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Audit Reports

Apr
20
2015
Report Number:
FT-AR-15-006
Report Type:
Audit Reports
Category: Finance

Fiscal Year 2014 Postal Service Selected Financial Activities and Accounting Records

Background

The U.S. Postal Service Headquarters Finance group establishes accounting policies and guidelines for recording and reporting financial transactions. The three Accounting Services (Eagan, MN; San Mateo, CA; and St. Louis; MO) are responsible for functions related to accounts payable, capital property, vehicles, transportation, money orders, international mail, and payroll. Further, the Headquarters / Accounting Service Center Testing Team drafts, implements, and employs a testing methodology for identifying, assessing, and reporting on internal controls over financial reporting.

The Postal Service Board of Governors contracted with an independent public accounting firm to express opinions on the Postal Service’s financial statements and internal controls over financial reporting. The firm maintains overall responsibility for testing and reviewing significant accounts and processes. The U.S. Postal Service Office of Inspector General coordinates audit work with the firm to ensure adequate coverage.

Our objectives were to determine whether:

■ Accounting transactions were fairly stated, and selected controls were designed and operating effectively.

■ Account balances followed the Postal Service’s general classification of accounts consistent with the previous year.

■ The Postal Service complied with laws and regulations having a direct and material effect on the financial statements taken as a whole.

We also determined whether the Postal Service properly tested, documented, and reported its examination of key financial reporting controls related to Postal Service Headquarters and Accounting Services.

What The OIG Found

he Postal Service’s accounting transactions were fairly stated and account balances conformed to the general classification of accounts. Also, the Postal Service complied with all material laws and regulations tested.

We did not propose any financial statement adjustments or identify any issues material to the financial statements or that would affect the overall adequacy of internal controls. However, controls over eTravel reimbursement claims, high dollar manual invoices, rejected invoice batches, and capital property disposals were not always designed or operating effectively.

Also, management did not always properly test or document their key control examinations of high dollar invoices and rejected invoice batches. As a result, there is an increased risk that control failures are not detected and reported.  The Postal Service could have potentially recorded $54.9 million in rejected invoice batches in an improper accounting period for fiscal year 2014.

What The OIG Recommended

We recommended management reinforce to all reimbursement claim approvers the requirement to include canceled checks or rental receipts for lease expense reimbursement claims. We also recommended management establish procedures to review rejected invoices for Prompt Payment Act interest payment consideration. 

Further, we recommended management revise key control language and test procedures over capital property disposals and rejected invoice batches to ensure they reflect the intent of the control and contain sufficient detail to determine whether the control is functioning efficiently. Finally, we recommended management reinforce to testers to document control test results based only on test procedure requirements.

Report Recommendations

# Recommendation Status Value Initial Management Response USPS Proposed Resolution OIG Response Final Resolution
1

R - 1 -- Reinforce to all reimbursement claim approvers the requirement to include canceled checks or rental receipts for lease expense reimbursement claims.

Closed $0 Agree
2

R - 2 -- Establish procedures to review invoices previously rejected for payment for Prompt Payment Act interest payment consideration.

Closed $0 Disagree
3

R - 3 -- Revise key control language and test procedures over rejected invoice batches to include actions required for invoices not resolved timely and to consider the date the invoice was initially submitted and rejected when determining timely resolution.

Closed $0 Disagree
4

R - 4 -- Reinforce to Postal Service Headquarters/Accounting Service Center Testing Team to document control test results based only on whether Postal Service personnel properly performed the controls based on the test procedure requirements.

Closed $0 Agree
5

R - 5 -- Revise key control language and test procedures over capital property disposals to include updates to procedures regarding 1) disposal of assets on the Semi-Annual Capital Property Certification Report, and 2) responsibilities to dispose assets in the Property and Equipment Accounting System.

Closed $0 Agree