POL00061214
POL00061214
Mana
Between
Regina
and
Carl Adrian Page Defendant
Report to the Court prepared by
T Taylor. a Director in KPMG LLP
KPMG LLP
7 Apail 2006
This report contains 21 pues,
itjp069.
Repori te the Court by T Taytor. a Director in KPMG LLP
Stricily private & Guntilential
Contents
I Introduction
11 Terms of reference
1.2 Qualificutions
1.3 Sources of information
2 Background
2.1 Summary of Prosecution case
3 Post Office accounting systems and procedures
31 Accounting provedures.- Horizon
3.2 Bureau de change and Forde Moneychanger systern
4 General
4.1 Information cansidered in my repart
5 Calculation of the alleged thett
5.1 Backgiotmd
$2 Surhniary of alleged theft ~ 14 January 2003 audit report
53 ‘Inflation’ of the "Foreign Currency Sterling Equivalent’ figure in
Horizon
5.4 How was the alleged theft-concealed?
5,5 Audit process
5.6 Audit of 27 June 2002
5.7 “Errors” pre-January 2003 audit
$3 Matters where I am unuble t comment further
6 Summary and conclusions
6.1 My overall conclusions
tnipii6o
ZAzail 106
we
vin
NON
POL00061214
POL00061214
POL00061214
POL00061214
PABA
Report to thé Coiut by T Taylor, a Director in KPMG LL
Stricily privaie & contideniial
F ipeil 2006
Glossary of terms used in my report
¢ Horizon — the automated system used to record transactions in.the pus! office.
« ‘BCV’ — Batch -Cortrol Voucher used to record the number. date ahd value of
cheques to he despatched to ‘Data Centra!” (clearing centre) in Londoa.
® Stock unit — a unit created on the Horizon system io which cash and stack is
assigned.
® ‘AM? stock unit ~ the stuck unit at the post office where bulk cash Uincluding
foreign ednency) and stock was recorded in Horizon.
¢ “BU stock unit — the bureau stock unit at the past office where foreign currency
transactions and balances were recorded in Horizon,
* Balance ‘snapshot’ —a report showing the level of cash and stock held in a unit
and.the receipts and payments made at a given point in time during the current
period,
® Cash Account — the statement of cash, stock and transactions produced hy the
Horizon system ut the end of-an accounting period.
¢ ‘ONCH* - Overnight Cash Holding figure recorded in Horizon representing the
total amount of casa (sterling) held at the end ef each working day.
«© ‘Remittaites’ — the movement of cash and stock between pust dffices and the post
offive distribution centre.
» ‘Command 3° printovt — daily printout frorh the Forde Moneychanger which
includes the transaction summaries of the day and a closing balance far eact
currency.
© ‘Command 10° printout — weekly printout from the Forde Monexchanger which
includes a value of foreign currency held and the bureau de change revaluation
und conimission toials for the week
e Stock includes postage stamps. niotor velnele licences, Postal Orders, ete.
wiphse 2
12
1.3.
122
123
124
Rana
Report to the Coiut by T Taylor. u Dyiectarin KPMG LLP
Strictly private & contidentiat
7 Apert 2005;
Intreduction
Terms of reference
{have been instrucied by Frisby & Co, Solicitors. tv prepare an expert a
for pussible use in the forthecming tnal of Mr Cerl Adrian Page (“Mr Pi
antancy report
i
My Tage was the sub-postmaster at Rugeley Post Office and has beon charged wih the
theft of £282,000 in, sterling from Post Office Limited between March 2002 and January
2003.
I have been specifically usked to consider the theit charge agamst. Mr ‘Poye and the
uccountihy evidence put iorward by the Prosecution,
Qualifications
Iara ‘Timothy Taylor. 2 Fellow of the Institute of Chartered Accountants in Fagland and
Wales and I have a Master's Degtee it Accounting and Finance. My business address 1s
La neeeneeneeeentnennen L Lana Member of The Avademy
of Experts afd of the Expert Witness Institute, [ joined what is now KPMG LLP
(KPMG") in 1972 dnd became a parter m 1985,
Sinee qualification T have been éxiensively involved in audit and accountancy work and
in the preparation of reports. Lretwed as a partner in 2002 and now continue with KPMG
as a Disectdr. specialising in ewperi. witness add dispute resolution services. I have
prepared numerous reports. giving wy expert opinion in both civil. und criminal matters.
atid have given evidence at trial on many-covasions.
