UK Post Office Software Glitch

[forcebwithu]

I read the article below and a couple of things didn't add up for me.

One is why sub-postmasters would reach into their own pockets to cover what was obviously a computer mistake in the accounts?

The other, is there no requirement that the UK Post Office undergo an independent audit each year? Assuming there is, I would expect the audit would have revealed the accounting software error in the first year it went live.

Prison. Bankruptcy. Suicide. How a software glitch and a centuries-old British company ruined lives

[Krapow]

1) Because the other option was jail. They were told it was only them, no one else, couldn't be an IT mistake. Make it balance or get prosecuted. Many still got prosecuted, and were advised by their lawyer to plead guilty to avoid jail.

2) It was known and covered up about the IT system being faulty. More comes out about this every day.

It's a shocking, horrendous thing that has happened, and to so many people, whole families stigmatised as thieves, mums or Dads going to jail when innocent, people taking their own lives over it. Families and lives ruined. 

It's gonna run and run this, and quite rightly. Those that did cover it up etc will hopefully end up getting jailed themselves.

It's hard to get your head around what happened, it's so, so bad.

Scary as well, as we move to more things being run by IT and AI, the reliance on it as near infallible. 

Not sure if you can watch these or not, horrendous yet compelling viewing -

https://www.bbc.co.uk/iplayer/episode/m001v640/newsnight-the-post-office-scandal

https://www.itv.com/watch/mr-bates-vs-the-post-office/10a0469/10a0469a0001

 

[Freee!!]

33 minutes ago, Krapow said:

1) Because the other option was jail. They were told it was only them, no one else, couldn't be an IT mistake. Make it balance or get prosecuted. Many still got prosecuted, and were advised by their lawyer to plead guilty to avoid jail.

2) It was known and covered up about the IT system being faulty. More comes out about this every day.

It's a shocking, horrendous thing that has happened, and to so many people, whole families stigmatised as thieves, mums or Dads going to jail when innocent, people taking their own lives over it. Families and lives ruined. 

It's gonna run and run this, and quite rightly. Those that did cover it up etc will hopefully end up getting jailed themselves.

It's hard to get your head around what happened, it's so, so bad.

Scary as well, as we move to more things being run by IT and AI, the reliance on it as near infallible. 

Not sure if you can watch these or not, horrendous yet compelling viewing -

https://www.bbc.co.uk/iplayer/episode/m001v640/newsnight-the-post-office-scandal

https://www.itv.com/watch/mr-bates-vs-the-post-office/10a0469/10a0469a0001

 

It is still happening, but by now people are aware computer systems aren't infallible.

And I've known about this particular scandal for several years.

[forcebwithu]

The article below is asking the same thing I was wondering about, why wasn't this caught during the company's annual audit?

In a prior life I worked for one of the then Big 6 public accounting firms as an auditor. Because of my background in computers I ended up in data analytics and computer forensics. Our audits looked for errors in software systems, and we looked even harder if it was a new system, or a system that had undergone a major upgrade during the year.

Sadly I see in a blog post referenced by the article, the firm I used to work for, Ernst & Young is the one that failed in their duty as auditors of UK Post Office.

https://clarotesting.wordpress.com/2023/02/14/the-mysterious-role-of-external-audit-in-the-post-office-scandal/

Statistical nonsense and the purpose of Horizon
Ernst & Young (EY) are one of the Big 4. They audited the Royal Mail from 1986, throughout the development and implementation of Horizon, and through most of the cover-up. EY continued to audit the Post Office after it split off from Royal Mail in 2012. In 2018 they were finally replaced by PwC, one of their Big 4 rivals.

 

Auditors facing ‘awkward questions’ as Post Office scandal escalates

ITV’s drama about the wrongful prosecution of hundreds of Post Office staff has prompted the accounting world to question the role of the auditors in the scandal, as national anger about the miscarriage of justice intensifies.
...

Where were the auditors?

Software testing consultant James Christie has written extensively on the failings of the Post Office and Fujitsu, with no senior figures held to account despite many wrongful imprisonments and the financial ruin of hundreds of sub-postmaster staff.

With a public inquiry ongoing, he said there are “several awkward questions the external auditors should answer”.

“There are many valid explanations for why we might not know what is happening in a complex system, but a failure to ask pertinent questions is not a good reason,” he said.

The AccountingWEB Any Answers community has also questioned the decisions taken throughout by the auditors, who are likely to face a reckoning given the mounting fury over a lack of accountability.

In several interviews with AccountingWEB, industry experts described a range of errors that could have fuelled the debacle, with leading accountant and past ICAEW president Julia Penny noting “one of the biggest problems was unconscious bias”, and particularly regarding automation.

She noted in ISA 220, paragraph A35 of the application guidance describes the tendency to favour output generated from automated systems, “even when human reasoning or contradictory information raises questions as to whether such output is reliable or fit for purpose”.

“Essentially the root of the issue seemed to be that the system was believed, despite indications that it wasn’t correct,” she said.

“In addition to this, culture must clearly have been a part of this, as it would appear that throughout the Post Office nobody was questioning the findings, or if they were, they were being dismissed as wrong,” she said.

‘Understandable fury’

Steve Collings FCCA, director at Leavitt Walmsley Associates Limited, said he has been following the case closely and is “astonished” that the auditors dismissed the pleas of the staff and assumed they were responsible.

