Branch Discrepancies
Recommendations Report
April 2023
J Cureau de Change
—_ iia
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Building a better)
working world
Contents
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Page2
Executive Summary
Engagement Background, Scope and Approach
Current State Assessment Findings
Recommendations
Next Steps
Appendices
PO Branch Discrepancies Review
36
46
48
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Executive Summary
Section 1: Executive Summary
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Discrepancy Management requires an increased focus on compliance supported
by process transformation, master data management and system optimisation
High and increasing
provision balance
Lack of compliance to
established policy
Complex, manual
resolution process
System Limitations
Lack of a ‘single source of
truth’
Investigation duration
constrains capacity
The Provision balance has increased by 46% since 2021
which is directly
period end from [ie
impacting PO's Balance Sheet
There is no formal mandate to comply with policies leading to
more discrepancy investigations and there are few
procedures to recover losses
Management of resolution process is complex as a result of
fragmented systems, multiple data hand-offs and extensive
manual workarounds
Finance system limitations conceal discrepancies and add
pressure to the reporting process, for MI reporting and
provision management
Multiple systems and reporting mechanisms means there isn’t
a single source for discrepancy Ml and insufficient visibility of
losses, gains, and write-offs
Significant impact on the capacity of service and support
teams to adhere to the 10 day investigation target to resolve
(78% of Tier 2 completed within target against a KPI of 90%)
PO Branch Discrepancies Review
To examine and document the systems data and data flows for
the interlinked areas that drive discrepancies between Post
Office (PO) and branches.
» Current state assessment, including process walkthroughs
» End-to-end data and process flow documentation
» Analysis of key findings driving branch discrepancies
Recommendations made based on our assessment:
Overhaul the Postmaster(PM) Franchise Framework
ee and roll-out a refreshed training programme
Utilise current state observations to redesign and
oh implement improved processes
Review PO SAP capability to optimise usage for
FSA aiscrepancy management
Transform discrepancy reporting and analysis
Reduce system usage, underpinned by an enterprise
wide IT Strategy
Embark on a Roles & Responsibility and Internal skills
& capability assessment
=] Implement Master Data Management (MDM)
Create a culture focused on commercial outcomes
and compliance
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Engagement Background,
Scope.afid Approach
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Section 2: Engagement Background, Scope and Approach
We assessed and documented the processes, systems and data flows for the
interlinked areas that drive discrepancies across PO
Over the past 10 weeks, we have undertaken the following activities to conduct this assessment:
Interviewed identified key stakeholders } '
Reviewed and evaluated process documentation '
Reviewed current accounting steps ' I» End-to-end Data and Accounting Flows: Details existing PO processes,
Reviewed existing PO process artefacts to identify areas of ' . ' system hand offs, data flows and accounting flows
improvement 1 Project ') Issues Log: Summarises key findings, issues and gaps identified in
Reviewed governance framework I ee I relation to in-scope areas
Reviewing existing Ml & Reporting oo I» Recommendations Report: Details our findings and recommendations
PIMOS REC ChieroReeacea I i with regards to the existing Data Management & Reporting across PO
Process 4 4
This work identified 8 recommendations as to how PO might improve their end to end management of discrepancies across the network.
_—_=
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Section 2: Engagement Background, Scope and Approach
Branch discrepancy lifecycle has been assessed against the core components of
a typical Finance Operating Model
We have conducted a comprehensive review of the four focus areas, (cash and cash equivalents, stock, OSO, and network monitoring and support), assessed against the operating model
design framework below
Policy & Controls Process Performance Measurement
m
+ Focus on PO's governance, internal _—_« An assessment of the efficacy of + Understanding PO's approach to 3
controls, policies (both internal and processes across the Branch monitoring and measuring 2
external) and risk management Discrepancy lifecycle including the performance, including KPIs defined in 5
level of process standardisation PO policies =
Organisation
+ Consideration of PO's organisational structure, and its ability to meet the needs of branch discrepancies 8
+ Assessment of lines of responsibilities and accountabilities across operational teams
Data People Technology
+ An assessment of PO's approach to _—+ Appraise the PO's approach to + Review the technology landscape, 4
the structure, timing and consistency _ specific skills, role specification and _including systems, tools, interfaces g
of data training for both PO staff and it’s and level of automation 2
agents, in addressing and mitigating 3
Branch Discrepancies
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Section 2: Engagement Background, Scope and Approach
To support the assessment, 22 stakeholders have been engaged across both
core operational teams and supporting functions
To understand the current state and challenges, we engaged each stakeholder listed below. Each session covered their perspectives on processes, data flows, and system support within each
of the interlinked areas of Cash & Cash Equivalents, Stock, OSO Button and Network Monitoring.
End-to-end - Branch Network Monitoring & Support
Doug Brown Cash Forecasting Simon Worboys Investigations Processing
Alison J Clark Network Monitoring, Reconciliation & OSO Trevor Ward BSC Processing
Jo Milton Overall end-to-end perspective Michelle Stevens Current Provision
Katrina Holmes Overall end-to-end perspective Jenny Smith Former Provisioning
Tracy Bannister Discrepancy reporting
Cash Equivalents & Stock
Stakeholder(s) Engagement Focus
Finance & Commercial
Andrew Stevens Inbound Stock
Pete Marsh Area Management Stakeholder(s) Engagement Focus
Sam Conway OSO & Mail Management Charlotte Ukaigwe Finance / Provisions
Oliver Firth FX & ATM Management Olha Ellis Finance
Tom Lee Finance
Wider PO Engagement David Southall Contract Management
Stakeholder(s) Engagement Focus Jayne Pardoe Contract Management
Garry Hooten Internal Audit Ranjeet Jouhal PM Onboarding
Wilson Gill Systems & MI
Nik Gill NBIT
—
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Current State”
Assessmentbindings
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Section 3: Current State Assessment Findings
A lack of granularity of data in high risk areas due to fragmented data flows, a
lack of policy mandate on R&D compliance & recoveries poses organisational risk
Set out below is a summary of the high-level activities across the discrepancy lifecycle. Within it we have highlighted a heat map of the most significant issues, operational issues and core
process gaps that have been identified:
Cash & Cash Transactions & In Branch Discrepancy Discrepancy Resolution & soni ;