In preparing ihis-report I have had assistinec from Jason Pate, 4 Senior Manager in
KPMG who i a Member of the Institute of Chartered Accountants in England and Wales.
Jason hus worked under my supervision and the opinions expressed in this report are my
own.
L report in this matter as an expert witiess and not & witness of fact, and 1 have relied
upon the information provided to me, Hf any further information corses to hight or eny
AL ypoy 3
POL00061214
POL00061214
125
13
134
Report to the Coit by T Taylor, aDnector in KPMG LLP
Stricdy otivute & confidential
F april 2006
information which I have relied upon proves 10 be mecrrect, I may wish to change my’
conclusions,
This report is strictly private and confidential. It has been prepared solely in relation to
the forthcoming trial of Mr Page and is prodaced on the understandiny: that if is not te he
communicated to any third party, in whole or in part. other than in connection with these
legal proveedmys
Sources of information
This report is based’ an 4 consideraton of relevant witness statements and exhibits
iciters,
provided jo nie by my instructing #
Details are summunsed in Section + below,
lejptige- 4
POL00061214
POL00061214
21
211
213
2.45
Repor ta ths Cows by T Taylor, a Direoior in KPMOLIP
Strictly private & confidential
7 April 2086
Background
Summary of Prosecution-case
‘The theit charge against Mr Page relates to. a cash ampunt of £282.00 said to be missing
from Rugeley, Post Office which was identified following an audit (see Seetion 3.5) at
Rugeley Post Office on 14 January 2003.
The Prosecution's Opening Note dated 2, October.2005 states that the indretmerd period
for the alleged theft1s from March 2002 to January’ 2003 andthe amount allegedly stolen
by Mr Page was £282.00 in sterling
However, in the Royal Mayl’s letter to my invtructing solicitors dated 23 February 2100 it
is stated thet the alleged theft “..ceald have begin ai any stage efier Mr Page tock over
at Rugeley".
The Prosecution further note in the same letter that there are “..,. difficulties in assessing
the tree position of the cash ‘stock held when nianipulated accounts ary presen”.
Notwithstanding the abave, [ pote that the Prosecution have not provided any Weekly
Cash Accounts of related «wweounting documentation for the period piior io March 2002,
and.as such Dhave not been able to'cedistder any Such evidence prior w the period of the
indictment.
W069 $
POL00061214
POL00061214
313
316
Repart to ihe Count by F Taylor. 2 Dircetor in KPMG LLP
Strietly provwte & confidential
2 April 2000
Post Office accounting systems and procedures
Accounting procedures ~ Horizon
Lhave set out below certain deta:ls of the Post Office accounting systems and procedures
that were in place duriny theindictment period. This understanding is based on a review
ofa nurmber of Post Office operation manuals and user guides provided to. me, details of
which-have been set out in Section 4 below.
During the indictment periud the Posi Office used a computerised accounting sysiem
know as Horizon which kept a record of transactions undertaken during each week
‘The Weekly Horizon Cash. Acocuntwes structured as follows:
© Opening balance due to Past Office (stock and cash brought forward from
previous week) +X
» — Recetpts of cush and stock in week « X
Total ‘receipts’ ” ¥
* Payments and remittances in week -X
© Closing balance duc to Post Office (elesiny stock and:cash carried forward) - %
‘Total ‘payments" -~M
For each transaction carried out cash, a cheque, d debit. card payment or equivalent would
either be reecived from or paid to 2 customer. with the Pust Office providing something in
exchange e.g, cash in exchange for a voucher such as.a pension or benefit foil,
The Cash Accounting: Week far exch Post Office ran from Thursday merning to
Wednesday’ evening. and 91 the end of cach accounting week. all-cash and stock on site
should have been verified avid adopted! as the opening ‘casti and stock balarice for the
following accounting week.
