The objective of this audit is to determine whether internal controls for issuing refunds for walk-in revenue were in place and effective at the Kissimmee, FL, Main Office.
The OIG Field Financial Risk Model identified the Kissimmee Main Office, for quarters (Q) 3 and 4 fiscal year 2017, made over 50 percent of all walk-in revenue refunds within the Suncoast District. Additionally, the Kissimmee Main Office refunded about 38 to 56 percent of the total walk-in revenue during Q’s 3 and 4. The audit team reviewed 50 refund transactions, totaling $255,211 or 99.4 percent of the total refund amount identified, between April 1 and September 30, 2017.
What the OIG Found
Internal controls for walk-in revenue refunds were not in place and functioning at the Kissimmee, FL, Main Office. Unit personnel:
- Did not always properly support or complete refund claims. Specifically,
o Thirty-one refunds totaling $244,114 did not have supporting documentation at the unit. Refunds were to one vendor, requested by a district Business Service Network Representative to be processed by the Kissimmee Main Office. No supporting documentation was forwarded from the district to the post office due to file size.
o Twelve refund forms, reviewed, were missing key information, such as a witness signature and account numbers due to unit personnel forgetting to complete the form.
- Did not record an additional 12 refunds to correct account numbers. While the unit recorded the account numbers correctly on the refund forms, the unit improperly recorded all 12 refunds into the incorrect account numbers in the system. This was due to the unit personnel’s’ confusion as to which refund to select in the system.
- Did not destroy unused customer printed postage meter stamps submitted as evidence for 10 of 11 refunds, valued at $7,014. Unit personnel were unaware of Postal Service policy to destroy unused postage meter stamps.
- Split four refund transactions valued over $1,000 each to circumvent the $1,000 no-fee money order limit. Unit personnel processed these refunds instantly using no-fee money orders instead of sending them to accounting services for processing. These transactions totaled $6,182 and occurred due to the sales and service associate’s misunderstanding of policy and misunderstanding the amount of stamps the customer wanted to purchase.
When internal controls are not in place and functioning, the Postal Service has an increased risk of issuing invalid refunds, using inaccurate and unreliable refund data to monitor the unit, and undetected theft or loss. In addition, when the stop-the-clock scans are not occurring, it creates unnecessary expenses for researching the validity of the refunds as well as revenue lost, even though the mail could have been delivered timely.
As a result of our audit, the unit supervisor reviewed the refund form training guide with unit personnel and reiterated the requirements for completing and reviewing the refund forms, selecting the proper account numbers, and properly processing refunds using no-fee money orders. Because management took corrective actions for those three issues, we are not making a recommendation for those issues at this time.
In addition, we plan to refer the refunds that did not have supporting documentation and that were supported by unused customer printed postage meter stamps to the OIG’s Office of Investigation for further review for potential investigation.
What the OIG Recommended
We recommended district management:
1. Obtain and review documentation that supports the refund amounts prior to processing the refund.
2. Reiterate to all unit personnel the requirements for processing refunds supported by customer printed postage meter stamp.
3. Destroy the $7,014 postage meter stamps used to support 10 refunds identified in the report.