Audit Reports

BackgroundThe U.S. Postal Service Office of Inspector General (OIG) uses tripwires to identify financial anomalies. Tripwires are analytic tools that look at specific behaviors and patterns that are strong indicators of improper activity. The OIG’s Perfect Count Tripwire identified that the Brooklyn Greenpoint Station in Brooklyn, NY, reported three perfect counts from April 1, 2015, to March 31, 2016. Perfect count means the Postal Service did not report any overages or shortages of retail floor stock.

Segmented inventory consists of retail floor stock (stamps sold on the retail floor), unit reserve stamp stock (stamps used to replenish those sold on the retail floor), cash, money orders, and stamps assigned to retail associates (RAs). Inventory can be transferred between segments; therefore, all segments of inventory must be counted to determine whether perfect counts are accurate. Postal Service managers are responsible for timely and proper counts of all segmented inventory.

An office with at least $100,000 in annual revenue and three employees overseeing segmented inventory is unlikely to go 12 consecutive months with no overage or shortage of retail floor stock.

The objectives of this audit were to determine whether financial transactions for segmented inventory at the Brooklyn Greenpoint Station were accurately presented in the accounting records and whether internal controls were in place and effective.

What The OIG FoundThe accounting records for segmented inventory at the Brooklyn Greenpoint Station were not always accurately presented and internal controls needed improvement.

We verified the office reported three perfect counts of retail floor stock from April 1, 2015, to March 31, 2016. Another perfect count was posted on July 8, 2016. However, on July 26, 2016, we conducted an independent count and identified a shortage of stamps valued at $34.

This occurred because one RA did not always properly record stamp sales from the retail floor stock. When customers exchanged stamps at the retail window, the associate did not always record the exchange in the retail system. So, the manager, Customer Service, improperly adjusted the count records to a perfect count.

In addition, the manager, Customer Service, did not properly record the unit’s inventory counts. We also identified:

• The unit did not have the required bait money orders for three of seven RA cash drawers. Bait money orders help law enforcement identify and apprehend criminals if the money orders are stolen and cashed.
• The unit did not return or destroy 588 obsolete money orders.
• Four RAs were missing the required duplicate key and password envelope to access and count the cash drawer when the RA is not present.
• Seven RA cash drawer inventory files did not have the required form to summarize the results for all inventory counts, and five cash drawer inventory files did not have the required form to record the current inventory count.
• The office vault, which stored accountable items such as cash and stamps, was not secured throughout the day during our site visit.
• One locked compartment inside a vault that contained $20 in cash, a book of forever stamps, and 120 unused postage labels valued at $249 that were not included in the accounting records.
• The unit did not always complete or maintain the required forms to accept and return saleable stamp stock.

If controls over inventory and cash are not followed there is an increased risk of theft of money orders, stamp stock, and cash.

As a result of this audit, management initiated the process to destroy the obsolete money orders and change locks; and secured keys to compartments in vaults.

What The OIG RecommendedWe recommended management establish a process to ensure employees follow the required procedures for retail floor stock counts, inventory accountability records, shipment records, and duplicate key and password maintenance. We also recommended management provide all RAs with the required bait money orders and follow the procedures to destroy obsolete money orders.

Finally, we recommended management implement procedures to transfer and maintain security over accountable items stored in the station’s vault.