Horizon cauld be interrogated to provide a printout known as a ‘snapshot’ which
provided a summary of the tansactiuns carried out in the week along with a breakdown
ttf)pi069 &
POL00061214
POL00061214
w
la
us
ia
Report to the Court hy P Taylor, o Director rh KPAIG.LLP
Strictly private & contdemial
7 apaed 20065
of the “bosk* casli und stock that’ should be on hard afier taking inte account all
transactions.
‘The individual who undertook the process of balancing the accounts at the end of each
week would verify the cash and stock on hand for each siock-unit and iiput these into
Horizon.
A balance would beachieved if the verified cach and stock en hand agreed with the book
eash and stock according ta the Horizoti snapshot. Ainy diserepaney cheuld be declared
as a shortfall or surplus in the Post Office’s Weekly Cash Account,
Tn effect, the “Balance due to Post Office’ would be a net balancitig figure. If all
transactions, including foreign: currency transactions drom the’ Forde Moneychanget had
been correctly entered in‘Harizon. then Horizon should balance.
Bureau de change and Forde Moneychanger system
The Forde Moneychanger (“1M”) isa -stahd alone foreign currency calculator that
operates indupendently fiom Horizon, {t performs a vatiety of functions including:
# calculating the sterling value of foreign purrency held,
® keeping a running check on stuck levels; and
# providing information for da:ly and weekly accounting reporting. details of which
are required to be entered manually inte Horizon,
Horizon and the Forde Moneychanger system operated. independently, and it was
necessary for foreign currency transferred into or avi of the: post office to be entered
separately into the Forde Moneychanger arid Horizon.
This iiputting would be’ performed independently and could be done at different times,
resulting in the potential for differences to arse between the tivo systems.
tuiprued 2
POL00061214
POL00061214
3.2.8
3.2.9
‘3.2.10
Report to. the Court by T Tylor. a Director in KPMG LLP
Strictly piwate & confidential
7 Aged 2006,
Reviving foreign currency
Foreign currency received by the post office was to be entered inte the Forde
Moneychanger at the retail “buy rate’ as indicated by First Rate ‘Travel Services (“F RTS”)
on a daily fax sent to the Post Office.
AN sales sind purchases of foreiga currency {and travellers’ cheques} in the week would
he made through the Forde Moneycbanger, independent of Horizon.
Daily accounting procedures for foreign enrrency
At the end of cach avcounting day a ‘Command 3° printout would be produced by the
Forde Moneychonger which would include all transaction. summaries of the day. along
with the closing balance for each currency and’a Travellers’ Cheques balance.
The printout should have then been checked, on a daily basis, to ensure tai the balances
of foreign currency and fravellers’ cheques agreed with the amounts physically on band at
the post office,
Weekly accounting procedures and recording transactions in Horizon (section 15.6 of
Buren de Change on Demand ~ Operations Maiiual)
At the end of each Post Office Cash Accounting week,
» weekly printouts for all totals should be obtained from the Forde Moneychanyer via.a
‘Command [0° printout: and
® — ¢heapics on hand and cash physically held in'the bureau 11! should be separately
entered into Horizon (know as the BU’ stock unit).
The*Command 10" printout includes a sietling value for foreign curvency and a bureau ce
change revelyation and commission total for the relevant week,
Any differences, between the amounts per the ‘Command 10° printout andthe amounts
agtudlly held m the buréau, should be recorded as a shortfall or disceepanvy in the final
Weekly Cash Agcount in Horizon and sent to the Post-Offive’s head olfice
1pm 8
POL00061214
POL00061214
3.213
Report ta the Court by T Tayter, n Director tir KPMG LLP
Sirictly private & confidential
7 lguil 2006
Despatch of cheques, including cheques used to purchase foreign currency (Section
14.2 of Cash and Cheque Acceptance Operations Manual)
Before despatehirig cheques reccived te the Pest Office clearing cents in London. a
vheck should hinve been’ performed by the post office siulf to ensure that.the daily: figare
recorded on Hovizon agreed with the actnal cheques un hand figure.
