Committee publication · Correspondence · 3 February 2026
Letter from Ernst & Young relating to Fujitsu account provisions for Horizon redress, 19 January 2028
From: Business and Trade Committee
Inquiry: Post Office Horizon scandal: Justice for sub-postmasters
Summary
Ernst & Young's letter to the Business and Trade Committee explains why Fujitsu Services Limited did not recognise a financial provision for Post Office Horizon redress payments in its 2024–2025 accounts, instead disclosing the liability as contingent. EY confirms it did not advise Fujitsu to avoid provisioning; rather, the three tests under accounting standard IAS 37 were not met because the quantum remained unestimable pending the Public Inquiry's full findings.
Key findings
- EY did not advise Fujitsu to avoid making a provision; it was the Directors' responsibility to assess whether IAS 37 criteria were satisfied.
- Under IAS 37, a provision requires: a present legal or constructive obligation, probable payment, and reliably estimable amount. EY accepted the Directors' view that the amount could not be reliably estimated given the inquiry's ongoing scope.
- EY deemed a constructive obligation existed (Fujitsu's public commitment to a 'moral obligation') but payment quantum remained too uncertain pending full Inquiry findings and ongoing government discussions.
- Fujitsu disclosed the contingent liability extensively in Note 27 of its March 2025 financial statements and acknowledged parent company (Fujitsu Limited) financial support dependency through 30 September 2026.
- EY modified its audit opinion with an 'Emphasis of Matter' to flag the Horizon contingent liability and going concern dependency, ensuring users of the accounts were properly alerted.
Tone
FactualTopics
Key actors
Ernst & Young LLP, Fujitsu Services Limited, Liam Byrne MP, Paul Patterson, Annie Graham, Jonathan Reynolds MP, Sir Wyn Williams
Notable line
“As auditors we are not allowed to give such advice from an independence perspective.”
Key Quotes
“As the external auditors of the Company's financial statements, it is not our role to advise the Company as to whether a provision is required, and nor did we in this case.”
“It was and remains clear as a result of the Company's own work and the challenge that, as external financial statement auditors, we applied to it, that there was a very wide range of possible outcomes .”
“Given the public commitment by the Company to contribute it was fair to assume that an outflow was more than remote.”
“… there was a moral obligation to contribute towards the UK Government's compensation schemes”
Source · parliament.uk record ↗