Internal Controls Over Financial Differences at James A. Farley Station, New York, NY
Backgound
The U.S. Postal Service Office of Inspector General (OIG) uses risk models to identify financial anomalies. Risk models are analytic tools that look at specific behaviors and patterns that are strong indicators of improper activity.
The OIG’s Field Financial Risk Model identified the James A. Farley Station in New York, NY, as having the highest value of financial differences in the New York District from April 1, 2016, to June 30, 2016.
Financial differences are variances in financial activities at U.S. Postal Service retail units, such as differences between banking deposits and receipts, errors with transmitted sales and money order data, and stock shipments not received by the unit. The value of the differences is expensed to the unit.
A manager or designee must identify the cause of the differences, adjust the financial records, maintain detailed records, and ensure timely resolution. A reason must be annotated for any unresolved differences.
The objective of this audit was to determine if financial differences identified at the James A. Farley Station were properly researched and resolved.
What the OIG Found
We verified that 54 differences were expensed to the James A. Farley Station during our review period. However, we could not determine whether management properly researched and resolved the differences because complete files did not exist.
The designee responsible for financial differences stated he did not have working knowledge of the resolution process because he had not completed financial differences training. But, training records showed he completed it in December 2009.
If the Postal Service does not reconcile financial differences, it cannot ensure that they are not a result of theft or fraud. Also, unresolved differences impact financial reporting accuracy. On November 23, 2016, the designee developed a log to begin monitoring financial differences.
What the OIG Recommended
We recommended management provide the designee refresher training on the financial differences process and ensure he maintains awareness of the process. We also recommended management implement controls to ensure files are established and financial differences are researched and resolved timely.