If the totals did not agree then any error should have been amended in Horizon to reflect
the actual value of cheques of hand. Only on balancing should the post office have
sremitted out’ cheques [ram the relevant Horizon’ stock unit tothe London clearing centre
All cheques, should bs despatched with a completed Batch Control Voucher (BCV").
The procedures required that cheques should-be despatyhed on u daily basis
13069 9
POL00061214
POL00061214
Al
401
Keport fo the Court. by: T Taylor. a Director in KPRIG LLP
‘Strictly prewte & canfidestial
? Sprit 6
General
Information considered in my report
Jn my work T have considéred the following information
styp/ng?
Proseeution’s Opening Note dated 2 October: 2005,
Letter from the Royal Mail io Frisby & Co Solicitors dated 22 February 2006,
Various Weekly Cazh Accounts for Rugeley Post Offices:
Internal audht reports dated June 2902 and January 2003.
Various witness statements and cahibits fiom relevant Presectition witnesses
including Mr Patel and Mr Davies,
Exhibit RK/GL ~ Bureau de Change operations manual (version dated 2
September 2002).
Post Offiee “Cash and Cheque Acceptance procedures manual’ (version dated 3
September 2002).
Exhibit SB/O1 — Copy cheques and associated baich control vouchers « June 2000
and January 2003,
Exhibit AW/1 ~ Copy HSBC tank statements for RPX Recycled Plasties Lid =
Avcourt number 71392875,
Extibit MP/3 - Bureau transactions schedule for Rugeley Post Office - 9 March
2002 10 13 January 2905.
Exhibit MP3A -- Copy sections of till rolls relating toentvies on Exhibn ME/3,
Exhibi¢ MP/6 - Foreign Currency Discrepancies Schedule,
Various onde Moneychanger till rolfs and ‘Command [0° printouts,
Ww
POL00061214
POL00061214
EA
rion
Report te the Court by T Taylor, a Director in KPMG LLP
Strictly private & confidential
7 dpaif 20068
Horizon System User Guide — version dated 28 July 2000.
Electronic: spreadsheet of information for Rugeley Post. Office from the remedy
system’ which records ‘errors’ and details of telephone calls from Rugeley Poat
Oilice.
Andit Process Manual dated 4 May 2002.
Letters from Roya! Mail to Mr Page dated 6 March 2001 and 2] May 2002
POL00061214
POL00061214
5,2.
3.34
2A
P.aport is the Coun by T Taylor, o Director ie KPMG LLP
Strictly private & confidential
7 Apri 2006
Calculation of the alleged theft
Background
As noted al paragraph 1.12 Mr Page has been charged with the theft of £262,000 in
sterling from Post Office Limited between March 2002 and January 2003.
Summary of alleged theft - 14 January 2003 audit report
An internal audit was undertaken at Rugeley Post-Office on 14 Jenvary 2003 and a
shortfull of £282,000 was eventually identified by the Post Office audit team,
The alleged theft of £282,000 r¢ lates to a shortfall identified specifically in the “Formgn
Currency Sterling Equivalent” figure recorded in the "AM" stock uait of Horizon. No
such curtency was found by the audit team during their audit. I undetvtand that Mr Page
accepts that no such amount of forcign currenvy was fuund at that time m:Rugeley Post
Office.
Mr Page demes thai the deficiency arase as:2 tesuit of theft by tum.
‘Inflation’ of the ‘Foreign Currency Sterling Equivalent’ figure in
Horizon
Pahibit MP/6.entiibiied by Mr Patel illusuates kow the alleged deficiency (or ‘inflation’
per Mr Patel) of £282,000 accumulatid over ime.
‘The inflation referred to by Mr Patel is simply the difference beween the “Forsign
Currency on Hand’ figure.as recorded in Horizany by Rugeley Post Office and. the *ster!ing
eynivalent foreign currency on hand’ figure as identified from the weekly Forde
Moneyvhanger*Command 10” printouts.
