Filed on behalf of the: Defendant

Witness: David Malcolm Johnson

Statement No.1
Date Made: 28 September 2018

Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

THE POST OFFICE GROUP LITIGATION

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ROYAL COURTS OF JUSTICE

BETWEEN:

ALAN BATES & OTHERS

Claimant

AND

POST OFFICE LIMTED

Defendant

WITNESS STATEMENT OF DAVID MALCOLM JOHNSON

51
I, DAVID MALCOLM JOHNSON , of 1 Floor, Ty Brwydran, Atlantic Close, Llansamlet,
Swansea, SA? 9FJ WILL SAY as follows:

1. I am a Training & Audit Advisor at Post Office Limited (Post Office). I am

authorised to make this statement on behalf of Post Office.

2. The facts set out in this statement are within my own knowledge, or if they are
outside my knowledge, I have explained the source of my information or belief.

BACKGROUND

3. I started my career at Post Office in 1984 as a counter clerk in a Crown Branch 1 . I

stayed there until I was promoted to Assistant Manager and I worked in various
branches performing that role. My last role in branch was Branch Manager at the
Barry Crown Office.

4. Horizon was introduced in 1999 whilst I was working in a Crown Branch. In 2010,
while I was the Branch Manager at The Barry Crown Office, Horizon Online was
introduced.

1
Crown Branches are operated by Managers employed by Post Office rather than a
Postmaster.

AC_ 152076427_ 1

E2/4/1
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

5. In 2012 I left the branch network to take on my current role as Training and Audit
Advisor, which at the time was known as a Field Support Adviser. I have been in
that role now since 2012. In 2014 I also worked on the Complaint Review and
Mediation Scheme that Post Office set up for Postmasters.

6. My job consists of two parts; training and auditing. Approximately two thirds of my
time is spent training Postmasters, either in a classroom environment or in a live
environment within branches serving customers. The rest of my time is spent
going to particular branches and auditing them, which essentially means I check
what cash and stock is at the branch, and compare this with what we/Post Office
believe/s should be there based on the branch transaction information provided
through Horizon. Where I refer to the "Horizon derived figure" or the "system
derived figure" I am referring to the figure provided by Horizon based on the
transactions that have been input into Horizon.

7. I have provided demonstrations on the use of Horizon to the legal teams and the
IT experts appointed by the parties to these proceedings.

8. In this statement I will describe the following features of the current version of
Horizon Online:-

8.1 logging in, stock units and basic transactions;

8.2 daily cash declarations and periodic balancing;

8.3 the cash declaration process;

8.4 the reports available in branch to identify cause(s) of discrepancies;

8.5 the balancing process; and

8.6 dealing with discrepancies at the end of a trading period.

9. I will then briefly describe how the system has changed since it was first
introduced.

10. The screenshots that appear in this statement are primarily taken from a
document called Post Office Onboarding Counter Guide {POL -0440083}. Where {F/1834}

a screenshot has been taken from another document I refer to that document.

LOGGING IN , STOCK UNITS AND BASIC TRANSACTIONS

11. When a Postmaster opens Horizon, there is a front log in screen with a standard
agreement message which warns that the user should only continue if they are

2
E2/4/2
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

authorised to do so. To log in, the user clicks continue and then enters a
username and password in the boxes as displayed below:

Tu.02 ON 14 11:18

BJcf
Jpa,.r

12. A message is then displayed telling the user that they have successfully logged
in. It will also show the user the last successful log in time and date of when they
last used Horizon.

13. Post Office policy dictates that usernames and passwords should not be shared
{POL - 0156170}. The rationale for this is that it becomes very difficult to identify {F/1112}

which member of staff entered data onto Horizon if more than one person is using
the same user ID.

14. In terms of the basic set-up, Horizon has two separate overall functions: the
"Front Office Home Screen" (also known as the "Serve Customer Screen") which
is used when completing customer transactions; and the "Back Office Home
Screen" which is where the accounting, reporting and administration functions are
conducted.

