Rachael Singh and Gavin Hinks, Accountancy Age, Thursday 5 August 2010 at 00:15:00

Sub-postmasters join forces to take legal action over alleged errors in thePost Office's system software they claim have been responsible for severaldismissals due to accounting irregularities


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

Accountancy Age has learned a group of sub-postmasters have joined togetherto bring legal action against the Post Office. Court papers are expected to befiled 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 byFujitsu.

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 toblame.

The JFSA comprises more than 100 people who argue they are being wronglyaccused of accounting dis*crepancies and allege that the accounting system isfailing to properly record transactions.

JFSA is spearheaded by former sub-postmaster Alan Bates, who lost hisposition over accounting discrepancies which he attributes to the Horizonsystem.

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

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

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

The JFSA has expressed concern that the accounts of many sub-postmasters havenot been examined for up to eight years, which it believes would highlight thesystem?s problems.

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

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

The judge suspended pro*ceedings after being presented with articles aboutthe row between sub-postmasters and the Post Office in the press, includingAccountancy Age.

The expert?s findings are yet to be heard in court, with a due date to be setin September.

Accountancy Age has seen Post Office documents which reveal that last yearFujitsu claimed it was ?fixing? 92% of urgent Horizon problems within six hoursand 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 PostOffice.

Allegations about Horizon first appeared in October last year when 30sub-postmasters came forward with complaints about the system. They had beeninformed they collectively owed 430,000 to the Post Office.

The Post Office issued a statement saying: ?Virtually all the UK?s 12,000Post 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 abranch are not properly managed or where money has gone missing, Post Office Ltdmust fully investigate, and take necessary action, including legal action in thelast resort.

?The decision to prosecute is not taken lightly and in every case whereaction has been taken no court has found evidence to believe the Horizonsystem?s integrity to be deficient.?

IT experts watching developments believed allegations about an accountingsystem 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 importantto everyone that they have confidence in their IT systems ? especially if theyare taking on banking systems.?

He added it is vital the Post Office does ?something? to ?dispel? any rumoursof 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 auditan accounting system. With a High Court battle on the cards, and various smallercourts around the country all calling for an audit, the Post Office now facescompelling claims to undertake a serious audit of its IT. The argument isbecoming almost impossible to ignore.