Exhibit MP/6..shows that the first period where there was a Significant inflation in the
“Foreign Currency Sterling Equivalent” figure in Horizon was in the weck unded 26 Junie
2002 (Week 13) when ihe amount Is said to be indlated by £53.378.03.
In the two weeks ended 3 and.17 fuly 2902 (Weeks 14 and 16) the infation figure is
negative, One of the negative ‘inflation’ figures is explained.as‘being the result of typing
wiphio 12.
POL00061214
POL00061214
5.3.5
5.4
SA
SAX
HA
Report io the Court by T Taylor, a Director is KPMG CLP
Strietly piwvate & configennal
7 April 2006
an incorrect revaluation figure into Horizon but there is to apparent explanation for the
other negative inflation flyure iv. the week ended 3 July 2002 (Weel: 14). This
demonstrates that as’ Hotizon and the Forde. Moneychanger were not integrated,
differences could arise a3 a fesult Of manual inpulting errors.
The next significant inflation in the ‘Foreign Currency Stérling Equivalent’ figwe is
shown in the week ended 31 July 2002 (Week 18) when the inflated figiire per MP/6 is
£177,500, T have not seen a copy of the ‘Command 10’ printout for this period. It is not
clear to me wiiether it 1s alleged by the Prosecution that the theft by Mr Page had reached
£177,500 by this date.
Exhibit MP/6 indicatcs. that, from the week crided 28 August 2002 (Werk 22), the
Horizon “Forcign Currency Storing Eguivalent’ figure was inflated. initially’ by
£188,000. and increasing to £282,060 by the date pf the intemal audit on 14 January 2003
(Week 41),
How was the alleged theft concealed?
‘the Prosecution’s. Qpening Note states that cash, in sterling, was stolen by Mi Page over
a period of time and, from the week ended 25 August 209? (Week 22). this was conceaivd
by Mr Page routinely inflating the Horizon computer records in -relation. to fereign
currency Feld inthe Rugeley Post Oflice “AM” stock unit.
I also note from the Prosecution’s Opening Note. that, some lime prior ta Week 22. the
alleged thei: by Mr Page is allyged to have been concealed by overstating the amount of
“Overnight Cash Holdings’ (*ONCII") ‘hicid at Rugeley as. opposed jo: the “Foreign
Currency Sterling Equivalent’ figure in Horizon,
Thave seen no evidence regarding the alleged theft concealment via the “ONCH” digure,
including as to how and whén any such concealment was undertaken prior 16 the -week
ended 28 August 2002 (Week.22). Lriote that the Roval Mail Icicy dated 22 February
2006 to ty instructing soliviters states That there are“... difficultics im assessing tte true
position of the cash? stock held when aciipnlared aevounts are presented”.
tip os i
POL00061214
POL00061214
$44
$4.5
5.4.8
3.4.9
5.5.2
Zn
Repoit to the Court by T Taylor, a Director an KEMG LLP
Sirietly privates. confidential
Z April 2006
Prior to Week 22
Tf it is alleged that by the week. ended 31 Siily 2002 (Week 12) the thef hud reached
£177,300, and that it was beng concealed ither by overstating the trve.toreign currency
balance or the ‘ONCH! figure. thea. in my opmuion, there is an uncaplained meonststerty
in the Prosecutions case as set out below.
Firstly I note that in the two weeks ended 14 and 2] August 2002 {Weeks 20 and 21), the
inflation figures as stated by Mr Patel (see Exhibit. MP/6) are ml, end therefore no
concealment is attributed 10 this item,
Secondly J note thai the recorded “ONCH" figure (see Weekly Cash Accoumts) for the.two.
weeks ended 14 and 21 August 2002 was only £79,810.00.and £91,240.69 respectively.
afd therefore they could not be overstated by £177,590
{he Prosecution have vot as. far as I ar aware offsted any alternative explanations
regarding methods of concealment other than {he overstatement of the “ONCH* or
‘Foreign Cunency Sterling Pquivalent’ figures m Horzon,
Sheek 22 onwards
1 agree with Mr Patel that as fiom. the week ended 28 August 2002 (Week 22) the
Horizon ‘Foreign: Currency Sterling .Fquivelent® figure was inflated, imally by
£188,000, and jnerecsing t@ £222,000 by the date of the dudit on 14 January 2603 (Week
aj.