Identifications J Investigations Outcome Giovisioning (SIA) aaa)
P . PF Tier 2 Established Provision Dispute or Discrepancy
inbound Cash, (nisounts Sas (neoiezemn i Bodkrettans [eae I Investigations loss/gain Allocation acceptance reporting
aot Financial
oso Discrepancy call Tier 3 Provision Repayment 4
‘Outbound Cash transactions management Investigations Write off Monitoring mode Rapa)
(provision)
Obsolete Stock Card controlchecta . cctv Committee Transaction Repayment Balance Sheet /
transactions investigations Escalation correction plan PL
FX REC submission Escalation ResolUtion Acceptance CapaLOM
Reporting
. Operational —_
: 7 7 Key: Issues G15
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Section 3: Current State Assessment Findings
Stakeholders feel that significant manual efforts in investigations are
unproductive and that there is a lack of robust policies on recovery
“There is a significant
effort towards discrepancy
resolution, however there
is no formal process to
recover it from PM”
“The lack of compliance by PMs
on Review and Dispute increases
work pressure on PAST and
network support teams”
“We are running old systems
which can't be updated or
integrated with other systems,
leading to manual processes”
“There is an excellent
suite of training materials TAGES REL ‘h “No end-to-end understanding
available - it just needs to } ea ma pT across Finance & Investigation
be utilised and na? teams about the composition
. “Data is used for
—_ scorekeeping rather than
driving insight”
“We have a wealth of “We are good at — Cie aed
resolving
“There is no formal continuous
data, we just need to
use it” discrepancies, we just
er lack capacity”
= improvement for Post Masters -
mandatory training is focused on
legal compliance, rather than
day-to-day activities”
“We mobilise
resources to address
challenges”
“We have an appetite to
“There is a focus on managing
change and improve the
= , discrepancies rather than
There are high levels of addressing the root cause”
manual compilation of data
“Auto-rem” for cash is <
for both investigations and
Discrepancy reporting”
working well and it should
be replicated in stock”
Key: Strengths Improvement areas EY
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PO needs to critically change their discrepancy reporting and investigation
processes to effectively manage branch discrepancies
5, 148 asx ver
£5.4m (gross) 49% VPP
Total volume/value of discrepancies
raised in P10
712 ”9% VPP
£3.8m (gross) #27% VPP
Number of new cases within P10 (70% of
total discrepancy value)
+ Lack of end-to-end MI insights into
the discrepancy life cycle
+ Discrepancy analysis does not
distinguish between PM or PO
causes
+ Dashboard metrics are insufficient to
do thorough performance
measurement and analysis
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22%
Resolved (inc. PAST and
Investigations)
51%
of new open cases assigned to PAST status
23%
In progress - T2/T3 investigation
11%
open no information
+ Onaverage it takes 25 days to
resolve Tier 2 cases and 86 days to
resolve Tier 3 cases compared to
stated policy of 10 days
+ Each discrepancy allocated multiple
case numbers throughout
investigation lifecycle
+ Ml Insights are siloed across each
investigation tier
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£412k
Established loss or gains found
(gross)
£194k
Transaction Correction (gross)
£208k
monthly payment expected from
Branch to PO
No data
is measured of the actual repayment
made by PM in Dynamics
+ Prior year comparative data
not available due to lack of
historical MI
+ No observed mandate and
process for recovery of losses
+ Inaccuracies in allocating a
discrepancy as a shortage or
surplus, PO can't give accurate
Established Losses and Gains
breakdown
41%
£1.5 (gross)
Value of new Review or Dispute
cases related to 10 branches
691
Branches have open investigations
related to 712 open cases (as at
P10)
+ Branch level discrepancy data is
not disseminated to Branch
Assurance team
+ Insights focused on prior vs
current period analysis, there is
no insights into annual or
quarterly performance
—
VPP: Versus prior period EY
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More than 70% of P10 cases are still under investigation, with limited insights
on the reason, status and nature of discrepancies
No. of Average
Case Status % Of Value
cases Values
PAST 388 ~T 51%
Past - In Progress 314
Past - Resolved 74 i
0 PAST & Investigation 79 I 19%
1 1 % Full Tier 2 Review 4
relate to cases at have no information Loss Established 1
Investigation Stage
PAST - In Progress 53
Resolved 5
1 9 % Written off 9)
relate to cases with 5 1 % Branch to resolve 7 I IRRELEVANT
both PAST and aati t A
Investigation IDs relate to cases at Investigation Stage 165 I 19%
Estee Full Tier 2 Review 8
Loss Established 5
No information 39
Resolved 14
Resolved to Branch 16
Written off 83
No Information 80 I 11%
Total 712 I
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Provisions are increasing significantly due to age of discrepancies and delays in
resolution and established loss recovery
Provisions
Provisions have increased by 46% since 2021 period end from
{imreevant! of the provision is attributable former postmasters which comprises 57% of overall
provision, for which there is no visibility to the case history in dynamics for resolving pending
actions
of the provision is attributable to pre April 2021 discrepancies which equates to 48%
of overall provision, for which there is no visibility to the case history in dynamics for resolving
pending actions
Current post master provision has increased fro
43% increase over last 3 reporting periods.”
P10) equating to a
Debt : Provisions
Observations
Development of provisions is done manually in Excel spreadsheets, with data inputs from
multiple teams. This exposes provisions to potential calculation errors and incorrect balances.
There is a lack of sufficient validation and supporting documentation, preventing a robust audit
trail
High risk of write offs due to established losses retained in provisions for resolved / old cases
due to outstanding recovery decisions
There is insufficient account reconciliation activity, Irregular and inconsistent reconciliation
activity increases the risk that all account balances do not agree, giving an unclear view of POs
financial position.
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Provisions movement by Period ( As of P10 )
Pron
. .
IRRELEVANT
* the spike was due to a new proactive stock check process that was introduced by the
stock team, several high value stock cases were raised
=~ IRRELEVANT)
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3.1 Cash and Cash
Equivalents
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Cash & Cash Equivalent processes are reliant on manual interventions with
limited system controls, leading to inaccurate accounting and non-compliance
Process Map
PO Branch Discrepancies Flows - Cash pdf
Key Issues
» Inaccurate Accounting: Challenge in
ensuring the accuracy of manual cash
declarations . P10 assigned volume is 57%
higher YTD than the same period last
financial year
» Non-compliance: Failure to comply with
daily or weekly balancing policies can result
in discrepancies remaining hidden for
extended periods
» System Controls: Limited system controls
to proactively identifying data & accounting
errors and to prevent duplicate scanning of
barcodes
on manual counts from Post Masters, e.g.
