Suspense Accounts

As soon as Second Sight raised queries about POL’s suspense accounts they were sacked.  Whether the sacking was linked to the queries is open to debate and conjecture.   There is however no doubt that POL maintain suspense accounts for unallocated funds,

POL are not perfect – far from it – but they are unaccountable – so no outsider will get to the bottom of this mess without a formal government backed inquiry.   If I were in charge of such an investigation I would start with the suspense accounts.

Remember that suspense accounts can hold money that has already been deducted from SPMRs income as a result of the totally unfair contract that SPMRs sign.   SPMRs are liable for all unexplained losses in their branch.  Trouble is the explanation for a lot of these errors lies within POL’s control.   Some errors are never resolved and the monetary value in the suspense accounts is probably allocated to POL income at some stage.   Other errors take a long time to resolve.  Only recently an example came to light of a SPMR receiving a credit for an old error that the previous SPMR in the branch had already paid for.   The new SPMR queried this with the help desk and was advised to keep the amount.  Clearly inappropriate advice.

And just to put it all into perspective – SPMRs have been prosecuted, jailed and made bankrupt because they can’t explain the losses that have accrued at their branches – POL can’t explain them either but if they set their minds to it they probably could.

How bad could it be?

How about an example from an audit taken on Salford City Council – an organisation that processes obviously far fewer bill payments than POL.

The Council Tax and Benefits Section is based within the Customer and Support Services Directorate. It is responsible for the processing, billing and collection of Council Tax. A total number of 92,586 Council Tax bills were issued in March 2004 and net collectable income for Salford City Council was £63,895,246.

The Council Tax system is a key financial system for Salford City Council. It is also subject to external scrutiny from the Audit Commission and therefore an annual review is required to ensure the system is functioning effectively.

The agreed scope of the audit was to identify and evaluate the risks and controls associated with Council Tax. Key risks being:

  • Tax payers not charged
  • Tax payers charged wrong amount
  • Tax not collected
  • Incorrect accounting
  • System failure.

Overall, the audit testing undertaken confirmed that the Council Tax function is well controlled. The majority of controls are operating effectively and key risks identified are adequately controlled.

However, a number of weaknesses were identified, the most significant of these were:

  • A significant number of items had been posted to the suspense account that had not been cleared, dating from 5 April 1993 to 8 December 2004

A review of write-off procedures found that write-offs are not formally assessed to ensure only appropriate accounts are written-off, prior to Committee authorisation.

The Management Response?

Unidentified items are subject to prompt investigation, monitoring and clearance. The 61 uncleared items mentioned are the residue of 3369 items that have found their way into Council Tax suspense from the commencement of Council Tax in April 1993. 32 items are DWP payments, which were received without sufficient information for the PARIS system to process; these items are currently being looked at by the Recovery team and will therefore remain in suspense for the time being. The balance (29) items will be written off from the Council Tax suspense account before the 31st March 2005.

And just to point out the possible connection with POL the auditors make this note as well:

Not implemented

The Section Leader (Cashiers) has no direct control over bills / invoices issued. Recent e-mail sent to all Fund Managers requesting that they should include “obtain receipt as proof of payment” on all documentation.

Note, when customer pays via Pay Point, the receipt advises the customer to retain the receipt for proof of payment. Discussions will be held with Alliance & Leicester (for Post Office Ltd) to see if “retain receipts as proof of payment” can be added.

……

So it is clear that money collected from SPMRs may not only be sitting in POL’s suspense accounts but in the Suspense Accounts of other Bill Collectors.   How on earth could an SPMR be expected to ‘explain’ this situation

……………………….

Here is another ‘suspense’ account that caught my eye some years ago.  The National Insurance Fund state this in their internal documents…. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/89249/ni-fundaccount10-11.pdf

“Missing Dispatches There are instances of cheques claimed by Post Offices as being cashed, which are not received at Alliance & Leicester Commercial Bank (ALCB). The values of these ‘missing dispatches’ are allowed pending investigations by both the Post Office and ALCB. Following these investigations, those cheques treated as encashments are reported as ‘Post Office Losses’. Any cheques that were previously settled as ‘Post Office Losses’ but are subsequently received at ALCB are offset against the existing ‘Post Office Losses’ balance.”

I wonder if there is a record somewhere of the amount of money in that Suspense Account and how eventually it is cleared?

……..

I’ll keep adding to this today as I find them ….https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/235125/0547.pdf

23. Payments to incorrect Post Office Card Accounts (POCA’s) Benefit expenditure has, on occasion, been paid into incorrect Post Office Card Accounts since they were established in April 2003. This is due to incorrect customer bank details being stored on the Heritage Benefit Systems for a relatively small number of customers. Corrective action is instigated as soon as, such errors become apparent. At 31st March 2005, an amount of approximately £400k was outstanding in relation to 5,000 payments (affecting 2,000 customers) being made to incorrect card accounts. Of this £400k, authority has been received from POCA’s parent bank to withdraw £38k from customer bank accounts. A number of other customers have also given authority to recoup a further £32k. The Agency is pursuing recovery of the above amounts, and a Ministerial steer which will be provided to the Department of Work and Pensions (which is experiencing similar problems) is expected to have an impact on how the Agency will proceed with this matter. At present, because the intention is to continue with recovery, no actual loss has occurred. However, it is possible that a proportion of the above amount will be formally classified as a loss in the 2005-06 accounts (or in subsequent years) and so this information is included to provide a more transparent view of the Agency’s year end position.

………………….

Tower Hamlets Audit 2010

The suspense account was not cleared in a sufficiently timely manner. At the time of the audit, the total balance on the suspense account was £35,222,261.49. Approximately £33m had only recently been posted (less than six weeks old) however 56 items dated back to the year 2006.

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