T have agseed the inflation figure calculated by Mr Patel to the Honzon and Forde
‘Moneychanger figures for Weeks 22 to 41 inclusive, except for Weeks 23 and 24 where
the ‘Command 10° prints have not been made available (and where according to Mi Patel,
the figurés were obtained from Chesterfield).
Audit process
Thave reviewed a copy of the edit of Accounts” section fromthe Audit Process Manual
(version dated 4’ May 2002).
Based. on a review of the manual, the Post Office audit is primarily one of ‘asser
verification’ in determining the value of cash, stock-and vouchers ‘on hand’ ~ it would
wyp'b69 W
POL00061214
POL00061214
$5.3
S54
55.5
5.6
5.6.1
5.62
5.63
Report t the Court by Ttaytor, a Director in EPMiG LLP.
Strictly private & epnvidentiat
2 Apr 2006
appear that rione of the other figures in ihe Weekly Horizon Cash Accounts would have
heen checked or verified to any other source documentation as port of the audit. La
addition & number of “Cempliance Tests” may also be undertaken in relatiun io Post
Office procedures and cuntrals,
The Post Office avdit team would firstly ascertain the number of individual stuck units
operated at the sub-post office and obtain an overall. “snapshot for the whele post office
and a ‘snapshot’ for each individual stack unit. The sub-postmasicr would be asked to
make all cash and stock on hand available which would be checked against amounts
revorded in Horizon,
Wher vouchers had been despatelied by the sub-post office these would not be checked
at the time of the audit. Any errors jound subscyuently m the documentation despatched
‘by the post office prior to. the audit would be dealt with by way of ar ‘ortor notice’.
I review such notified "errnes* mm Section 5.7.
Audit of 27. June 2002
Evidence of Mr Robert Davies - ivituess statement dared 16 Mareh 2004
Arnaudit was undertaken by the Post Office Security & Audit Section.efi 27 June 2002 for
the week ended 26 June 2062 (Week 13), in the course of which the internal, audit feam
checked individual cash and stock balances. in each stock unit physically. on vite at
Rugeley-and compared thom with whai was recorded.in Horizen,
LT note that the. Post Office audit report made reference to the fact that. “dhe burect way
rebalanced showing the actual gn hand. This produced « shortage of £33k...". This’
amiyunt is also the ‘inflation’ figure referred to by Mr Patel as at 26 Jane 2002 in Exhibit
MP%6, although Mr Vatel does not state whether or hot he is of thé opinion that this relates
to the concealment of an alleged theft, This difference appears to have urisen as a resuit
of the sales figure fir the week from the "Commend 10° printout raiber than the foreign.
currency on hand figure bemg entered inte Hotizon,
LT note the Post Office audit report stated that the overall result from the audi, was a net
shortfall of £8.335.63,
te jp 69 is
POL00061214
POL00061214
564
35.6.5
5.6.7
maya
Report te the Court by T Taylor, a Chrector in KPMG LL
Strictly private. covifidentiat
7 Apt 20885
Farther evidence of Mr Robert Davies — witness statentent dated 18 February 2006
Lnoie that the Prosecution have now provided further evicence in respect ef the June
2002 audit,
‘The shortfall identified at the time is analysed as follows.