15. In order to serve customers, individual users (i.e. branch staff) need to be
attached to a specific "stock unit". Stock units are in effect separate ring-fenced
sets of sub-accounts within a branch's general account in Horizon. Although there
are no mandatory business requirements for how many stock units a branch has
to have, or how they are physically deployed, the creation of a stock unit by a
Postmaster will cause Horizon to create a separate sub-set of accounts
connected to that stock unit.

3
E2/4/3
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

16. When a member of branch staff is preparing to start serving customers, they will
log onto Horizon with their User ID and password and link themselves to a
specific stock unit.

17. Any transactions conducted by the user will then be recorded against that stock
unit, with the corresponding changes to cash and stock levels being recorded
against that stock unit's accounts.

18. One of the reasons for using multiple stock units is so that the branch can operate
"individual" stock units, with each member of staff being allocated their own
dedicated stock unit. The person allocated a stock unit normally has a separate
drawer in which to store cash and stock associated with that stock unit so that it is
physically separated from the cash and stock in other stock units or in the general
branch holdings. When branches have balancing problems, it is normally
recommended to adopt this approach so that mis-balances and mistakes can be
linked to specific individuals.

19. Some branches operate "shared" stock units. In effect, this means that all the
branch staff serve customers from one pool of cash and stock with all
transactions then being recorded against one set of accounts. While seemingly
simpler to operate, this does mean that discrepancies cannot be linked to
individual users (while the transaction data for a shared stock unit will still record
the User ID of the staff member who performs each transaction, it is not possible
to tie a discrepancy to an individual user or a transaction that they performed
because of all of the transactions carried out by users of a shared stock unit are
amalgamated).

20. Stock units can also be set up for individual product categories, for example
ATMs. This allows the Postmaster to record all transactions for a particular
product within a separate set of accounts so that any discrepancies can be more
easily identified, i.e. by reference to a specific individual product category.

21. In order to attach to a stock unit, the user enters the 'Admin' section from the
'Back Office Home Screen' and selects 'Attach User' as displayed below:

E2/4/4
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

!:,i:< li.-·'. I !u(~ fJ(if

1j ( 1'1) ·:.·r ':'·•)
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22. The user then selects their username and the stock unit. The stock unit ID will
then show at the bottom of the home screen.

23. The Front Office Home screen shows the user ID, the trading period (TP) and the
balance period (BP) along the bottom of the screen. The different function groups
(or sub-menus) appear down the left hand side: Stamps, Post Services, Banking,
Travel, Licences and Government, Telephony, Retail and Local Schemes.

Mon 21 Au g 17 12:M Help

·· ci~,.·t p1 t1dl1C"t ot fu n ctiun ut n4.lvi!,J;.i ti::- t1J <.1t1rJth r.!r s ,.·1 ~r: n
JS1n 9 tab s or tn'4:t'!n
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Banking 2nd 2nd 2nd Open Q
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Stamp L..Jr13e x 12 Postage COP

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--- t I S tcJmp t Sb.lmp~i:. S t ~mp~J4

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:tG

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--- - - - -- -><- ·-

24. The middle of the Front Home Office Screen contains icons relating to the most
frequently used transactions across the network. This front page is the same in
every branch, except if the branch doesn't sell a certain product then this product
item will not show on the home screen.

5
E2/4/5
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

25. Transactions are initiated by the user pressing the product icon on the screen or
scanning a barcode (e.g. on a customer's bill). Further information may then
need to be entered. This will be prompted on screen. Once all the transactions
have been entered, the total amount is shown in green if cash is due to the
customer and red if a payment needs to be received from the customer.

The following screenshot shows that £25 is due from the customer and is
highlighted in red:

Home Help
Select Product or Function or Navigate to another screen using Tabs
Stamps Screen
Entry
F1 Stam s Acee tance T1
Postal 1st 1st Large 1st x 12 1st x 6 Post Mail Items Suspend
Services Resume

F2 21 22 23 24 26 Lock T2
Banking 2nd 2nd Large 2nd x 12 Open Ordina,y
Postage COP
25.00
F3 31 32 33 34 35
Travel Business DG Quantity Previous
M&1ls Screen Item
H1
F4 Bureau 45 46 PREV
Licences & Sell Euros Sell Dollars Drop Mails Relums Remove Scroll Up Scroll Cancel
Governme nt Suite Item Down