to confirm the outbound cash pouch values,
which may lead to inaccuracies in the
» Manual Interventions: Significant reliance
reported values in Horizon i
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Section 3: Current State Assessment Findings
Although standardised to a degree, Cash and cash equivalent processes are
generally manual in nature, causing a manual transactional processing risk (1/2)
The assessment of PO's cash and cash equivalents processes covers six sub-process areas: cash forecasting, inbound cash, outbound cash, cash declarations, foreign exchange, and
automated teller machines (ATM). Despite being partially automated, these processes have specific control limitations that affect the accuracy of compliance and cash balancing. As of year
to date, 77%* of resolved cases are related to discrepancies in cash or cash equivalents
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Findings
Impact
Cash forecasting is a manual process based primarily on
multiple Excel and Bl reports. This used to be system-driven
until 2019/20, when CWC was brought in on account of SAP
Management Information (MI) on the accuracy of cash
forecasting in relation to additional cash requests is limited
‘An automated cash "remming" system has been implemented
to enhance the accuracy of inbound cash management
Cash is counted under camera surveillance in the cash centre,
and this footage is used in discrepancy investigations
However, this is not being utilised effectively within the Branch
There is a lack of system control to verify the accuracy of
manual cash declarations (60% of declarations are accurate)
Compliance with existing Policies is inconsistent across the
network and there is a risk of PMs changing cash declarations
to meet what is on the system vs declaring a discrepancy, not
declaring losses or carrying losses over at month end
Specific control improvements are required to enhance cash
balancing efficiency and accuracy, to ensure PMs are
performing manual counts and counting the value of notes, not
the number of notes
Training on managing potential discrepancies is optional, and
the uptake rates are low
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Cash estimation for branches is based on daily cash
declarations and inaccurate declarations has a cascading
impact on estimating the cash position of the branch
Inaccurate cash positions can pose liquidity risks for branches
in day-to-day transactions
Increased volume of cash discrepancies causes delays in
identification and resolution
Investigation delays and escalations require Branch assurance
visits
Real discrepancies are hidden along with temporary
accounting/system issues, creating complexities in
investigation and delays
Increasing workload of the Network Monitoring team by
proactively monitoring branches that have not completed the
daily cash declaration & addressing instances of non-
compliance
Lack of mandate for robust training and compliance results in
inaccurate accounting errors
* As per P9 New investigations dashboard
Power BI report Significant
change needed
Limited change
needed
No change
needed
=
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Section 3: Current State Assessment Findings
Although standardised to a degree, Cash and cash equivalent processes are
generally manual in nature, causing a manual transactional processing risk (2/2)
A continued evaluation of PO's current processes relating to Cash and Cash Equivalents, indicated that processes are partially automated and as such have specific control limitations, which
impact discrepancy volume to compliance and cash balancing accuracy. Outbound Cash and Cash equivalent discrepancies are lower in volume, however they can still have a significant
limitation in discrepancy resolution, due to limitations within PO's evidence base
Findings Impact
There is a significant reliance on manual counts from PMs to + Manual counting errors in outbound cash can result in
confirm outbound cash pouch values, which may lead to increased discrepancies These discrepancies are challenging
inaccuracies in reported values to investigate due to a lack of data and evidence
There are limited controls in place at branches for cash
handling, and existing controls are not adequately reviewed for
effectiveness with regard to CCTV checks
‘Outbound cash discrepancies amount to cise} spread
across a high volume of cases (4000+), with an average value
of £96 per case
There are 500 errors a day from branches sending cash back to
the Cash Centre, Total values amounting to cl iT
shortages and c [i in surpluses
ATM cash declarations are performed manually without any Increased risk of the retention of surplus cash
system controls to verify the accuracy of the declaration Delayed identification and resolution of cash and cash
ATM discrepancies are often of high value due to stacked equivalent discrepancies due to lack of data integration
discrepancies as a result of delayed balancing relating to failed transactions
There is no feature in Horizon to distinguish a temporary
surplus resulting from a failed transaction
Increased risk of discrepancies in FX processing due to manual
times which may result in inaccuracies scanning errors
+ Increased workload for investigation to manually review and
verify scanned pouches in Horizon
3)
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change needed needed needed
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Stock processes are predominately manual which contributes to discrepancies,
inaccurate reporting and a lack of inventory visibility
Process Map
PO Branch Discrepancies Flows - Stock.pdf
Key Issues
» Manual Stock Rem in: Manual Rem-In entries
of Stock increase discrepancies due to
inaccurate input in Horizon, e.g. wrong
product lines or quantities
I!» Inventory Management: No stock
i management system to track overall stock
t levels in branch, limiting opportunities for
{I stock analysis and Royal Mail reporting
» Investigations: Stock related discrepancies
are difficult to resolve due to the lack of
accurate stock data
Non-compliance: Low levels of accuracy
within monthly stock balancing activities
between physical stock vs stock balance
shown in Horizon
Master Data Management: There are
multiple systems, with a lack of integration
‘and common master data e.g. different
I product IDs across systems
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Section 3: Current State Assessment Findings
Stock discrepancies are largely driven by challenges with the manual nature of
stock “Rem-in” processes and suboptimal inventory management controls (1/2)
PO's stock process evaluation has 5 focus areas: stock dispatch, inbound stock "Rem-in", transactions, stock balancing, and stock returns. The manual process and multiple systems lead to
low branch stock visibility, making it challenging to investigate discrepancies. 7% of resolved cases this year relate to stock, which is likely underestimated due to the absence of a formal
process for raising stock discrepancies and controls within the stock adjustment process
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Findings
Impact
There is no integrated process of Inventory Management for
Stamps to manage optimum quantities within branch, due toa
lack of visibility of stock holding in Branch
There are multiple stock systems, with a lack of integration and
common master data, therefore specific stock volumes become
difficult to trace across multiple systems
“Manual input of stock data into Horizon by PM
If a discrepancy occurs for inbound stock, PO has limited
opportunity to investigate, as Galaxy and Horizon do not share
the same Product ID numbers This means that a typical
resolution is to issue additional stock
Network monitoring team pro-actively checks stock Rem-in
entries at branch, but has no visibility of what has been sent vs
what has been entered into Horizon
Incorrect stamp categories are selected in Horizon when selling
(eq 1st Class button selected when a 2nd Class stamp is sold).
The classifications of different product lines in horizon is,
complex and are often hard to find
0SO button is being used inappropriately and PMs are not
making appropriate stock adjustments in Horizon.
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There are no singular branch reports available to have visibility
of stock position at each branch against dispatched inventory.
This leads to reporting challenges with Royal Mail who are
requesting additional stock information to meet SOC
requirements
No system interface between Galaxy & CWS, meaning it is
difficult to track stock PO loses granularity of data volumes in
high-risk areas, such as special stamps
Stock input discrepancies occur within Horizon, through a
combination of transposition errors and misallocation of stock
to incorrect line items in Horizon “Rem-in" errors result in
stock adjustments & write offs without establishing the onus of
losses
Any differences in stock as a result of inaccurate stamp
transactions or unaccounted sales are advised as stock
adjustment, which impact the cash held figure on Horizon and
therefore is a loss to PO
SO mis-use leads to a lack of visibility of accurate stock levels,
and the potential to misrepresent sales, impacting PM
renumeration
Significant
change needed
Limited change
needed
No change
needed
3)
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Section 3: Current State Assessment Findings
Stock discrepancies are largely driven by challenges with the manual nature of
stock “Rem-in" processes and suboptimal inventory management controls (2/2)
A continued evaluation of the PO's current stock processes, data flows and control inefficiencies are directly impacting stock reporting accuracy, leading to an increased risk of stock related
discrepancies being assigned to a suspense account
Findings Impact
PMs perform monthly stock balancing activity between physical + In the absence of stock reporting compliance, stock values
stock vs stock balance shown in Horizon, however there are returned to PO can understate the level of stock in branch
branches that do not undertake any full physical stock-take
Discrepancies arising out of stock (other than Rem-in) are not Resolution of stock discrepancies can either be a stock
checked by any other teams and does not go through a Triage adjustment (which hits the suspense account in CFS) or
process like Cash Manual reporting / accounting for stock transactions corrections; and there is no recovery from PMs
(stamps) leads to the possibility of manually reporting incorrect __for the same
stock levels at Branch by PO
It is recommended that Branches SHOULD perform weekly
balancing to ensure accuracy. However, many only balance at
i ure ace
There is no process to request excess stock to be sent back to Excessive stock holding at branch results in higher inventory
PO (except for obsolete stock) amounts with risk of potential misuse by PMs, making it
Contents of pouches returned do not match Horizon receipt / difficult to accurately determine branch stock requirements
entry on Horizon showing what the branch recorded that they It is challenging to investigate causes of stock discrepancies
sent out due to limitations with evidence-based discrepancy resolution,
leading to either transactions corrections or transfers to the
“Suspense account"
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3)
Significant Limited change No change
change needed needed needed
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3.3 Network Monitoring
and Support
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Network Support and Resolution is reliant on reliable MI but fragmented data,
increasing volumes and lack of capacity is limiting timely discrepancy resolution
Process Map
PO Branch Discrepancies Flows - Network.pdf
Key Issues
Non-compliance: PM's not following
established protocols once review or dispute
button has been pressed
Skills & Development: Lack of mandatory
training for PMs on addressing and managing
discrepancies
apacity: Increasing volumes, coupled with
increasing uncontactable PMs, results in
resolution delays and increased workload for
investigations teams
Increasing Provisions: No mandate for
recovery of established losses contributes to
increased provisions
Discrepancy tracking: No single case
reference number for a discrepancy, or a
single date stamp for Review or Dispute
Button presses, limits effective reporting
Reporting: Multiple reports cause a lack of
single source for discrepancy MI and
insufficient visibility of cause, losses, gains,
and write-offs
BO Branch Discrepancte:
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Section 3: Current State Assessment Findings
Fragmented systems and a lack of a single source of truth distorts the visibility
of the end-of-end discrepancy lifecycle (1/2)
An evaluation of the PO's current processes relating to Network Monitoring and Support, focuses on discrepancy identification, branch support, investigations and resolution. The process is
heavily reliant on a number of different systems for investigation references, with case management data captured on Dynamics for current PMs and Excel for former PMs. The Network
Monitoring and Support processes investigate on average 4800 cases on a monthly basis.