* “BU" bureau stock unit surplus reporied £191,192.95
» “AM” stock unit shortfall teported (£145.873 74)
® Shortfall im the bureau cash and stock held (£ 54,285, 40)
e Other difterences (£369 38)
Total (£._8,335,63)
Mr Davies now states that three cheques totalling £139400.00 (emg cheques for
£80,124.22, £49,.689.44 and £9,586,24 respectively) were included in the Week 13 Cash
Account figures, being the week ended 26 June 2002
Qn the basis «f' the accounting evidence made available to me, 1 agree with Mr Davies”
conclusions that the tao larger of the three- cheques which he refers to should not have
heen inchided m the Horizon account for the weck ended 26 June.2002 and henec the
shortage as calculated by the audit team should be mereazed by £129,812.66 (480,124.22
plus £49,689.44),
‘I would however note that it is not possible for me now to check whether or not the
amounts ‘verified” at thé audi( were correet as the audii process is largely one of simple
asset verification.
However, if the above rater was the oaly ‘error’ in the June 2062 audit then the revised
deficit in the Weekly Cash Account should, as Mr Davies states, be inareased to
£138,149,29.
1ujp-069 16
POL00061214
POL00061214
5.6.16
5.74
5.75
ois
Report tothe Couit ty T Taylor, a Director in HPMG LLP
Strivily onjvate & confideniial
7 April 2000
Third cheque referred to hy Mr Davies in his witness statement
note that the third cheyuz referred to by Mr Davies for £9.586.34 cleared the hank on
the same date as the other we cheques and therefore it may oe, that this alse should be
includéd in the revised shortfall figure.
‘Errors’ pre-January 2003 audit
Independent of ‘the above issues, [ note from correspendense prio to the audit on 14
Jaauary 2003 that the Post Office had identified a large number of ‘errors’ and issues with
Rugeley Post Office.
T nete. for example, ina letter to Mr Page dated 6 March 2001 (although from the
sequence ths seemingly should be dated @ March 2002, not 2001}, reference is made io
“There have been 170 errors recorded against your office to date”.
In a further letter to Mr Page irom the Post Office dated. 2! May 2002 itis noted that
Your ont turn for the year 200102 has been reported at 204 evrers. 1 have also been
advised theta further 21 virsrs have been incurred duriiy period 1 (2002413), Lstieuld
remind ‘yor once again tht your performance is unaceeptuble cnn’ shat fantediute
improvement is required...”
In addition te ihe above I have been provided with a list of *irwiderd Ings’ from the
‘remedy systeth’ in.relation to Rugeley Post Office. These refer to numerous ‘erfors” or
incidents, I have suminarised below a number of examples below which eppcar to he of
relevanee 19 the overall eceutacy of the accounting records at Rugeley.
Tu the absence of more detatled information Lhave simply noted ihe following:
® = June 2000 ~ refers to advising the sub-postmaster. that ho should not be
entering commission twice in respect of the bureau de change:
« 17 July 2000 — zefers to Rugeley Post Office receiving ‘error notices’ and
being *... 29,000 at a loss-for lottery” and told the cash account sent hed heen
incorrect for lottery,
jypusy 17
POL00061214
POL00061214
WUypO6?
Report to the Court by T Taytor, a Director in KPMG LLP
Strictly privane & vonfidential
7 tpell 2006
28 March 2001 ~ refers:to the postmaster wishing to reversé a transaction on
ithe moneychangor (bureau deichenge):
1} October, 2001 — notes 25 errors end that Rugeley Post Office was in the
Sworet 10% in the overs}l league position, Also refers to unpaid cheques
returned and that the Pest Office should ensure that all cheque acceptance
procedures for ‘the product’ are followed conectly:
19 November 20C1 - noizs 62 cumulative errurs by Period 7 aad that
Rugeley Post Office was still ithe ‘worst 20%" in the overall leagne
postion:
14 December 2001 -- refers to further error neaces at Rugeley in Week 39;
14 Janyary 2002-—-refers to a further }1 ctrors im Period S aad the oltiot now
having 12 ervors:
14 February 2002 ~ refers to the outlet having 29: errors and that Jim Coney
will be issuing 4 written warning to the outlet:
15 April 2002 ~ refers to “2:
has 1S. errars™,
jaiton for aver 1 Lerrors in Peried12. Outlet
15 May 2002 ~ refers to “Escalation for over 11 errors in-Periad 1. Outlet
das 2herrers”:
27 June 2002 - refers'to the June 2002 audit and thay the bureau unit was
‘yolled over’ with incorrect bureau figures (€82,772.85 and should. have been
£29,487.39);
4 July 2002 ~ notes an issue with balancing Horizon and the *....cash aeveunt
ed
nines”, The incident report also makes reference as to haw to remove a gain
surplus aid minus in suspense account off 191.192.95 and aso 145.87.
