The OIG Field Financial Risk Model identified that the Hartford Main Office, for quarter (Q) 3 fiscal year (FY) 2017, made 92 percent of all local purchases within the Connecticut Valley District. This unit had a 367 percent increase in local purchases recorded to miscellaneous supplies, materials, and services during Q3 compared to Q2 of FY 2017. The audit team reviewed all 110 miscellaneous supplies, materials, and services transactions identified between April 1 and June 30, 2017.
The objective of this audit was to determine whether internal controls were in place and effective for making local purchases and payments at the Hartford, CT, Main Office.
What the OIG Found
Internal controls for local purchases and payments were not in place and functioning at the Hartford, CT, Main Office. Specifically, unit personnel:
- Improperly recorded in the system all98 no-fee money orders (NFMO)reviewed. The U.S. Postal Inspection Service (Inspection Service) requested the NFMOs for processing refunds for official business purposes. This resulted in an overstatement of revenue and expenses. Unit employees stated the former manager did not provide the correct instructions on processing NFMO requests from the Inspection Service.
- Did not collect and report Bank Secrecy Act (BSA) data, as required, for eight of 11 NFMOs requested by the Inspection Service that met the BSA reporting requirement. Unit personnel misinterpreted the reporting requirement.
- Did not obtain proper approvals, collect vendor tax data, or stay within the local purchasing limits prior to issuing five no-fee money orders for three local payments totaling $3,357.
- One invoice, valued at$2,280, was paid without a properly approved purchase request. Additionally, the unit using three NFMOs for the$2,280 payment to circumvent authorized local payment limits. Further, the unit did not collect vendor tax data as required by federal law.
- One payment for $800 was made without a properly approved purchase request.
- One payment for $277 did not have any documentation to explain the purpose for the purchase or who approved the payment.
Unit personnel stated they were instructed by the former unit manager to make the payments and, therefore, assumed policy was followed.
- Did not always properly support or complete refund claims. Specifically,
- Four refunds totaling $335 did not have documentation supporting refunds of cash found loose in the mail.
- 100 of 102 refund forms reviewed were missing key information, such as a witness, certifying employee signature, or customer signature.
Postal Service policy does not require unit personnel to acquire supporting documentation for refunds of cash found loose in the mail. In addition, the acting manager was not aware of her responsibility to review refund forms for support and completeness because she had not received Daily Financial Reporting training.
When internal controls are not in place and functioning, the Postal Service has an increased risk of:
- Using inaccurate and unreliable revenue and expense data to monitor and assess unit performance.
- Being subject to penalties of $200,000 for the eight forms not submitted per BSA requirements.
- Maintaining inaccurate and incomplete refund payment information.
What the OIG Recommended
We recommended district management:
1. Provide training to all employees with responsibilities for processing or overseeing NFMO requests, to include Daily Financial Reporting and BSA reporting requirements.
2. Submit required BSA forms for the eight recipient NFMOs requested by the Inspection Service and tax documentation for the $2,280 parking payment.
3. Reiterate to unit personnel that all local purchases must be approved in advance, must be within authorized limits, and may require tax reporting for service payments.
We also recommended headquarters’ management
4. Develop a policy regarding refunds for monies found loose in the mail.