The U.S. Postal Service operates about 32,000 facilities that use various types of utilities. These utilities include electricity, natural gas, water, steam, sewerage, and regulated telecommunications. In fiscal year (FY) 2014, the Postal Service paid about $537 million for utilities through two systems. Over 196,000 invoices totaling $433.9 million were processed in the Utility Management System (UMS) and over 675,000 invoices totaling $102.9 million were processed in the eBuy2 system.
A Postal Service contractor enters and processes utility bills in the UMS for about 5,500 larger Postal Service facilities. A system-generated email is then sent to designated local officials to verify the accuracy of the processed invoices. In addition, the Postal Service uses an exception report to identify invoice anomalies, such as excessive billing amounts, on all invoices processed in the UMS.
eBuy2 is designed for ordering goods and services that cost less than $10,000; however, it is also used for requesting payment for utilities such as electricity and water for Postal Service facilities the UMS does not manage. Unlike UMS, Postal Service employees input and review utility invoices in eBuy2 rather than a contractor. Also, eBuy2 does not have the capability to produce exception reports.
In 2010, we issued a report addressing the certification process for electronic invoices, including utility invoices processed in the UMS. In that audit, we found Postal Service personnel responsible for reviewing invoices were unaware of their roles, and contact information in the UMS was inaccurate. In response, the Postal Service developed training videos that described personnel roles in the UMS invoice process and how to access and update reviewer contact information in the UMS.
This report is a follow-up to the corrective actions taken to improve oversight of utility payments made through the UMS. We also reviewed the eBuy2 utility payment process. Our objective was to evaluate the Postal Service’s controls over utility payments.
What the OIG Found
The Postal Service can improve controls over utility payments. Its processes for reviewing utility invoices in the UMS were overlapping and unclear. For example:
- Area and district personnel were responsible for resolving UMS invoice anomalies identified in the UMS exception report when designated local personnel were already tasked to review the invoices.
- For 49 of 55 (89 percent) sampled utility invoices analyzed, personnel designated to review, question, or approve invoices in UMS did not always do so because they were unaware of their roles and responsibilities.
- Contact information for personnel designated to review and approve UMS invoices was inaccurate or incomplete for 35 of the 55 invoices we reviewed.
- Five of 39 district personnel we interviewed who were responsible for addressing invoice anomalies identified on the UMS exception report were not familiar with the exception reporting process.
Further, based on our sample of 153 eBuy2 invoices, 85 employees who input invoice data and 95 employees who reviewed the data stated they did not receive guidance on their roles and responsibilities. For example, the Postal Service was not able to take advantage of a potential tax exemption in at least 14 cases where employees were not aware they could request exemptions from certain taxes and fees. We also referred an invoice to the U.S. Postal Service Office of Inspector General Office of Investigation because the invoice had a Post Office box as its return address for payment, and the local utility authority stated it had not issued it.
These conditions existed because management had not established a comprehensive or cohesive formal policy to direct the utility payment process and help ensure proper payments through the UMS and eBuy2. Instead, management relied on piecemeal processes and informal guidance to mitigate potential risks associated with utility payments. For example, training videos about the UMS and eBuy2 utility payment processes were dated, and personnel were not always aware of the training videos existence.
Without clear policy and procedures to help defend against improper payments and the difficult “pay and chase” aspects of recovering improper payments, it is more challenging for the Postal Service to detect such payments.
What the OIG Recommended
We recommended management develop comprehensive formal policies and procedures to help ensure utility payments are properly made through UMS and eBuy2.