“Part of their remit should have been to think that surely several hundred [sub-postmasters] cannot be stealing money to that extent,” he said.

“Questions should have been asked as to whether this was to do with the systems in place – which clearly they were,” he said. They should not have simply said that the staff were stealing money and that was that. Reports on the Horizon system found that the system had flaws, but this seemed to have been brushed under the carpet.”

He said the fact the case was spiralling into one of the biggest miscarriages of justice in British history also undermined the role of internal audit.

“Given that some of these innocent individuals spent time in prison, ended their lives and caused untold amounts of stress, it is no wonder that the country is absolutely furious,” he said.

Lack of probing

A lack of expertise in assessing the risks of a system handling such large volumes of transactions is also evident, added Leo Smigel, personal finance expert and the founder of Analyzing Alpha.

“Outside auditors who check the books are important because they look at everything with a fair and neutral point of view,” he said. “When issues first came up about money not adding up after putting in the new computer system, the auditors should have taken a close look at what the Post Office was saying.”

Rather than pinning the blame on low-level workers, the auditors should have investigated further to find the real cause, Smigel said.

“A good audit would have checked the software itself for bugs or problems, and made sure the numbers and reports were right. Missing money that big is a huge red flag that needs careful checking before blaming anyone.”

Why audit really matters

Andrew Gosselin CPA, a former senior strategy consultant for a global, multi-billion-dollar software company, and a senior editor at The Calculator Site, said the fiasco should hammer home that “what auditors do really matters”.

“With the Post Office mess, money went missing out of nowhere once a new computer went in,” he said. “Auditors should have looked hard into why this was and checked if the system really worked right.”

Given the job of outside auditors in a case like this is to provide an objective, unbiased look at the financial reports and controls, they “should have paid close attention” to ensure the financial details were right and if the newly implemented system “could really report finances properly”.

“Good oversight is key for catching difficulties early and making sure finances are tracked right,” he told AccountingWEB.

There are lessons for auditors to learn from the saga, added Keith Donovan, business advisor and founder of Startup Stumbles.

“When potential fraud appears, like the missing money after the new computer system, they should dig into the details,” he said. “In my experience, auditors are at their best when collaborating closely with internal teams. That back-and-forth helps auditors identify risks, evaluate controls, and recommend solutions.”

No scrutiny of the system

“The more I think about this Post Office case, the more concerned I am about how the auditors handled it,” said Branson Knowles, head of US digital banking at Top Mobile Banks.

“Any time you see discrepancies crop up right after a big system change that should be a major red flag to auditors that something might be off or, worse, that fraud could be happening,” he said.

Questions over the missing money should have been asked immediately, he said, with a focus on specific transactions that were not adding up, and whether the new system could be at fault.

“At the end of the day, the auditors had a responsibility to figure out why money was disappearing and if any vulnerabilities were being exploited,” he said.

“All in all, this case really makes it seem like they weren't doing thorough enough audits when things started looking off.”

More than 3,500 post office operators were targeted by prosecutors over 16 years with wrongful allegations of theft, fraud and false accounting.

Despite being aware of faults with Horizon, the Post Office continued to push for legal action, with hundreds of individuals prosecuted, whilst many were financially ruined. At least four suicides have been linked to the travesty.

[forcebwithu]

Thanks @Nightcrawler for moving the topic. Bumping it so other BM's notice the move.

[Glasseye]

On 1/14/2024 at 9:44 PM, Krapow said:

1) Because the other option was jail. They were told it was only them, no one else, couldn't be an IT mistake. Make it balance or get prosecuted. Many still got prosecuted, and were advised by their lawyer to plead guilty to avoid jail.

2) It was known and covered up about the IT system being faulty. More comes out about this every day.

It's a shocking, horrendous thing that has happened, and to so many people, whole families stigmatised as thieves, mums or Dads going to jail when innocent, people taking their own lives over it. Families and lives ruined. 

It's gonna run and run this, and quite rightly. Those that did cover it up etc will hopefully end up getting jailed themselves.

It's hard to get your head around what happened, it's so, so bad.

Scary as well, as we move to more things being run by IT and AI, the reliance on it as near infallible. 

Not sure if you can watch these or not, horrendous yet compelling viewing -

https://www.bbc.co.uk/iplayer/episode/m001v640/newsnight-the-post-office-scandal

https://www.itv.com/watch/mr-bates-vs-the-post-office/10a0469/10a0469a0001

 

 

Tech related issues and negative impacts they can have on peoples lives is significantly greater than most people have a clue about.

I keep mentioning this sort of thing and will continue to do so. 

I knew early on (years ago actually) people thought I just had a few loose tools in the shed. But, I was way ahead of the curve on this one (I'm not patting myself on the back). 

I am trying to impress upon people the devestating effects that can result (either acute or long term). More people are beginning to open their eyes and understand. Otherwise they are just putting their heads in the sand and we all will pay for it in one way or another.

I will never relent from my position(s) regarding tech. It's nice to see that even just a few are also boarding that train. 

I almost compare it to fighting a war. We are losing the war. Sometimes in war a resistance forms and battles continue. We may not be able to cease progess, but we can demand that progress be followed with ethics and safeguards built in. Failing to insist and speak out in not defending your personal rights is a tremendous lack of dignity IMO.

Edited January 16 by Glasseye