Findings
Impact
Lack of a formal process in training PMs, assistants and
clerks in addressing Branch Discrepancies and day-to-
day operations
There are discrepancies that are raised directly with
team members, rather than following the branch
support team protocol
PMs are not always contacting the branch support
centre when there is a discrepancy. They press the
Review or Dispute button, but do not follow protocol
There is no mandate for, or consequence to PMs for
non-compliance in engaging with BSC for an
investigation
Cases escalating into Tier 2 due to PAST not being able
to contact the PM have increased 190% in FY23,
compared to the same period last year
Insufficient process support for PAST team to contact
PMs within days to resolve Review and Dispute button
discrepancies (83% of cases in P10 assigned ‘PAST’
were open / unresolved)
Lack of adequate response by PMs in resolving
discrepancies
Workflows are not prioritised by value
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Higher risk of accounting errors, resulting in more discrepancies,
and a lack of formal training leading to inconsistent approaches to
Branch management of discrepancies. 72% of discrepancies are
driven by Inaccurate accounting of transactions at Branch
New PM's confidence in training after undertaking e-learnings has
dropped to 85% (the lowest value year-to-date), demonstrating low
levels of confidence (and hence compliance) with existing trainings
PMs are not always following standard processes, and contacting
individuals via e-mail runs the risk that discrepancies may be
missed (due to staff absence), and also impact workflow planning
If PMs were following protocol, it would release capacity within the
PM Account Support Team (PAST)
Significant impact on the workload of the service and support
teams to adhere to the 10 day timeframe to resolve (78% of Tier 2
cases are completed within 10 days against the target of 90%)
Insufficient process support results in process delays beyond those
stated in the policy, ie. delays in case resolution compared to the
timeline stated in polic
Tier 2 resolution is 25 days (vs 10 days as per policy)
Tier 3 resolution is 86 days (vs 10 days as per policy)
Significant
change needed
Limited change
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Section 3: Current State Assessment Findings
Fragmented systems and a lack of a single source of truth distorts the visibility
of the end-of-end discrepancy lifecycle (2/2)
The complexity of investigations is increasing due to incomplete data, causing delays in decision-making. The Discrepancy Mis limited in providing a complete end-to-end view, from the
initial Review or Dispute button press to resolution or recovery, resulting in reduced visibility.
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Findings
Impact
Transaction corrections can both resolve and create
discrepancies
Once a payment has been made by a PM, there is no
way to track and assign the payment to a specific
discrepancy Any adjustments are made at a branch
level
Discrepancy reporting is manual and labour intensive,
which requires cross referencing several data sets and
manual look ups of numbers to develop the context
supporting it
There is no single source of truth that captures the
entire discrepancy lifecycle from R&D button press to
recovery/resolution
Formers agent provisions are not available in
Dynamics, meaning that the actions required to
mitigate/resolve are not visible (YTD, 65% of the
overall provision, £25m relates to formers debt)
No visibility towards the Established loss, or recovery
position in the Suspense account
Dynamics does not allow fixed review/dispute dates
Each escalation step generates a new time stamp,
making it impossible to analyse resolution from the
start of the process
There is insufficient account reconciliation activity, and
weaknesses and inefficiencies lead to inaccuracies and
mistakes across finance reporting
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+ Longer duration to correct transaction corrections, or their
delayed application can result in higher provisioning
There is a risk of financial loss to PO as Leadership may not have
clear visibility of the extent of discrepancies, established losses
and established gains
Distorted ageing of discrepancies (not reflecting an accurate
position in time), as ageing in Dynamics is updated with new dates
each time a discrepancy is escalated
Inconsistent storyline/context on the increase or decrease of
provisions as to the composition of provisions due to a lack of
single discrepancy reporting
System limitations within Dynamics leads to a gap in analytical
opportunities
Irregular and inconsistent reconciliations activity increases the risk
that all account balances do not agree, giving you an unclear view
of the financial position
Significant
change needed
Limited change
needed
No change
needed
Section 3: Current State Assessment Findings
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Rationale for the increase in provisions and its connection to relevant
discrepancies has not been established due to insufficient data and insights
Measurement of provisions is done manually in Excel spreadsheets and with manual feeds from multiple teams. There is a lack of sufficient validation, subjecting it to errors, and a lack of
sufficient evidence and documentation, resulting in increased risk of transposition errors and no robust audit trail.
Findings
Impact
Manual Excel spreadsheets are used for measuring
provisions, with manual data feeds from multiple teams
lacking sufficient validation, evidence, and
documentation, leading to increased risk of errors
Finance only consolidates figures from the Past and
Network Monitoring teams, without sufficient data
insights to establish a relationship between provisions
and discrepancies, resulting in limited visibility
The Investigations team carries out functions related
to provision computation, such as providing the CFS
and BI data extract . As a result, Finance lacks an end-
to-end view of the data composing the provisions
Established Loss figures are increasing due to a lack of
process and mandate for loss recovery
There is no policy or process for recovering established
losses, and the amount is placed in a suspense account
until recovery action is taken. This is mainly due to a
lack of required data to operate control around
Established Loss/Non-established Loss and limited
visibility in discrepancy reporting
Page 27
PO Branch Discrepancies Review
Provision balances are at an increased risk of transposition errors,
with a lack of a robust audit trail of the context behind the
numbers, further increasing the risk of errors
The longer duration of discrepancy resolution directly impacts
provisions, with an average of +55 days needed to resolve
escalated tier 2 discrepancies
Aging investigations become increasingly complex as data doesn't
show the full picture, causing decision delays
Overlapping accountability within and between PAST, Finance, and
Network Monitoring teams leads to duplicated efforts and
difficulties in determining accountability for provision-related
issues
The debt position will continue to increase until recovery activity is
recommenced on properly established losses
=
EY
No change
Significant
needed
change needed
Limited change
needed
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3.4 OSO Button
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Section 3: Current State Assessment Findings
There is a misuse of OSO* button, leading to a risk of inaccurate PM Rem
calculations, inventory records and accounting
7
1 snot tg espe APO RPO ES og oan
v
Acknowledgement of misuse: It is widely
known that the OSO button is not used for
the intended function and there is a lack of
consequences for non-compliance
High Usage of OSO: 84% of OSO Sales are
reversed (£94/112m), highlighting it's
prominent usage by PMs. High levels of
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i I* No associated Moron entries atthe time of customer » PM REM Risk: PMs using the OSO button to
cae (Wane cacy esac art soto, reverse transactions can lead to the
I =I misrepresentation of transactions used for
the calculation of PM REM
Investigation limitations: As OSO is an open
field - investigating OSO discrepancies/
reversals is challenging
Inventory Impact: OSO usage impacts
inventory management as there is no
visibility of what stock is sold via OSO,
leading to a disconnect to stock in store vs
recorded on Horizon
v
—=
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Section 3: Current State Assessment Findings
OSO (open postage/other stamp ordinary) is widely recognised as being misused
in branches
OSO was intended for non-standard mails transactions through Horizon, however it is now used for various purposes including: Retail Sales, Card transactions & then reversed out cash,
National lottery transactions, Postal credit facilities, Postal order sales (e.g. where cash is the only payment option and Customer unable to withdraw cash as using mobile phone to pay). This
creates an open text field, not aligned to a specific product ID.