F5 51 52 55 56 FS UNDO
Telephony View Full Receipt Back Back
Basket Office Space

F6 Other F1 0 RECPT F14

Retail AP Manuel Enlry Chip & Transcash Retail Sale Calculate logout Quantity E
Pin Single

F7 72 73 74 75 F11 F13 F1~

Local Custo mer Referral s Fast Cash PLU Settle
Schemes

F8 82 F12• F16
USER01 TP: 01 BP: 02 SU: M Individ ual Serve Customer 27-09-1814:02

The following screenshot shows that £100 is owed to the customer and is
highlighted in green:

Select Product or Function or NaviQate to another screen usinq Tabs

Stamps Screen
Entry
F1 Stamps Acceotance T1
Postal 1st 1st Large 1st x 12 1st x 6 Post Mail Items Suspend
Services FRES Cancel Order Resume
1 @-£100.00 -100.00
F2 21 22 23 24 26 Lock T2
Banking 2nd 2nd Large 2nd x 12 Open Ordinary Total Due te, Custom er
Postage COP

F3 31 32 33 34 35 £100 00
Travel Business DG Quantity Previous
Mails ... Screen

F4 Bureau 45 46 PREV
Licences & Sell Euros Sell Drop Returns Remove Scroll Up Scroll Cancel
Government Dollars Mails Item Down
Suite

F5 51 52 55 56 F9 UNDO
Telephony View Full Receipt Back Back Space
Basket Office

F6 Other F10 RECPT F14

Retail AP Manual Entry Chip& Pin Transcash Retail Sale Calculate logout Quantity ·Ettlf
Single

F7 72 73 74 75 F11 F13 F15

Local Customer Referrals Fast Cash PLU Settle
Schemes

F8 82 F12 F16
USER01 TP: 01 BP: 02 SU:M Individual Serw Customer

6
E2/4/6
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

2
26. The user can then select the method of payment, being cash, card or cheque . If
the user selects card, this triggers a sequence of prompted steps for payment to
be made using the chip and pin machine in branch.

27. For example, to sell a first class stamp the user needs to click on 1st class (either
on the . main Serve Customer Screen or this can also be accessed from the
'Stamps' sub menu) and enter the quantity of stamps that are required (in this
case it will be 1). Horizon then shows the amount due from the customer is £0 .67
and this is highlighted in red to show this is money owed from the customer. In
this example, should the customer pay with the correct cash (exactly 67p), then
the user simply clicks 'Fast Cash' and the transaction is complete . The user
should then put the £0.67 received from the customer into the till. The stock of
first class stamps recorded on Horizon will then be reduced by 1 and the cash
recorded at the stock unit will increase by £0.67.

DAILY CASH DECLARATIONS AND PERIODIC BALANCING

28. Branches are required to carry out daily cash declarations . This process is
described in section 32 - 38 below.

29. Branches must perform a balance at the end of each TP and "roll over" into a new
TP (i.e. move into the next TP) . There are 12 Trading Periods in a year {the year
runs from April through to March) and the TPs, which are identified with a number
between 1 and 12, follow a cycle of 5 weeks, 4 weeks, 4 weeks. The balancing
process is described in section 42 below.

30. To help maintain control over their accounts and branch cash holdings, branches
are also advised to balance on a weekly basis, although balancing can be done
more frequently and larger, busier branches may choose to perform a balance on
a daily basis . A BP is a period of time between each branch declared balance.
There are therefore multiple BPs within a TP (again, BPs are identified with a
number). The balancing process is the same for BPs and TPs, save that a
branch trading statement must be completed at the end of a TP (see section 42
below).

31. The more regularly branches complete cash declarations and balance reports, the
more quickly they can identify any discrepancies. This also means that if the
transactions have happened more recently, it is more likely the user will be able to
recall what happened or what the customer requested in branch .

2
For some transactions, certain methods of payment are not permitted .

7
E2/4/7
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

THE CASH DECLARATION PROCESS

32. Branches are required to make a cash declaration for every stock unit (used on
that day) on a daily basis. The declarations need to be made by 6.55pm as the
data is polled (or transmitted) at ?pm and goes to the Post Office Cash
Management Team, who decide how much cash is to be sent to each branch to
facilitate its trading, or whether the branch has too much cash and needs to send
a certain amount back to Post Office.

