customer later pays by cheque?
11. Training and Support issues including Helpline and Audit
11.1. Please provide us with full details as to how the following issues are
dealt with during the handover to a new Subpostmaster:
a) — Ensuring that the new Subpostmaster has
manager/supervisor-level access rights to the
branch's Horizon system;
b) That every employee has a unique User ID and password;
c) — Ensuring that every till or employee and ATM is associated
with a separate stock unit; and
d) — Ensuring that all branch employees are approved by Post
Office;
11.2. We are aware that, when attempting to correct errors made at the
counter, and to deal with incoming TCs, some Subpostmasters
make matters worse by making further mistakes at that point.
Please describe the controls and procedures in place to detect and
11.1 - Gayle Peacock
11.2 - Andy Winn
11.3 — Kendra Dickinson
11.4-11.9 — Andy Winn
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prevent or correct these types of commonly made error.
11.3. Please provide full details of the following:
b) _ the extent to which that advice provided by the NBSC.
and HSD Helplines is monitored and quality checked;
c) the extent to which the written reports (call logs) of the
NBSC and HSD Helplines are routinely compared to the
actual calls and quality checked;
d) any surveys or quality control techniques used to assess
the adequacy of training provided to Subpostmasters; and
e) any surveys or quality control techniques used to assess
the adequacy of training provided to branch staff other than
Subpostmasters.
11.4. Process issues at the end of each Trading Period
11.5. Please provide full details as to how and when Post Office notifies
Subpostmasters that they may extend a Trading Period into what
should be the next Trading Period.
11.6. Please provide full details as to the options available to any
Subpostmaster who, at the end of a Trading Period, discovered a
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shortfall that was:
a) _ larger than they could ‘centrally settle’; or
b) — only discovered after the Helpline had closed for the evening.
11.7. Bearing in mind that some TCs would be issued many months after
the original shortfall, what options are available to Subpostmasters to
‘fund’ shortfalls that exceed their ‘central settlement’ limit?
12. The contract between the Post Office and Subpostmasters
12.1. Please provide full details of the following:
b) the measures Post Office takes in order to reduce the risk
that incoming Subpostmasters, who take over an existing
branch and its staff, may be inheriting employees who have
been found to be, or are suspected of having been,
incompetent or dishonest. In this context, was there, or is
there now, any competency and integrity verification,
performance appraisal, or formal disciplinary/warning
process whereby outgoing Subpostmasters and Post
Office's own Line Managers could warn incoming
Subpostmasters where questions had been raised?
John Breeden
12.8 and 12.9 — Alison Bolsover
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c) the measures Post Office takes in order to satisfy itself that
potential Subpostmasters have the necessary skills to meet
the challenging requirement of being a Subpostmaster? and
d) how Post Office ensures that Subpostmasters have a copy
of the Contract no later than the day that they commence
their position.
12.4. We understand that Post Office does not recommend that its would-
be Subpostmasters take legal advice (in regard to the Standard
Contract) prior to entering into that contract. This appears to be
contrary to best practice procedures. For example, the British
Franchise Association recommends that independent legal advice
should always be taken prior to signing a franchise agreement. Please
provide full details as to why Post Office does not comply with this
best practice recommendation?
12.8. Please provide full details of Post Office's policy and procedures
in respect of writing off amounts due from Subpostmasters. Please
also provide similar information relating to Crown Offices. Please
also describe the write off authorisation limits applicable to
different grades of staff.
12.9. Please provide details of Post Office's Policy and Standard Operating
Procedures in regard to helping Subpostmasters recover shortfalls
that they have made good as a result of proven theft by branch
employees
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13. Post Office Investigations Function
14. Surpluses
14.1 Please provide full details as to how Post Office tracks Surpluses
and Shortfalls at the end of Trading Periods at both branch level and
in aggregate.
14.2 Is it possible that an error which has generated a surplus in one
branch can result in a shortfall in another branch? Please provide full
details as to how this may occur.
14.1 — Andy Winn
14.2 — Rod Ismay
15. Suspense Accounts
15.1. Please provide full details of all Suspense Accounts held by Post
Office. Please also provide a schedule, for each year end
between 2008 and 2013, showing the amounts transferred to Post
Office's Profit and Loss Account (both debits and credits) for each
Suspense Account held.
15.2. Please also provide a schedule, for each year end between 2008
and 2013, showing the balance held on each Suspense Account
(both credits and debits).
Rod Ismay
(no answers needed yet on 15.1-15.3)
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15.4. Please describe the controls used to detect errors in Post
Office client reports that if not corrected could give rise to an
incorrect TA or TC being issued.
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