Findings Impact
SO has become a hiding place for non-compliant + Unadjusted OSO transactions can significantly impact PM's
transactions remittance
Lack of analysis on volumes of use and controls is due» Lack of associated Horizon entries at the time of customer
to the challenge of reconciling OSO records with transactions makes it difficult to evidence the reason for specific
reversals as it is an open entry 0SO transactions and usage
There is a high level of usage because the OSO button +The system design both drives OSO usage and enables its use for
is easy to find for non-standard stamps and is on the the sale of key stamps
front page of Horizon, which results in POs reversing it
later
Key stamp product IDs are linked to enable sales via
SO, which hinders inventory management and stock
recording
PMs using the OSO button to reverse transactions can
lead to the misrepresentation of transactions used for
the calculation of PM REM
There is a general acknowledgement that there is mis-
use, although limited compliance controls in place
Risk of inaccurate reporting of cash vs card retail sales
by using OSO button as workaround to take payments
by card /cash to reimburse or vice versa
—_—
Page 30 PO Branch Discrepancies Review Significant Limited change No change EY
change needed needed needed
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3.5 System and Data
Flows
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Data flows related to managing discrepancies are ineffective due to having a
complex systems landscape, manual interventions and a lack of rigour in MDM
@ Process Map
PO Branch Discrepancies Flows - Data Flow.pdf
Key Issues
Lack of integration: There are multiple
systems, that are not integrated, e g
Credence does not interface with Dynamics
Multiple systems: 11 systems and tools used
in core processes, with high levels of manual
intervention
Underutilisation of exiting systems: SAP
II ECC 6 Ois being used, with element of its
1) capabilities not utilised
Master Data Management (MDM): Across the
multiple systems, there is a lack of master
data management, data governance and data
ownership
}>
v
Debt management system: There is a gap in
the systems landscape to address recovery of
non-transactional debt (unpaid invoices).
Defaulted debt is not flagged automatically -
it is monitored manually
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3.6 Current State
Assessment
Summary
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There are challenges across the discrepancy lifecycle from a lack of compliance
rigour within branch to a lack of effective data and controls within PO
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There are challenges with the controls, audits, resources, skills and the manual processes in place, which result in
discrepancies arising from cash accounting and stock management. In addition, the lack of system integration and limited
management information results in complex reporting, ineffective debt recovery and provision management.
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Section 3: Current State Assessment Findings
Assessment against the finance operating model, shows fragmented reporting,
unclear accountability and insufficient training
+ Significant manual Excel interventions and non-
compliance with existing policies posing risks to
the organisation across operational and support
teams
a-N
+ Fragmented, non-standardised and highly manual
processes, especially in investigation, provision
management, and reporting, causing delays and
inefficiencies in decision-making
I __- Performance Measurement Measureme
+ Siloed understanding of branch discrepancy
process among internal stakeholders with a lack of
end-to-end performance reporting
Disconnect in lines of responsibility between Finance and
Network Service & Support teams, leading to duplication of
effort and delayed decision-making
+ Duplication and overlap of process
ownership/accountability leading to capacity
constraints
+ Finance activities are performed by Investigations
and PAST teams, and the previous operating
model changes are not fully embedded, resulting
in unclear RACI
+ Minimal data governance in place
+ Information management processes heavily reliant
on manual methods, posing risks of human error
Insufficient integration of multiple systems and
manual data maintenance, requiring significant
+ PM discretionary training completion rates is low, largely labour
through lack of available resources, but a lack of uptake.
Her seems to be skillset and capability constraints across PO
staff*
Heavy reliance on Excel-based reporting
“this needs to be validated through a capability assessment
—_
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ae i
Section 4: Recommenda
tions
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Branch Discrepancies are systematic of wider business challenges requiring a
fundamental shift in how PO utilises its people, processes and technology
Each recommendation*
is an improvement
opportunity which has
been designed to
address the gaps
identified during the
Current State
Assessment
The recommendations,
while considered
independent, have been
numbered based on the
initiatives that should be
prioritised
Pace of Implementation
@ owGick win co - amos)
ie) Medium Term (3 - 12mos)
@ Strategic change (12mos +
Cost of Implementation
< £500k
££ £500k - £1m
>£1m
Page 37
OO 00000
Overhaul the PMs Franchise Framework and
roll-out a refreshed training programme
Utilise current state observations to redesign
and implement improved processes
Review PO SAP capability to optimise usage
for discrepancy management
Transform discrepancy reporting and analysis
Implement Master Data Management (MDM)
Reduce system usage, underpinned by an
enterprise wide IT Strategy
Embark on a Roles and Responsibility and
Internal skills and capability assessment.
Create a culture focused on commercial
outcomes and compliance
A robust PM franchise framework that incl refreshed training programmes,
mandatory standards, compliance and monitoring is required
Design and implement future state processes with a “ELIMINATE,
MAINTAIN, and OPTIMISE” approach to ensure process areas are fit for
purpose
Detailed assessment of PO's core ERP, SAP ECC 6 0 (CFS) instance to
identify opportunities to leverage the ERPs capabilities to its fullest in the
short term, and ensure S/4 readiness in the long term Note: SAP will end
support for SAP ECC 6 in 2027
Design and implement improved performance reporting cycles, KPIs and
reporting solutions to enable better decision making
Develop a strong MDM framework that will establish control over Master
Data values and identifiers that enable consistent use, across POL systems,
with the most accurate and timely data
Identify and limit the core systems involved in the management of branch
discrepancies This must be underpinned by an enterprise-wide IT strategy
and implementation roadmap to minimise disruption and to ensure system
shut down decisions are strategic
To undertake a roles & responsibilities and skills & capabilities assessment
across the different teams that interact with the end-2-end branch
discrepancies process
Create a culture where the PO and Post Master relationship is supportive,
proactive but also contractually accountable
)
©)
©)
@ee © @
£
E/EE
£
££
£
EL/EEE
*The estimated pace of implementation and cost of implementation at this stage are guidelines only - True cost and pace of implementation will be dependent on scope, resources and project timelines
PO Branch Discrepancies Review
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Section 4: Recommendations
Recommendation 1: Overhaul the PMs Franchise Framework and roll- ® = I ©
out a refreshed training programme
Develop a comprehensive PM Franchise Framework supported by an updated Training Programme and Roll-Out . The PM
Franchise framework should cover the contractual and operational expectations of the PMs. The training programme must Y Co-development with PM supports a culture of
ensure that each PM can easily understand and follow the expectations to ensure effective operations and cohesion across the change and compliance
network. We recommend:
v Robust and accurate MI to drive interventions (eg
training or non-compliance ramifications)
An updated PM Franchise Framework
¥ Reduce Branch discrepancy volumes and
investigations allowing the network monitoring
team to focus on value added activities,
1. Review current PM contractual arrangements, terms and conditions, and escalation routes Identify areas for improvement by
leveraging existing pain points from the current state assessment
2. Identify key performance indicators, key risk indicators and develop quantitative mechanisms and controls to minimise
framework non-compliance
A refreshed PM Training and Roll-out Programme 4 6 ® Cid)
1. Analyse and assess training needs across the network, including an evaluation of the effectiveness of existing training
2. Update training curriculum to ensure it blends digital and instructor-led training effectively to increase effectiveness, with an
opportunity to co-develop with PMs
3. Provide easy-to-use training documentation and a PM community that will serve as a useful reference point for seasoned PMs
and aid future on-boarding activities
4. Rollout the training programme across the network, ensuring that the worst-performing branches are selected for dedicated
training and upskilling
5. Implement a regular 'monitor and update’ programme to ensure training remains fit for purpose
The NBIT programme gives the opportunity to re-base PM contracts and roll out PM training, providing a platform to embed
improved skills and compliance.
