Internal Controls Over Stamp Stock Shipments – Genito Station, Midlothian, VA
Background
The U.S. Postal Service Office of Inspector General (OIG) used data analytics to identify offices with expenses related to lost or stolen stamp stock shipments. We identified 46 expenses totaling $30,347 related to stamp stock shipments for the Genito Station in Midlothian, VA, and Brandermill Finance Station, a small finance station whose stamp stock is shipped to the Genito Station, between May 1, 2016, and April 30, 2017.
Stamp Fulfillment Services, Kansas City, MO, fulfills stamp orders from postal retail units. Retail units are responsible for identifying and locating missing stamp stock shipments. When retail units do not resolve discrepancies timely, Accounting Services records an expense to the units for the difference.
Management advised that they are strengthening overall stamp accountability and upgrading financial controls, including:
- Daily financial accountability reconciliations and semi-annual stamp counts at Stamp Fulfillment Services.
- Enhancements to tracking stamp movement and in-transits at Stamp Fulfillment Services; and stamp shipments to individual post offices.
- New tracking process and centralized review of all missing stamp stock shipments, including orders sent to the wrong unit.
- New stamp destruction process that better aligns and tracks inventory discrepancies.
The objective of this audit was to determine whether internal controls over stamp stock shipments were in place and effective at the Genito Station.
What the OIG Found
Internal controls over stamp stock shipments at the Genito Station needed improvement. Specifically,
- Personnel at the Genito Station did not always secure stamp stock shipments or include a witness when receiving new stamp stock shipments into unit reserve. Specifically, after arrival into the unit, personnel placed the stamp stock shipment in the manager’s office where it is left unattended and open to the workroom floor until the manager arrives and verifies the shipment.
- The Genito Station did not always maintain required stamp stock documentation, including a log with detailed records of expenses and required stamp stock shipping or transfer forms.
As a result, we could not verify that all of the 46 expense transactions identified were related to lost or stolen stamp stock shipments between May 1, 2016 and April 30, 2017. However, we verified 14 stamp stock expenses, regarding lost or stolen shipments, were attributable to correction of errors made when stamp shipments were received or due to errors transferring stock into mobile Point-of-Sale accountability.
This occurred because prior to January 1, 2017, a clerk served as the acting manager and unit reserve stock custodian, but did not have proper stamp stock training. Also, the current unit manager stated he believed stamp shipments were best protected in his office. He also stated that he did not always include a witness in the process to save time and because he was financially responsible for the stamp stock. Finally, the current unit manager stated he was not aware of the requirement to maintain a log with detailed stamp stock records, even though he had previous stamp stock related training.
If controls over stamp stock shipments are not followed, there is an increased risk of undetected theft of stamp stock. Further, there is an increased risk the financial records could be misstated and the Postal Service cannot ensure that financial differences are not a result of theft or fraud.
As a result of our audit, on June 22, 2017, management began securing stamp stock in a safe after it is scanned as “arrived” at the unit and created a log and file for required documentation. Further, the unit manager will now include a supervisor as a witness in the stamp stock shipment receipt process. Finally, on June 19, 2017, the current manager completed additional mobile Point-of-Sale training.
What the OIG Recommended
Because management took corrective actions, we are not making a recommendation at this time. However, we may follow up in the future as part of our ongoing financial control audits.