Audit Reports

Background

The OIG used data analytics to identify locations with lost or stolen stamp stock shipments. We identified expenses related to lost or stolen stamp stock shipments for the San Juan Stamp Office (SJSO); Fernandez Juncos Station; and Amelia, Bayamon, and Condado Contract Postal Units (CPU) between May 1, 2016, and April 30, 2017.

The SJSO primarily fills emergency stamp orders and occasionally fills non-emergency orders and performs the stamp destruction process for postal retail units in San Juan, PR. The Fernandez Juncos Station is a postal unit within the SJSO stamp stock service area.

The Amelia, Condado and Bayamon CPUs are also located in the SJSO stamp stock service area. A CPU is a retail unit located inside a private business under contract with the Postal Service. It provides postal services to the public and is operated by non-postal employees.

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 in St. Louis, MO, records an expense to the units for differences.

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.

• A new tracking process and centralized review of all missing stamp stock shipments, including orders sent to the wrong unit.

• A new stamp destruction process that better aligns and tracks inventory discrepancies.

Our objective was to determine whether internal controls over stamp stock shipments were in place and effective at the SJSO; Fernandez Juncos Station; and Amelia, Bayamon, and Condado CPUs.

What the OIG Found

Internal controls over stamp stock shipments at the SJSO; Fernandez Juncos Station; and Amelia, Bayamon, and Condado CPU’s needed improvement. Specifically:

• The SJSO did not always ensure stamp stock shipped from postal retail units in San Juan to the SJSO for destruction was accurately recorded. Due to retail system limitations, the supervisor had to contact Accounting Services to manually change the recipient unit finance number from Stamp Fulfillment Services to SJSO after the stamp destruction process was complete. During our scope period, the supervisor forgot to request the change.

• The SJSO fulfilled two stamp stock orders for CPUs without the responsible post office authorizing the transaction. The SJSO supervisor stated she was not aware they were not approved.

• The manager of the post office responsible for overseeing the Condado CPU did not comply with Postal Service policy when transferring stamps to the CPU. District management overseeing these procedures was not aware the manager implemented his own procedures that circumvented policy.

• The managers of post offices overseeing the CPUs did not always research and resolve stock discrepancies; complete the claims for loss process; or notify the OIG for lost or stolen shipments. They did not have proper systems access to review and monitor stamp stock activities, so they were not aware when Accounting Services expensed the units.

If controls over stamp stock shipments are not followed, there is increased risk theft could occur without detection and financial records could be misstated.

As a result of this audit, district management instructed the SJSO not to fill any CPU stamp stock orders without the approval from the responsible post office manager; therefore, we are not making a recommendation on that issue.

We referred the issue of filling stamp orders without proper approval to the OIG’s Office of Investigations for further review.

What the OIG Recommended

We recommended district management:

• Enhance the retail system to include the unit finance number for the specific location where stamp stock destruction is performed.

• Include the supervisor, SJSO, on the distribution of reports showing expensed items.

• Reiterate the requirement to follow established policy for ordering, shipping, and securing stamp stock; researching and timely resolving financial differences; completing the claim for loss process; and notifying the OIG, when applicable.

• Provide managers access to all resources necessary to monitor stamp stock activities for the units they oversee.