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Section 4: Recommendations
Recommendation 2: Utilise current state observations to redesign and @
implement improved processes
Build on the current state assessment process flows to design and implement future state processes with an “Eliminate, Maintain,
and Optimise” approach to ensure process areas are fit for purpose. For each of the core processes we recommend: ¥ Leaner and more efficient operations, reducing
duplication of effort and opening up capacity within
1 Cash teams
+ Automate cash forecasting processes
+ Address manual cash counting control options, e.g. implement technology solutions at each branch
+ Consider alternative controls for timely and accurate cash declarations (e g prompts, blind declarations [removing visibility of
Y Opportunities to automate certain process steps,
allowing greater rigour in information flow
advised value for PMs to encourage accurate/manual counts], compliance) ¥ Elimination of bottlenecks within end-to-end
+ Explore ATM integration options processes, with greater speed of service and
+ Review in-bound scanning capabilities in Horizon to remove ability to duplicate scan a single barcode/pouch function within teams
2 Stock
+ Integrate inventory information across all PO systems e.g. consistent product IDs and location tracking
+ Review options for Auto-REM of stock aligned to the current systems’ capabilities and integration
+ Embed barcode-led stock transactions in Horizon as the sole mechanism to administer stock sales
+ Review and update the Branch stock-take expectations and processes
+ Assess ability to remove the stock adjustment button from Horizon to prevent PMs directly impacting PO financially
3 Network Monitoring & Support
+ Create a single route (and ID#) for discrepancies to be raised, investigated and resolved
+ Define clear roles and responsibilities (RACI) with particular focus on PAST, Investigations and Finance teams
+ Review current risk allocation between PO and PMs and explore options have disputed values sit in PM suspense accounts
+ Leverage system optimisation to reduce manual development of the Provision and ensure clear documentation and support
policies to ensure a robust audit trail
+ Create a process to effectively manage the recovery of established losses and associated payments
4 oso
+ Ensure OSO is used solely for its designed purpose, supported by a robust compliance framework and training programme
+ Assess ability to remove the ‘open field ' data entry; all OSO transactions should require a description or reason for usage
+ Assess ability to remove the capability for key stamps to be sold via OSO
Future state process improvements will require alignment with key enabling recommendations, specifically recommendations
5 (Master Data Management) and 6 (Systems), as well as alignment with other existing PO projects.
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Section 4: Recommendations
Recommendation 3: Review PO SAP capability to optimise usage for ® = I ©
discrepancy management
Perform a detailed assessment of PO's core ERP, CFS (SAP ECC 6.0) instance to identify opportunities to leverage the ERP's
capabilities to its fullest in the short term, reinforce SAP as the main reporting tool, and ensure S/4 readiness in the long
term.
system optimisation would leverage the current state assessment to evaluate PO's SAP deployment and its fit for purpose. It
will evaluate the usage of other systems to identify redundant applications, which can be replaced with SAP or enabled with
updated SAP functionalities or new models. Y Future planning and preparation for when SAP ECC
6.0 is no longer supported (2027)
Y Improved discrepancy management and reporting
v Improved SAP functionality that can be leveraged
across Finance
The recommended activities include:
1. Understand key goals based on discrepancy / business vision and strategy (this can be at discrepancy level but we
strongly recommend this is done at a strategic level to reduce duplication of effort and increased costs in the long term)
2. Leveraging future state processes (recommendation 2), identify key requirements across the discrepancy management
processes
SAP ECC 6 0 capability demonstration / workshops to develop a detailed understanding of the POs SAP configuration e e@ eo
Analyse how any functionality gaps and how they can be addressed i.e. via new functionality / system integrations etc
Perform a Change Impact Assessment, that details any changes (and the resulting impact) that will need to be made
ana
Develop a clear case for change that will assess the costs of staying with ECC 6.0 versus the cost, potential value and
business impact of upgrading to S/4HANA
Any SAP optimisation and/or planned SAP 4/HANA upgrades, will need to be considered as a central part of the wider IT
systems strategy (recommendation 6).
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Section 4: Recommendations
Recommendation 4: Transform discrepancy reporting and analysis ® = I ©
Design and implement improved reporting, with defined performance reporting cycles, KPls and reporting solutions to ¥ Single end-to-end reporting dashboard, breaking
enable better decision making. Build upon existing MI improvement projects to further enhance management reporting packs down operational silos, enabling cohesive analysis
by leveraging existing tools e.g. PowerBl. ¥ Insightful management reporting through multi
dimensional analytical views and drill down
The recommended activities include: capability
Y Operational efficiencies by eliminating duplication
1. Review all existing financial and non-financial reports and developing a single MI strategy for branch discrepancies of efforts across different teams
2. Harness digital opportunities to develop reporting process optimisation integrating the back end data with source data
such as CFS, Dynamics and Credence with suitable mapping tables with auto refresh options
3. Develop a single and simple reporting Dashboard by:
+ Defining standardised reporting metrics and KPIs
+ Incorporating the functionality to drill down to the appropriate reporting layer for the audience requirements e e@ 6
+ Enrich the presentation layer with advanced data visualisation (heatmap, branch view, filters etc )
+ Simplify reporting language
+ Elimination of discrepancy MI that has limited uptake or limited insights
+ Develop insightful trend analysis reporting, both period to period, quarter to quarter, year to year, etc
4, Create a reporting culture that enables both Descriptive MI (what happened) to more Prescriptive (what should happen)
and Predictive analysis (what might happen) linked to PO's strategic targets at regular intervals
5. Setting up Ml Governance to assign accountability, control and ownership of reports, and supporting data
We suggest this recommendation is completed alongside recommendations 5 (Master Data Management) and 6 (IT
Strategy).
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Section 4: Recommendations
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Recommendation 5: Implement Master Data Management (MDM) ©
Establish enterprise-wide Master Data Management, with supporting software solutions allowing technology to automate the
definition, capture, validation and usage of master data, enabling more rigor and data confidence. MDM establishes control over
Master Data values and identifiers that enable consistent use across systems to provide the most accurate and timely data
essential for all PO business areas.
