Our audit objectives were to determine whether the U.S. Postal Service:
- Fairly stated selected accounting transactions in the general ledger and whether selected key controls surrounding those transactions were operating effectively.
- Properly tested, documented, and reported its examination of selected key controls related to Headquarters and Accounting Services.
The Postal Reorganization Act of 1970 requires annual audits of the Postal Service’s financial statements. In addition, the Postal Accountability and Enhancement Act of 2006 requires the Postal Service to comply with Section 404 of the Sarbanes-Oxley Act. This section requires the Postal Service to report the scope and adequacy of its internal control structure and procedures and assess their effectiveness.
The U.S. Postal Service Board of Governors contracted with an independent public accounting (IPA) firm to express opinions on the Postal Service’s financial statements and internal controls over financial reporting. The IPA firm maintains overall responsibility for testing and reviewing significant Postal Service accounts, processes, and internal controls. The OIG coordinates audit work with the IPA firm to ensure adequate coverage.
What the OIG Found
The Postal Service’s accounting transactions were fairly stated, and selected key controls were operating effectively. In addition, we found the Postal Service properly tested, documented, and reported selected financial controls.
We did not propose any adjustments or identify any issues or control deficiencies that were material to the financial statements or that would affect the overall adequacy of internal controls.
However, the test procedures for Intra-Governmental Payment and Collection transactions were not designed effectively to independently verify individuals authorized to approve these transactions. Management uses test procedures to assess whether controls are in place and functioning effectively, so inaccurate test procedures increase the risk that control issues are not properly identified.
Management agreed with our issue and took corrective action by revising the test procedures to include independent verification of the authorizing individuals.
What the OIG Recommended
Since the Postal Service took corrective action on the issue identified, we did not make any recommendations.