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Former Post Office chair Alice Perkins was warned about potential faults in the Horizon IT system as early as 2011, an inquiry has heard.

At the time, the Post Office had prosecuted hundreds of sub-postmasters for fraud on the strength of faulty data from Horizon accounting software.

It would carry on with these cases until 2015.

Ms Perkins, who was giving evidence at an inquiry into the scandal, said at the time she did not make a link between the two.

She was also told that the Post Office had "driven a very hard bargain" on the price of Horizon, and in return developer Fujitsu had cut corners on the quality of the software.

The inquiry was shown a handwritten note from Ms Perkins about a meeting on 27 September 2011 with Angus Grant, an auditor at Ernst & Young (EY).

'A risk for us'

According to the note, Mr Grant had flagged concerns about Horizon, describing the program as "a real risk for us".

He also warned that if Horizon was not accurate, then EY would not be able to sign off Post Office company accounts.

"Does it capture data accurately?" was a concern raised by Mr Grant, according to Ms Perkins' note.

Lead counsel for the inquiry, Jason Beer, said the information given by Mr Grant had been "very significant".

In 2011, some 11,900 Post Offices branches still used the computer system to process millions of transactions worth billions of pounds per year, he said.

"[If it's] a real risk to the independent professional auditors, then it's also a real risk to the Post Office too, isn't it?" Mr Beer said.

Ms Perkins said her meeting with Mr Grant was one of her first as chair, and she had interpreted his point "as a point from the perspective of the auditors, and their ability to audit the accounts".

"I don't think - wrongly - that I would have made the connection to the operation of Horizon at the branch level," she said.

"Doesn't one follow the other?" Mr Beer replied.

"I don't remember that that was the connection I made at the time," Ms Perkins said.

'Deeply problematic'

According to Ms Perkins' note, Mr Grant had gone on to discuss cases of alleged fraud by sub-postmasters at the time, pointing out that "suspects suggest it's a systems problem".

But again, Ms Perkins said she did not make the connection between potential problems with Horizon and what sub-postmasters were saying in their defence.

Mr Beer asked Ms Perkins whether the note was "deeply problematic for you, because you did nothing with the information given to you?"

But Ms Perkins said that she did not accept that. At the time she was meeting with "a great number of people, who were giving me a lot of information about the Post Office" which she was trying to make sense of and take on board.

It "did not ring alarm bells", she added.

According to the note, Mr Grant also told Ms Perkins that the Post Office had driven "a very hard bargain" on the price of Horizon, but that Fujitsu "took back on quality/assurance".

He also suggested the Post Office was being "naive".

Ms Perkins told the inquiry it was not uncommon for organisations contracting with IT companies "to be at a disadvantage" and that she had concerns about the relationship with Fujitsu being unequal.