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IN CONFIDENCE
To:
From:
cc:
Mr C Burston
Contracts Advisor
Judy Balderson
Field Support
Jason G Collins
Fraud Team Manager
Advisor
Area Sales Manager
Rita Kendellen
Field Support Team
Leader
Outlet Intervention
Team
Date: 05 January
2011
Audit of Post Office®Howey, Branch Code 158644.
On the 5 January 2011.
named branch.
I conducted an audit of the above
The purpose of this audit was to verify financial assets due
to the Post Office® and confirm compliance with a range of
Business processes, procedures and regulatory requirements.
The audit revealed a shortage in the branch of £13044.23.
A breakdown of the audit result and details of the audit
findings are as follows:
12756.62
50.99
in
in
a difference
a difference
Identified as
Identified as
hand figures
cash figures
£
£ cheque on
£ 652.37 (-) Identified as a difference in stock
figures
£ 538.80 (+) Identified as a difference in postage
figures
£ 78.05 (-) Identified as a difference in foreign
currency figures
£ 45.00 (-) Other (voucher to CRU no supporting
documentation)
£ 13044.23 (-) Total Shortage
I arrived at the branch at 08.15am and introduced myself to
the Postmaster Mr Lawrence Bailey who was serving in the
retail area and advised him that I was to perform an audit
on behalf of Post Office Ltd®.
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allowed me access to the secure area, and either
he or his wife were hilst the audit was carried
out.
I contacted the Network Business Support Centre (NBSC) at
approximately 09.00 am and advised that an audit would be
performed at the branch, and that it would remain closed
until its conclusion. The nominated branches offered were:
Llandrindod Wells and Tremont Road and a notice placed on
display at the branch detailing this information.
On my arrival at the branch I noted that the door to the
secure appeared to be wide open on closer inspection it was
apparent that no door was present although the hinge marks
could clearly be seen. I asked Mr Bailey what had happened
to the ABS door and he said that it fell apart about a year
go. I asked why a new door had not been requested and was
advised that Mr Bailey had applied for a grant to refurbish
the branch and that the door was not replaced pending the
refurbishment. The grant was apparently not available but
the door had not been replaced.
Mr Bailey logged onto the Horizon system using his wife’s
user name and password.
I asked Mr Bailey for the PO cash and stock and Mr Bailey
handed me a plastic crate from the safe in the adjacent
store room and I began to count the notes, it was apparent
that there was a large number of notes missing and I asked
Mr Bailey about this and he produced some additional notes
from the safe drawer. He then asked how much I was missing
and I said £11700 in notes (I had not checked any coin or
the ATM at this stage). Mr Bailey said he would ask his
wife who had declared the cash_on the night prior to the
audit Mr Bailey said his wife} GR
iley returned a fe oments later with his wife
Mrs Bailey said there were no more notes and she knew the
cash was short. She said she had found discrepancies on
balancing which she could not find and so_had inflated the
cash. rather than tell her husband as he
GRO nd she did not want to worry :
said she did not know how much was missing. I asked Mrs
Bailey if she knew this was against procedure and she said
that she did. I asked how long she had been inflating the
cash and she said several months. She stated that her
husband knew nothing about the shortage in the main branch
as he only conducted the balance at the outreach branch.
At this point Mr Bailey said ‘’I will take full
responsibility’’ and he did state that my findings explained
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I then completed the audit, this was protracted that Mrs
Bailey gave me stock that had not been booked in, the huge
amount of stock held, the HANCO dispensed figure for the
previous day had been incorrectly input, and numerous
philatelic items were on hand which were out of date or had
been incorrectly declared on Horizon. There was also a
transfer pending between the two stock units for £500.00.
At this point Mrs Bailey said the ATM cash would be about
£1000.00 short.
A physical check of the cash revealed a shortage of
£12756.62. The stock and postage were checked and a net
shortage of £113.57 found. The foreign currency was £78.05
short (Euro’s overstated). The snap shot showed a figure of
£50.99 of cheques which were not on hand and a voucher to
CRU figure of £45.00 for which no supporting documentation
was on hand so these amounts were disregarded for the
purposes of the audit.
I then asked for the MVL discs and found that the bulk discs
were secured overnight in a wooden cupboard within the PO
area. I counted all the discs on hand and found 813
compared to the declared figure of 687.
E were then advised that they should
satisfy themselves that the figures of the audit team were
correct. Therefore, I asked Mr and Mrs Bailey if they would
do there own independent count of all the cash on hand
again, which dispite three requests neither Mr or Mrs Bailey
wanted to count the cash or stock.
then confirmed that the
the aud re correct.
I then telephoned yourself at 14.00 to report an overall
shortage in the branch of £13044.23.
otified Jason G Collins Fraud Team Manager at
to relay these findings.
The decision had already been taken to precautionary suspend
Mr Bailey at 09.30am the assets were secured in safe until
a relief could be found and three sets of keys taken by Mrs
Judy Balderson Field Support Advisor.
I collected the Branch Trading statements and noted that
they had not been signed when requested Mrs Bailey signed
them in my presence.
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The audit of the branch was concluded at 3.00pm. The branch
was rolled into TP10 BPO1l and a Final Account produced.
The amount of was posted to Late Account,
I advised the NBSC that the branch would be closed until
further notice
It was not possible to check the outreach branch cash and
stock as the luggable Horizon system was not operational.
The engineer was on site whilst I was conducting the audit
but failed to effect an repair. I secured all the outreach
cash and stock supplied by Mr Bailey in the safe and advised
him that I would contact him tomorrow to see if the system
was up and running. Once repaired an audit will need to be
completed.
No Compliance Tests were carried out at this audit other
than those control gaps that were observed whilst on site
If you require any additional information, please contact me
on the telephone number below
Judy Balderson
Lead Auditor
can
Mo
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