33. In order to perform a cash declaration, the user needs to select 'cash' from the
Back Office Home screen as displayed below:

T hi.. 1a J ~ n 11 1 •:.l1"

r ,,

._._..,.,u, ob
I'"''" · ~tnq

F' o<~•~' <:u ,o, ,

ttc1htn11•

34. On a shared stock unit, the user can select 'new declaration' or the user can
choose to select the previous declaration and overwrite it. On an individual stock
unit, the previous declaration will appear which is then overwritten with the new
figures.

35. The user counts all the cash (both bank notes and coins), and enters the amounts
for each denomination into Horizon, selecting 'Enter' once finished. This is
manually inputted and Horizon is reliant upon the Postmaster or their staff
accurately counting and recording the number of each denomination of bank note
and coin and inputting the figures correctly. On a shared stock unit, the user also
has to input a declaration ID number, for example, 01 .

36. If the cash declaration is being completed on an individual stock unit, the system
will automatically display any cash discrepancy between the total figure declared
by the user and the system derived figure .

8
E2/4/8
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

37. For a shared stock unit there are then three options presented: print, preview or
variance. The user has to click 'variance' in order to compare the cash
declaration with the system derived figure and view any differences/discrepancies
between the two figures.

38. Horizon then shows the type and amount of variance. For example, the message
"cash £14.27 gain" means there is £14.27 more cash declared by the user
(assuming the count was correct and was correctly input into Horizon), in
comparison with the net cash position as a result of transactions entered on
Horizon (i.e. the system derived figure). Equally, the message "cash £14.27 loss"
means there is a shortfall between the amount of cash declared as being on hand
at the branch and the system derived figure (again, assuming the count was
correct and was correctly input into Horizon.

REPORTS AVAILABLE IN BRANCH TO IDENTIFY THE CAUSE(S) OF

DISCREPANCIES

39. Transaction log

39.1 The transaction log allows any user with access to Horizon to obtain a report of
the transactions performed on Horizon over the past 60 days. The transaction log
is a list of all transactions and transfers completed in the branch, in chronological
order. The log can be used as a general investigation of all transactions or it can
be refined to look at specific criteria. This is very helpful if a user is trying to look
to see why a discrepancy has occurred or whether a transaction has been
entered incorrectly into Horizon.

39.2 Searches of the transaction log can be filtered in a number of ways, such as by
stock unit, TP, user, product type, time and date range, value of transaction and
session ID. If, for example, the user wanted to review all the transactions that
happened on a certain day last week, they would go to 'Transaction Log', then in
the 'date from' and 'date to' boxes they would enter the relevant dates and select
'Enter'. The user can then click preview and view all the transactions that have
taken place within that time frame and the transaction report can also be printed.

39.3 A user may spot errors that they have made in entering data into Horizon or when
handling cash by reviewing the transaction log. For example, a user may recall
giving a customer a cash withdrawal of £100 at a particular time of the day, but by
reviewing the transaction log they may spot that they actually processed the
transaction as a deposit. This would create a shortfall of £200 in the branch
accounts (Horizon will think that the user has taken a £100 deposit whereas in
fact the user has given the customer £100).

9
E2/4/9
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

40. Event log

40.1 The event log records what reporting has taken place and is a record of back
office use. If the user selects 'Balancing', then selects a date range and 'Preview',
it is possible for the user to see all the cash declarations that have been made, by
which user and whether there were any discrepancies. If there was a
discrepancy in a particular stock unit followed by another cash declaration with no
discrepancy, the Postmaster may want to balance that particular stock unit to
check whether the user has made an accurate cash declaration and has not
concealed a discrepancy.

40.2 For a shared stock unit, discrepancies will appear on the event log if the user
selects to check the variance at the time of the declaration.

40.3 Users are able to print a hard copy of the event log (by selecting 'Print' rather than
'Preview')

41. Balance snapshot and stock on hand

41.1 The balance snapshot shows details of all receipts and payments since the last
time a stock unit was balanced. It also shows the derived position of cash,
cheques (if applicable}, stock, currency and stamps on hand. It can be used to
check receipt and payment transaction totals.

