Post Office faces legal action over accounts IT

The row between the Post Office and some of its sub-postmasters is set to take a fresh turn with court action over accounting software used in branches.

Accountancy Age has learned a group of sub-postmasters have joined together to bring legal action against the Post Office. Court papers are expected to be filed in the coming weeks.

The action originates with the Justice for Sub-postmasters Alliance (JFSA) and is over the use of Horizon accounting software made for the Post Office by Fujitsu.

A number of sub-postmasters have lost their positions over alleged accounting
irregularities, while some have also faced fraud allegations in the courts.

But the sub-postmasters claim that errors in the system software are to blame.

The JFSA comprises more than 100 people who argue they are being wrongly accused of accounting dis­crepancies and allege that the accounting system is failing to properly record transactions.

JFSA is spearheaded by former sub-postmaster Alan Bates, who lost his position over accounting discrepancies which he attributes to the Horizon system.

Bates said the Post Office relies on a clause in all contracts which states that the sub-postmaster is liable for all accounts.

However, Bates argues that the contract was created in 1994, before the Horizon system was brought into the branches.

Sub-postmasters are also concerned about an imp­ending upgrade to Horizon, which was due to take place in November last year. Concern centres on whether an audit of the current system is undertaken before the upgrade goes ahead. It is understood that the upgrade will go ahead later this year despite postponements.

The JFSA has expressed concern that the accounts of many sub-postmasters have not been examined for up to eight years, which it believes would highlight the system’s problems.

Accountancy Age has learned of a case against a sub-postmaster that was adjourned by a judge in the Midlands so that his legal team could commission an expert to present evidence on whether an IT audit of the system was necessary.

The sub-postmaster denies any wrongdoing and claims the software was misreporting transactions.

The judge suspended pro­ceedings after being presented with articles about the row between sub-postmasters and the Post Office in the press, including Accountancy Age.

The expert’s findings are yet to be heard in court, with a due date to be set in September.
Accountancy Age has seen Post Office documents which reveal that last year Fujitsu claimed it was “fixing” 92% of urgent Horizon problems within six hours and 91% of non-urgent Horizon issues by the end of the next working day.

Fujitsu declined to comment about the issue, and referred calls to the Post Office.
Allegations about Horizon first appeared in October last year when 30 sub-postmasters came forward with complaints about the system. They had been informed they collectively owed £430,000 to the Post Office.

The Post Office issued a statement saying: “Virtually all the UK’s 12,000 Post Office branches operate entirely professionally, using the Horizon system, without any accounting discrepancies and without accumulating abnormal debts.

“...In the very few instances where there is evidence that the finances of a branch are not properly managed or where money has gone missing, Post Office Ltd must fully investigate, and take necessary action, including legal action in the last resort.

“The decision to prosecute is not taken lightly and in every case where action has been taken no court has found evidence to believe the Horizon system’s integrity to be deficient.”

IT experts watching developments believed allegations about an accounting system could be damaging and needed clearing up, whether true or not.

David Turner, group marketing director at accounting software company CODA, said last year: “With an organisation as big as the Post Office, it is important to everyone that they have confidence in their IT systems – especially if they are taking on banking systems.”

He added it is vital the Post Office does “something” to “dispel” any rumours of faults because reputation is critical when it comes to accounting.

IN OUR VIEW

Rarely has there been a more pressing need for a forensic accountant to audit an accounting system. With a High Court battle on the cards, and various smaller courts around the country all calling for an audit, the Post Office now faces compelling claims to undertake a serious audit of its IT. The argument is becoming almost impossible to ignore.