Given the operating landscape within PO, a short-term focus on Branch Discrepancy data governance and master data through a
phased (and repeatable) approach is suggested, whereby within each focus areas PO should:
1. Define what master data to collect upfront - enforcing consistency with suppliers (where relevant)
2. Establish tight and planned integration between systems to enable workflow across teams
3. Enforce Data Governance rules, standards, and policies - Establish clear and defined processes for audit and traceability
4, Develop a modular approach focusing on core data channels, eg customer, vendor, stock , finance etc
Initial focus areas for the phased approach include:
» Stock MDM: eg Consistency of Product ID's across the network
» Discrepancy MDM: eg to establish a single Identifier for Discrepancy ID throughout lifecycle, Introduction of FAD vs Agent 1D
within Dynamics, Create a single date record in Dynamics for each phase of discrepancy investigation
» Finance Data MDM: e g creating a single source of Finance data, with linked supporting data to evidence journal postings
> Once MDM good practices are established, develop supporting software solutions in the longer term
This recommendations should be aligned with existing programmes of work which impact MDM, eg the “Data Lake” project.
Reduced manual interventions and improved data
confidence
Improved data Integrity - Accurate, Complete,
Correct, Consistent data across PO data users
Drive better decision making for decision
management
Collaboration & shared ownership, accountability &
stewardship across PO
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Section 4: Recommendations
Recommendation 6: Reduce system usage, underpinned by an ® « I ©
enterprise wide IT Strategy
Identify and limit the core systems involved in the management of branch discrepancies. This must be underpinned by an
enterprise-wide IT strategy and implementation roadmap to minimise disruption and to ensure system shut down decisions do not
cause issues in other areas of PO
Y Clear view on the key systems to invest in to meet
discrepancy management needs, whilst achieving
wider PO strategic objectives
As part of the enterprise-wide IT strategy, the PO will need to consolidate their IT system landscape reducing the reliance on Y Anaudit of PO enterprise architecture, highlighting
multiple systems and tools (11 identified in total) PO should focus on leveraging and expanding the use cases of newer existing systems potentially doing similar or the same
systems which support agile module changes in shorter time frames to support business needs, versus older ‘legacy’ systems that things
carry integration limitations, preventing end-to-end performance of systems and potential value extraction V Better control of costs e.g. through the reduction
. of licenses needed for underutilised systems
The recommended activities include:
1. Develop an enterprise-wide IT strategy which defines what the key external and internal systems trends / pressures are over
the next 3-5 years, business priorities and their implications and how PO can prioritise investments and assets to focus on high
impact areas, whilst leveraging both existing and new digital technologies
2. Areview of system functionality against business needs; to address manual interventions (e.g. CWC not performing cash
forecasting) and overall PO business requirements
3. Areview of the IT system landscape and the ability of each system to meet functional requirements, interface with each other
and integrate into the wider environment, eg interfacing Galaxy with CWC (WCS) for stock inventory management
4, Develop a strategic roadmap that includes a prioritisation of programmes, sequencing and planning, their interdependencies
and prerequisites
5. Collate and validate quick win improvement opportunities such as:
a. Update Dynamics to include functionality to track Review or Dispute cases end-to-end, enable single data fields for
each phase of an investigation process and enable separate FAD and Agent ID to capture formers data effectively
b. Identification of a more effective debt management and recovery system in order to better track movement and data
flows of repayments (e g how many PMs are on payment plans, how much they have paid and what is left to pay),
which should also interface with Dynamics
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Section 4: Recommendations
Recommendation 7: Embark on a roles & responsibility and internal ® = I ©
skills & capability assessment for discrepancy management
Embark on a roles & responsibility assessment to refine and agree future state roles and responsibilities in line with to-be
processes . Once identified, this will need to be supplemented with an assessment of the internal team’s current skills, v Provides clarity of roles & responsibilities to enable
capabilities and learning needs to ensure staff are adequately trained and aware of the necessary process & system efficient discrepancy management across the PO
functionalities to effectively manage the end-to-end discrepancies process. V Comprehensive analysis of capability to identify
i itine i . strengths and skills gaps to recruit and retain the
The recommended activities include: right talent
¥ Improved Employee Experience through upskilling
Roles & Responsibility Assessment:
and reskilling opportunities
1. Leverage the RACI* matrix to review what activities are being completed by whom across the end to end branch
discrepancies process and identify gaps or overlap
2. Overlay the current level of effort of activities performed across the process through activity analysis to identify further “Which issues are addressed
improvement opportunities
Skills & Capability Assessment:
1. Define the required skills, capabilities and proficiencies required for the roles across the end-to-end discrepancy
management
2. Leverage the outputs of the roles & responsibilities, to evaluate the current proficiency levels for skills and capabilities \
needed to deliver the future state discrepancy processes
3. Develop tailored strategies to address skill gaps and cultivate strengths to drive effective discrepancy management
4, Establish a programme for periodic review and continuous improvement
This recommendation will require alignment with key enabling recommendations, specifically recommendations
2 (process redesign and implementation) Additionally, this recommendation must be considered as part of any wider
ongoing or planned PO People related projects
*RACI - Responsible, Accountable, Consulted, Informed
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Section 4: Recommendations
Recommendation 8: Create a culture focused on commercial
outcomes and compliance
Create a Leadership driven culture aligned to the PO purpose of “We're here, in person, for the people who rely on us” and v Greater awareness and buy-in amongst PMs of their
where the PO and PM relationship is supportive, proactive but also accountable .The outcomes of these changes should help impact on the organisation, with greater adherence
PMs better understand how each of them contribute to the success of the organisation, enabling buy-in and a positive and to Policies
proactive engagement v
Improved consideration of mutually beneficial
; commercial outcomes
The recommended activities include:
¥ Reduced friction for PO teams that engage directly
1. Arreview of cultural focus areas with PO and PMs to understand the necessary shift in organisational culture, including sl ia and greater adherence to policy
cultural traits to keep, start and stop, and how to prioritise imeframes
2. Clear definition of the purpose of the culture review and narrative
3.
Perform a Voice of the Customer (PMs) analysis, engaging with PMs to determine key themes and understand regular
pain, to proactively mitigate errors arising from non-compliance and resistance to existing Policies and procedure
4. Build out, update and share simple guidance for prioritised Policies and process initiatives that are easy to follow,
educating PMs being sure to connect messaging to the culture shift
5. Leverage culture levers such as training or targeted and effective communication routes
6. Demonstrate impact of culture change initiatives to business and culture values
7. Development of a new non-compliance framework
8. Perform a Culture Fitness Diagnostic to reveal the steps required to shift behaviours and achieve a desired culture This
should include motivational and reinforcing levers, such as:
a) Motivating people by showing how they can impact the success of the organisation
b) Aligning performance management, rewards/recognition and risk appetite to reinforce the behaviours
©) Ensuring PO leaders inspire, understand and consider PM's perspectives, ensuring they are fully present with an
open mind to make fully informed decisions
This recommendation is to be considered in conjunction with any existing People and Culture work being performed by the
People team
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Section 5: Next Steps
Next steps
We have identified 8 recommendations which have been prioritised based on our assessment of a high level (1) Pace of Implementation
and (2) Cost of Implementation
Note: Pace and Cost are only high level indicators, true pace and cost of implementation is dependent on scope, timeline and
resource availability
Our suggested next steps for the PO are as follows:
Review the recommendations
Prioritise the recommendations based on business value and PO strategic priorities
Develop Business Cases for selected recommendations
Once approved, each project should be supported with a clear Project Brief and Project Initiation Document This will define
project scope, key timelines and resource requirements
vvvy
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Section 6: Appendix
Documents reviewed
Policy & Process Document List
No Document Name Description
4 Network Monitoring & Branch + This policy explains how branches will be supported with any potential issues identified through network monitoring and how PO will help those branches maintain accurate records of cash and
‘Assurance Support policy stock through their branch accounting
2 Network transaction corrections + This policy details the procedures for issuing Transaction Corrections and Transaction acknowledgements to PMs, which is intended to ensure that any discrepancies identified between files
policy received from third parties (clients or suppliers), or cash and stock centres, and the data recorded by the branch in Horizon, are corrected accurately
+ PO recognises that discrepancies will occur from time to time in the nature of a retail business, and this policy lays out the responsibilities of PO to notify PMs of those Compliance with these
3 _:PM Account support policy policies is essential to PO in meeting its business objectives and to balance the needs of PMs, customers, clients, and other stakeholders including our shareholder
4 PMComplaint Handling polic * PO recognises that complaints will occur and this policy lays out the formal Complaints procedure which is intended to ensure that PO handle all PM complaints consistently, fairly and within.