41.2 The stock on hand report shows the derived position of cash, cheques (if
applicable}, stock, currency and stamps on hand. This means that the user can
check the physical stock on hand in the branch against the system derived figures
at any time and see if there is any discrepancy.

THE BALANCING PROCESS

42. Each branch is required to perform a full balance of every stock unit at the end of
each TP. By 'balance' I mean a declaration of the full cash and stock holdings in
branch to check it matches the figures derived from Horizon or declare a
discrepancy if it does not.

43. The steps that must be taken before the final balance report is produced are
described below.

44. Declarations

44.1 Stock on Hand

10
E2/4/10
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

44.1.1 This report provides a snapshot of all the stock items held with a stock
unit as recorded on Horizon. This is done from the Back Office Screen,
by selecting the 'Stock on Hand' button as displayed below:

f' d 1l O"t 7 1~ llll

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:. : IJ(d • .

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t
:t,:,.: I. ,:.:., Ha n d Total
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•'
IIM11h.... 1• HI .. . UJ . j ... 1,,., .,.,...._.

44.1.2 The user should then check that the stock on hand report matches the
actual stock at the branch which ensures that the system held stock
matches the actual stock holdings. If there is a discrepancy the user
can sell the difference between the derived and actual figure (if short)
or complete a sales reversal for the difference (if over). This is the
same process as described for stamps in paragraph 44.3.1 below.

44.2 Currency

44.2.1 When completing the monthly stock unit balance, the user has to input
on Horizon the total value of each currency that is held at the branch.
From the 'Monthly Accounting' screen, 3 they should select 'Currency'
and then press 'New Declaration' or overwrite the existing figures as
displayed below:

3
This would be done from the 'Weekly Accounting' screen in the case of a BP. This
applies to all further references to the 'Monthly Accounting' screen.

11
E2/4/11
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

r·, tl•ct::l .1 1•
c ... !'1 .t.•t~ll tr" ~ ! ·~··
L__d-·""""-....
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44.2.2 The different options available for a shared stock unit or individual stock
unit is outlined at paragraph 19 above. The user then selects the
currency line in the list for the currency value to be declared. For each
quantity that needs to be edited, the user should input the new quantity
into the box and then press the tab key. One the user is satisfied with
the currency values, they then press 'Enter' to make a declaration.

44.3 Stamps

44.3.1 The user must input on Horizon the quantities of each denomination of
stamps that are in stock. This is done by selecting 'Stamps' from the
'Monthly Accounting' menu. Horizon will display the 'Declare Stamp'
screen. Stamp declarations are carried forward, allowing the user to
edit the previous declaration. As explained in paragraph 34 above, the
option to perform a new declaration or to overwrite the previous
declaration is available on a shared stock unit. On a shared stock unit,
the user can select 'new declaration' or the user can choose to select
the previous declaration and overwrite it. On an individual stock unit,
the previous declaration will appear which is then overwritten with the
new figures.

44.3.2 The user has to count and list all of the postage stamps that are held at
the branch. The user can either confirm the figure for each stamp or if
the quantity needs to be edited, the user should select the stamp line
for the value that needs to be edited and input the new quantity into the
box. Once the user has confirmed or edited all the stamp values, they
then declare the position by pressing enter.

12
E2/4/12
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

44.3.3 Horizon then compares the declared stamps total with the system
derived figure. If any discrepancies are found, Horizon will display a
message warning to that effect. The amount of stamps that are
physically held in the branch is the true position. The user can reverse
a sale of stamps (if over) or sell stamps (if short) on Horizon in order to
bring the accounts in line with the true position. If the user wants to
confirm the discrepancy then they can select 'Continue' and then 'Yes'.
If the user does not want to confirm the discrepancies and wants to
check the declaration, they can select 'Continue' and then select 'No'.

