Many thanks to Fim for contributing his story as a comment to ‘Banking on POL’
See below for the relevant extract.
What we need to do is analyse what happened and the accounting effect on those concerned.
At the branch level, Fim deposited £200 with a paying in slip to that effect. At the close of business on that day Fim’s branch would have balanced as he entered the deposit correctly on to Horizon, he received the correct cash (from himself) and had the necessary paperwork (the paying in slip) to confirm the transaction.
At the end of the day Fim will have a number of paying in slips to send on to POL. He prepares a Batch Control Slip (BCV) by writing on it the number of paying in slips he is sending in plus the total amount (generated by HOL) of ALL the deposits.
This is then sent in a secure envelope to IPSL in Northampton.
The envelope would be opened. The clerk would enter from the BCV the number of deposits to process and the total amount of these transactions. Then the clerk would enter manually each paying in slip until all are processed. When finished the data entry system he uses would no doubt check the number of slips processed and the total amount against what was entered from each paying in slip.
At this stage if they were £19,800 out the system would prevent the contents of the batch entry from being processed until the amounts match. Standard data entry batch processing.
So how could such an error pass through this system? I don’t know, I could guess but won’t do so. It should be practically impossible you would think but as Fim has shown, it is not only possible it does occur.
And then it gets worse – IPSL is a clearing house – an intermediary for these transactions – they can only credit one banks accounts if they in turn debit another’s – and the two accounts in question must surely be Fim’s banks and POL’s bank.
I can now see an almighty mess – a figure of £20,000 has been debited from POL’s bank yet all POL have in terms of paperwork/computer records is the £200 entry from Fim’s branch.
How on earth could POL even attempt to reconcile this – totally and utterly impossible.
So until Fim told his bank of the mistake POL were £19,800 down and had no idea where this amount had originated from.
Had Fim not reported it he would almost certainly have got away with it. So the ‘system’ is totally reliant on the recipient of an error in their favour coming forward. And just how likely is that?
I simply cannot believe this and perhaps that statement in itself sheds light on the failings of POL management – they simply cannot believe that such a mess exists and therefore deny it.
Well it does exist – and clearly somebody now has to fix it.
On Horizon errors, I have first hand experience of how some errors could have arisen.
Just before going on holiday, I paid a couple of hundred quid into my own bank account through my PO using a deposit slip. The slip was clearly showing the correct amount.
While on holiday I was astonished to find that my £200ish quid had magically transformed to £20,000, the bank reference was not the usual LINK reference.
I assumed that this obvious keying error would correct itself over a few days.
After 4 weeks away, I cam back to fiund that the amount was still showing as £20,000.
I rang my bank and the error was eventually sorted.