Pi ig poney. agreed timescales It is one of a set of policies which provide a clear risk and governance framework and facilitate an effective system of internal controls for the management of risk across PO
+ This policy is applicable to members of the Decision Review Panel and all PO employees involved in decision review process and defines the minimum standards to control financial loss, PM
5 PM Decision Review policy impact, regulatory breaches and reputational damage in line with the PO risk
+ appetite
6 Network Cash & Stock Management + This policy sets out clear and consistent guidelines to ensure that PO supports Branch in planning & forecasting their cash needs & Methods are employed to minimise discrepancies in Cash and
policy Stock distributed to branches, such as quality assurance on remittances
7 Transaction Correction Process Flow + The process flow provides a high level summary of end to end branch correction process (Transaction corrections) process and controls at PO with respect to ATM, Camelot, Personal banking,
narratives Stock Non Rem, Suspense account process, Card payments etc
8 PO Accounting manual * This policy states the accounting policies with respect to Period end close, revenue recognition, Banking and financial services, people cost, Income statement presentation, Balance sheet ,
Business combinations and Other accounting matters
MI, Finance and Performance Data Document List
No Document Name Description
+ Period wise Discrepancy reporting to Service and Support Optimisation Director & Tier 2 Resolution Team Manager & Tier 3 Investigators Legal Counsel Includes period wise discrepancy
1 Coptic nest Review reporting with cause analysis, cases assigned vs resolved along with Cause description , impact & resolution agreed along with Deep dive of Tier 2 /3 cases with context, problem statement and
resolution
is _ ici Dashboard + Period wise Discrepancy reporting status of including Training and onboarding , Post master complaints, Cash management , Transactions, Discrepancy and Post master accounts, Accounting
dispute resolution ete
+ Internal audit report To evaluate the effectiveness of design and operation of controls and processes around the
+ handling of PM discrepancies and complaints The report includes detailed findings and agreed actions for the problem statement along with rating guide
New Investigations Outcome = POF showh i
Dashboord presented within the dashboard is fluid E g , an investigation (case) can be assigned into the team and count towards the
4 Internal Audit Report
all dash views for discrepancies, where investigations have been completed
in the financial period note Source system used is Dynamics Live data, ; this means that the data
5 ures but in the following days can be re-assigned and then this will
drop out of the scope of the dashboard
6 Provisions excel + Provisions computation working sheet with Former agent data & Current agent data
Discrepancy Data from R&D till + Source from Dynamics review or dispute discrepancies for P10 and looks to track across the various stages from initial contact through to resolution Includes R&D Button Press (Horizon data
Resolution sourced from our internal data platform called Credence), Call to BSC, PAST Chase process, Investigation, PAST repayment follow up etc
Page 49 PO Branch Discrepancies Review EY
Section 6: Appendix
Glossary
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Systems
No Name
1 Horizon a
2 CFS(SAP)
2a POSAP "
2b CFS(SAP BW) wl
2c CFS(SAPART) +
3 Credence “
4 MS Dynamics
6 Galaxy 7
7 WMS /WcS
Investigation Tools
No Name
8 —-HORIce .
9 BART .
jo Transaction
Correction Too!
Stock Landing
11 “Too!
12 NOMAD
Page 50
Description
Horizon, a system exclusively used by the branch network to account for branch transactions including cash & cash equivalents & stock
Core Finance system (CFS) is a PO Back office application that manages branch accounts & performs the settlement billing functions for PO
CFS is Interfaced with Horizon that allows PO to carry out Management Reporting and Financial Reporting at branch level
POSAP is a SAP-based bespoke financial accounting system that maintains transactional data for PO
CFS BWis a data warehouse of SAP which is used for Billing and Reporting
CFS SAP module that manages PM/Agent Remuneration and Data feed of the same is managed by Central Remuneration team
Credence is a Management Information Reporting Warehouse that enables transactional level information at a 3-month level with direct interface from Horizon
MS Dynamics is a Case Management system (also known as the “Issue Management Too!" in PO ) where each discrepancy and investigation information is recorded and used
for subsequent discrepancy reporting and analyses
MS Dynamics is a live standalone system and is not interfaced with any other PO systems
Galaxy is an Order Management System used for stock, that facilitates and manages the execution of stock orders for PO and tracks stack movement between the PO &
Branch
‘A Warehouse Stock Management System used by PO to gain visibility of orders within the warehouse and has the ability to track when the order is received, picked, packed
and shipped This ensures there is full visibility of what stock is being sent and to which location
Description
HORIce (Horizon Interrogation - Live Horizon Data Reporting) is subset of Horizon It contains 18-month trading statements that cover all transactional activity related to
Horizon, including non-sales events such as branch declarations
Branch Analysis Review Tool (BART) is a data capture form used to record the differences between the actual volume and value of cash, stock and currency in the branch
and the volumes and values as shown on Horizon
The Transaction Correction Tool (TC Too! )is a reporting tool that captures the Holistic
issued to the branch
ww of all transaction corrections and their associated descriptions that have been
‘The Stock Landing Tool is used to verify what stock has been dispatched to a branch, and provides the following information:
‘© Confirms when pouches are scanned as received
© Uses data to verify if stock has been correctly remmed in
© Shows any stock or rem adjustments
NOMAD (Network Observation Monitoring Analysis Dashboard) is used to view branch information This includes cash collection details, the last date of Trading Period
rollover, date of cash declaration, dynamics cases, linked branch information, and outstanding customer account balances Audit history and audit rationale are also
contained within this dashboard
PO Branch Discrepancies Review
Used by
Branch
Finance, PAS Team
Cash Centre, Finance
Finance
Finance, PAS Team
‘Area Managers, Finance, Supply Chain
PAS Team
PAS Team (Tier 1), Network Resolution
Operations (Tier 2, Tier 3), Network
Monitoring team
Branch
Central Stock Centre
Used by
Network Resolution Operations (Tier 2,
Tier 3)
Network Resolution Operations (Tier 2,
Tier 3)
Network Resolution Operations (Tier 2,
Tier 3)
Network Resolution Operations (Tier 2,
Tier 3)
Network Resolution Operations (Tier 2,
Tier 3)
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