The former chairman was informed of the IT risks in 2011

The investigation found that former Postmaster General Alice Perkins was warned about potential flaws in the Horizon IT system as early as 2011.

At the time, the Post Office was charging hundreds of subpostmasters with fraud based on inaccurate data from its Horizon accounting software.

The cases are set to continue into 2015.

Perkins, who was testifying at the inquiry into the scandal, said he had not intended to link the two at the time.

It was also reported that the Ministry of Posts and Telecommunications engaged in “very tough negotiations” over the price of Horizon, and in return, developer Fujitsu lowered the quality of the software.

The investigation was shown handwritten notes by Perkins from a meeting with Angus Grant, an auditor from Ernst & Young, on September 27, 2011.

According to the memo, Grant expressed concerns about Horizon, saying it posed a “real risk to us.”

He also warned that EY would not be able to approve the Post Office Company's account if the horizon was not accurate.

According to Perkins' memo, Grant expressed concern, “Are we collecting the data accurately?”

Jason Beer, the lead lawyer for the investigation, said the information Grant provided was “extremely significant.”

He said that in 2011 around 11,900 Post Office branches still used computer systems to process millions of transactions worth billions of pounds a year.

“[If it’s] “If it's a real risk to an independent, professional auditor, then surely it's a real risk to the Post Office?” Beer said.

Mr Perkins said his meeting with Mr Grant was one of his first as chairman and that he interpreted Mr Grant's comments as “coming from an auditor's perspective and in their auditing capacity”.

“I don't think I'm mistaken in understanding the relevance of Horizon's branch-level operations,” she said.

“Doesn't one follow the other?” Beale replied.

“I don't recall there being any such connection at the time,” Perkins said.

According to Perkins' memo, Grant went on to discuss a case of alleged fraud by the then-subpostmaster general, noting that “the suspect suggests it was a system problem.”

But Perkins again said he could not see a link between Horizon's potential problems and what the subpostmasters said in their defence.

Beer asked Perkins whether the memo was “so problematic to you because you did nothing based on the information that was given to you?”

But Perkins said she didn't accept that. At the time, she had met with “a lot of people who gave me a lot of information about the post office” and she tried to understand and accept that information.

“There was nothing that set off any alarm bells,” she added.

According to the memo, Grant also told Perkins that the Postal Service had “negotiated very hard” on the price of the Horizon, but that Fujitsu had “withdrawn its quality and guarantees.”

He also suggested the post office was “naive.”

Perkins told the inquiry it was not uncommon for organisations that contract with technology companies to be “put at a disadvantage” and he was concerned about the unequal relationship with Fujitsu.