Cash Shortages Held in Suspense Account
Discussion document HoA Workshop - 30 January 2002.
Background
During Horizon Implementation an alarming increase in Cash Shortages held
in table 2A suspense accounts was experienced . In hindsight perhaps this
should have been expected following the introduction of anew a
computerised system with new balancing routines. As a consequence
branches who had not previously experienced problems balancing, looked to
the Horizon system as a potential reason for a sudden change in
performance when they failed to balance correctly. Horizon was an Enigma to
many , including some RNM’s and so the myth was born . It must be a
system fault ! . At it’s height the shortages were just under £10m - more than
three times the pre Automation norm . To tackle this the Horizon Evaluation
Review Forum Sub Group ( HERF Sub Group ) was established , lead by Gail
Morley, Head of Transactional Processing, and latterly by Lynn Kelly . The
group was targeted with getting losses back to pre-automation_norm and
establish if there was any truth in the system having a fault that caused
shortages / gains.
The group set about re-enforcing the losses/ gains policy through the
Territories and the Retail Line. A practice that had produced excellent results
during the Retail line Trial. Information about long term losses, where a
system fault had been claimed, was collated by the Territories. The result of
the investigations of claims of system faults, which included support from the
BSM Problem Management Team, found the system to be sound, and in the
cases thoroughly investigated, found poor accounting practices to be chiefly
the cause of a downturn in performance.
System Sound
There have been and will probably continue to be faults with the system.
These are logged by Pathway and dealt with accordingly. In 98% of the cases
the fault has also caused an error notice to be generated and the incident is
closed i.e. error issued and account put back in balance . A small percentage
do not cause an error and BSM Problem Management deal specifically with
these incidents to seek a solution.
Poor Accounting Practices
These fall into three categories - postmaster inapt , postmaster playing
the system , learning curve, the latter being the main cause . With
tremendous effort both in Territories and BSM the shortages were brought
back to acceptable levels at the Year End (£3.6M) . The BSM Suspense
Account Team set up as part of the Retail Line Review - were successful at
reducing amount held in table 2A in the two trial areas and as a result the
operation was expanded in May 2001to take on the whole network in advance
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of RLR roll out . The pattern has continued to improve steadily and is now
better than pre - automation with amounts held in table 2A lower than they
have been since records were first kept in January 1998. However, there are
still large numbers of losses held that are over 12 months old, and many than
do not comply with business policy.
New Processes for Dealing with Horizon System Fault Claims
A gap that has been highlighted during this work, is that our processes for
dealing with these cases are not robust , in the event of the postmaster
refusing to make any shortages good . One recourse in these situations
would be to take the postmaster to court - but on the many cases we have
tested - we are very short of the evidence that would be required . For
example are our training records complete , do we have records of support
requested and given , is there record of the calls logged , do our scripts on
the Helpdesk show a duty of care , do we have a signed record of what was
discussed with the Postmaster during visit to investigate the problem . As an
off shoot of the HERF Sub Group - we have run two workshops to work
through the processes - covering most scenarios that documents the
responsibilities of the postmaster , BSM ( Customer Relations , Helpdesk ,
Problem Management , Suspense Account Team ) and the retail Line - This
has been endorsed by Legal Services .
So what are these responsibilities ? Lets start with the postmaster
Postmaster
e Responsible for any shortages / gains and is obliged to make good /
withdraw immediately.
e Investigate cause and if a system fault, or accounting error is strongly
suspected , must contact NBSC immediately for balancing support, and if
appropriate request authority to hold an amount in suspense account.
e Ifasystem fault is claimed, but at the time of the call not proven, the
postmaster would not receive authorisation and would be requested to
make the amount good pending investigation.
e The postmaster would be advised to contact HSH and report a system
fault, providing they have specific evidence of the fault. If they have
already done this they will be asked for the HSH reference number and this
will be recorded for future reference. Without specific evidence a system
fault will not be accepted by HSH, or POL (should a claim of system
fault be subsequently made at a later date).
It is not acceptable for a postmaster to put an amount in the suspense
account without authority .
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Business Service Management
e Will log the call with a unique incident number.
e Register the call as a claimed system fault (Problem Management,
Customer Relations, Suspense Account Team)
e Match the call with the HSH call log to identify if the incident has been
accepted for further investigation.
e Utilise the information for further enquiries by the outlet , retail line,
Transaction Processing , or other internal customers ( Problem
Management , Customer Relations ), and inform either outlet or retail line
of the next steps when asked for information.
e Retail Line will be given the background .
Retail Line
e Main responsibility here is the pursuance of the loss.
e Must investigate the postmasters version of the problem , decide whether a
visit or a telephone call is necessary, produce a record of the discussion,
and obtain a signature from the postmaster confirming the report is a true
reflection of what was discussed.
e If new information found, request outlet to ring NBSC but also make good.
e Respond to escalations from BSM Suspense Account Team within 28 days
indicating one of the following.
e date amount made good.
e date amount written off (if write off considered then retail line
representative must check with BSM Problem Management to
establish if case previously dealt with as a problem office).
e request for amount to be treated as a Hardship case (details
provided).
In extreme cases only, responsibility for the amount can be accepted by
the retail line representative but in these cases it will be classified as
unauthorised as it does not meet current business policy. The representative
will be asked to clear the decision with their Head of Area and to manage
the incident to its conclusion. Regular updates will be requested by the
Suspense Account Team.
e Must make a decision in the event the postmaster does not make good.
Recommendation to be made to Heads of Area for consideration of
termination of contract , litigation ,write off.
New processes have been written to provide guidance in cases where a
branch claims an accounting discrepancy has been caused by a system fault.
The onus is on the branch to report they have a system fault to HSH at the
outset and is a requirement covered under the Horizon System User Guide.
The claim must be substantiated with specific evidence.
The processes cover the existing call handling procedures operated at the
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NBSC and HSH, and provide specific information to the retail line when an
outlet refuses to make an amount good.
The intention is to cascade the new processes to the retail line and the
views of the Heads of Area are sought in respect of the most
appropriate method to undertake this exercise.
Current Performance
Since taking over responsibility for providing authorisation for amounts held
in suspense accounts and challenging unauthorised amounts held, table 2a
(counter losses) has fallen to £2.2M, a fall of 36% (position at period 8).
The activities of the Suspense Account Team have been specifically focused
on the reduction of amounts held in agents table 2a (counter losses). The
reduction of £970K achieved in table 2a represents a fall of 47%.
The table below indicates how the amounts are spread across HoA patches.
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Specific branch details can be found in the reports send to Heads of Area
monthly .
As you can see there are large amounts being held that are older than 6
months old. Similarly there are a high % of losses held that are unauthorised.
With the help of the retail line these amounts could be significantly
reduced. The business requires the support of Heads of Area before
amounts begin to rise again, and the possibility of the business
incurring unnecessary losses through potential write off.
Next Steps
e Cascade of the new processes that cover the existing NBSC/ HSH
procedures and provide guidance to the retail line in respect of amounts
held by branches. Method to be agreed by Heads of Area.
e Amounts held that are in excess of 6 months to be reviewed by Heads of
Area and pursued to conclusion.
¢ Amounts held that are less that 12 months old and unauthorised to be
challenged and resolved by AM’s/RLM'’s using the existing Suspense
Account escalation process.