44.4 Travellers Cheques

44.4.1 The user has to count and list all the Travellers Cheques that are held
at branch. In order to do so, they go to the 'Monthly Accounting' screen,
select 'Travellers Cheques' and then press 'New Declaration' as
displayed below:

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44.4.2 The user then selects the Travellers Cheques line in the list of the
currency value to declare or edit. As explained in paragraph 19 above,
there are different options for a shared stock unit or an individual stock
unit. For each quantity that needs to be edited the user should input the
new quantity into the box and then press the tab key (as explained
paragraph 34 above). Once the user has confirmed or edited all of the
Travellers Cheques values, they then declare the position by pressing
'Enter'.

13
E2/4/13
 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

44.5 Cash

44.5.1 The user then needs to make a cash declaration, which can be
accessed from the 'Monthly Accounting' screen by selecting 'Cash' as
displayed below:

l'rl 1l Gu 17 11S:U

r,

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("="S(IQyt:11
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44.5.2 The rest of the process is the same as outlined in the daily cash
declaration process at paragraphs 32 above.

44.5.3 The stock unit is then balanced. If there is a discrepancy at the end of
this process, it is transferred to local suspense (see 47.4 below) and
that stock unit rolls over into a new TP (or BP as appropriate). When
the final stock unit is balanced the user is presented with the total
branch discrepancy which they must either make good or settle
centrally (see 47.5 below).

45. Balance Report

45.1 The user can now produce a balance report. This is done by selecting 'Balance
Report' from the 'Monthly Accounting' screen as displayed below:

14
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 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

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45.2 Once the "Balance Report" icon has been selected Horizon automatically checks
for outstanding reports and declarations and will not allow a Balance Report to be
produced until all mandatory reports and declarations have been completed. If
they have been completed, Horizon will show a message to that effect and the
user presses "Enter" to continue.

45.3 A Balance Report must be produced for every stock unit in the branch.

46. Postage Label Report

46.1 The user should then print off a Postage Label report. This can be done either
before or after balancing the stock unit. This report lists the value of the confirmed
and rejected labels for each stock unit and user. The confirmed label value
includes the value of any rejected postage labels.

46.2 The user can do this by selecting 'Monthly Accounting Office' from the 'Monthly
Accounting' screen, then under the Balancing Options select 'Postage Labels' as

15
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 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

displayed below:
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46.3 The user should then select 'Print' and check the totals against the rejected
postage labels that are at the branch and once this has been done select 'cut off'
and then press 'yes' and Continue'. These reports should be kept in branch for
two years.

47. Suspense Account

47.1 The next step is to complete the Suspense Account report. This report only needs
to be printed by one user as it provides suspense account totals for the whole
branch, unlike the other reports which must be completed for each stock unit.

47.2 This should be done after balancing the last stock unit, but before producing the
trading statement. The suspense account report can be produced by selecting
'Monthly Accounting Office' from the 'Monthly Accounting' screen, then selecting
'Suspense Account' as displayed below:

16
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 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

rr1 1.l o.u 11" 1s: 3 1

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47.3 The user should then select 'Print' and then 'Enter'. This report must be kept in
branch for two years {POL-0171713/107}. The suspense account will show if {F/1835/107}
there are any discrepancies between the amount of cash or stock on hand and
the amount that is recorded on Horizon. For example, 'discrepancy over - £10.92'
means that there is £10.92 more cash at the branch than the system derived
figure. Equally 'discrepancy short - £10.92' means that there is a shortage of
£10.92 at the branch compared with what has been recorded on the Horizon
system. As explained above, the user can use the transaction log as necessary to
investigate the reason for the discrepancy.

47.4 At the end of the TP, the user will get a message which details the amount of the
discrepancy. For example:

'There are outstanding discrepancies of -£10.92 press continue to transfer this to

local suspense and continue to rol/over. Press cancel to cancel the rol/over.'

47.5 If there are multiple stock units in use at the branch, when the final stock unit is
balanced, all the discrepancies from each stock unit in the branch are
amalgamated and the final stock unit is presented with the total discrepancy for
the branch.

48. Branch Trading Statement (BTS)

48.1 Once all of the stock units in a branch have been balanced and rolled-over, a BTS
can be produced.

48.2 ABTS should be completed at the end of each TP. An example BTS can be seen {F/1613}
at {POL - 0440082}.

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 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

48 .3 The BTS shows an overall summary by stock unit and it also has a list of stock on
hand. The user must check the BTS and if they want to proceed, they need to
select 'Enter' to print the BTS.