from the Suspense Account;
POL00061214
POL00061214
POL00061214
POL00061214
Report ta the Court by I Tuytor, x Diecior fn KPMG LLP
Sinedy prvate & confidenttal
F April 200%
* 29 July 2002 — refers to the fact Mr Page was nét sending in paperwork uatil
Monday monting because Rugeley were “... dutbiv
ne checking
paperwork” and reters tg the need for performance improvement: ard
e 15 August 2002 ~ refers to-the outlet having 24 errors and an ‘ecealation of
errors in Period 4,
5.8 Matters where I am unable te comment further
5.8.1 Based on-a review of the evidence provided it -has not been possible for me to confirin
whether a shortfall.as alleged was concealed in the ‘ONCH* figure in Horizon as these
figures were never (other than in the two audits noied above) the subject of an audit,
$82 In addition I note that the Prosecution have provided nu evidence regarding the accuracy
of the other figares ia Morizon. They siniply indicate that ‘the figures set out in the
Weekly Cash Accounts are those as submitied by Rugeley Post Office,
repos Ww
6.1
6.11
Bana
Report ta the Court by T Tayfor, a Director ig KPMG LLP
Strictly private & con ideatiak
é Apert 2006
Summary and conclusions
My overall conclusions
In summary I note the following:
ip
Tayree with Mr Patel that as trom the week ended 22 August 2002 (Week 22) the
Horizon “Foreign Currency Sterling Lqutyalent’ figure was inflated, initially by
£188.00, and increasing to £282,090 by tho date of the audit on 14 January 2003
(Week 41),
Tagree with Mr Davies (witness statement duted 18 February 2036) that, on the
basis of the accounting evidence ayailable, the shortage in the audit of 27 June
2002 should be increased by £129.813.66, aid possibly by a further £9 886.34;
‘The alleged deficiency of £282,500 in the AM” siock unit at 14 January 2003
docs not necessarily indicate theft by Mr Fage - any such shortfall could in
practice be the result of other unidentified criors or differences in Monzon,
It is implictt in the Prosecution’s case that, by. simply stating that the £282,000
shortfall in, the “AM stovk urit equates to-4 theft of the saise amount, all other
figures in Horizon (except for the differences identified at the audit) were correct.
Thave' seen a0 evidence that this us‘ fhe case and would ‘also note the bigh
incidence of ‘errors’ as set out in Section 5.7.
‘The Prosecution rely on the assumption that the figures in Horizon we these
reourded by Rugeley Post Orfice staff themselves and that the Horizon system
was working correctly throughout the indictment period:
It is now not possible to establish whether the declared. ‘ONCH* figures were
coitectly recorded im Horizon as they were not independently checked at the time
other than at the two audits;
{f it is alleged that by the week ended 31 July 2002 (Week 18) the theft had
reached £177,500, and thot it was being concealed cither by overstatmg the-tiue
foreign currency balance or the "ONCH’ figure, then, in my opinion. there is ar:
et)
POL00061214
POL00061214
mans
Report te the Court by T Taylor, a Duceter ( KPMG LL?
Strictiy private & confidential
? Apr 2006
unexplained inconsistency if the Prosecution’s ease, This is because jn the two
weeks ended 14 and 21 August 2002 (Weeks'20 and 21). the inflation. figures a8
stateed by Mr Patel are nil and the recorded ‘OINCH' figures were only £79.810.60
and £91,240,69 respectively, and therefore they vould not be overstated by
£477,500,
T Taylor MA FCA MAK MEWI
KPMG LLP
typo a
POL00061214
POL00061214