48.4 The following statement appears on the BTS:-

I certify that this balance and trading statement is an accurate reflection of the
cash and stock on hand at this branch

48.5 The BTS should be signed and kept at the branch for six years {POL - {F/1835/143}
0171713/143}. It is possible for a branch to continue to trade if they do not
complete a BTS, but we always advise that branches roll over into the new TP at
the end of each TP.

DEALING WITH DISCREPANCIES AT THE END OF A TP

49. As I mentioned above, the more regularly branches complete cash declarations
and balance reports, the more quickly they can identify any discrepancies. This
also means that if the transactions have happened more recently, it is more likely
the user will be able to recall what happened or what the customer requested in
branch .

50. If at the end of a TP the BTS shows there is a discrepancy (i .e. either a shortfall
or a surplus) of less than £150, the Postmaster must 'make good' the
discrepancy. For example, if there was a shortfall of £10 .92 the Postmaster
would be required to put £10.92 into the till so that there is no discrepancy but a
balanced account at the start of the next TP. If a Postmaster needs advice on
identifying the cause(s) of the discrepancy, they are able to ring the helpline for
assistance and this has been a constant practice since Horizon was introduced.

51 . If at the end of a TP a branch has a discrepancy of more than £150 they have the
option to either make good or settle the discrepancy centrally. If the Postmaster
choses the option to "settle centrally" they don't have to physically place cash in
the till (in the case of a shortfall) at that moment. Rather, a message is sent to
Post Office's Finance Services Centre and the discrepancy is moved to a central
account held in the Postmaster's name. I understand from Post Office's solicitors
that my colleague Dawn Phillips will give evidence about this process.

52. On occasions a Postmaster may consider that a discrepancy has been caused by
an error made in branch which requires the branch accounts to be corrected.
This will be done through a transaction correction (TC )4 issued by Post Office

4
TCs are issued by Post Office to correct accounting errors made in branches .

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 Claim No: HQ16X01238, HQ17X02637 & HQ17X04248

where appropriate. If that is the case then the Postmaster can advise the Agent
Accounting team (where the discrepancy is over £150) or contact the helpline for
assistance. A TC balances out the discrepancy that was created when the error
was made by the branch.

CHANGES TO HORIZON

53. When Horizon was introduced branches were provided with a Horizon System
User Guide. A copy of booklet 1, which deals with balancing an individual stock
unit, individual stock unit declarations, balancing a shared stock unit, shared stock
unit declarations, general stock unit activities and cash account production, is at
{POL-0184487}.

54. As booklet 1 of the User Guide shows, branches had to perform a Cash Account
rather than a BTS in the original Horizon System, The Cash Account was a
weekly process and was replaced with the BTS in 2005, though it fulfilled the
same role.

55. With the introduction of Branch Trading in 2005, TCs replaced Error Notices as
the means of correcting accounting errors made in branches.

56. Horizon Online did not make many significant changes to the Horizon system
from the perspective of branches. The Back Office screen was simplified slightly
to make it more easy to navigate. Some reports did change over time depending
on whether there was a change in products, but the key elements of the core
reports discussed in this statement have stayed the same.

57. The number of days' worth of data available to the branch via transaction and
event logs has also increased. Before Horizon Online was introduced in 2010,
Horizon reports were available in branches for 42 days. With Horizon Online,
these reports are now available for 60 days.

58. The local suspense account changed when the BTS was introduced in 2006. The
losses/gains during the weekly balance periods would be held in what was then
called the local suspense account. Prior to this, any loss was moved to the
'unclaimed payment' box and any gains would be put in the 'uncharged receipts'
box of the cash account.

STATEMENT OF TRUTH

I believe that the facts stated in this witness statement are true

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 Cl'a im No: HQ116X0 11 238, HQ17X02637' & HQ17X04248

Signed .... ~ c L J ! = ............................... .

Name David Johnson

Date 28 Sep,. 18 ... .. ................. ....... .. ...... .. .......... ···· -·- ·· ··-- -

20

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