Internal Controls Over Local Purchases and Payments – Norwalk, CT, Main Office
Background
The U.S. Postal Service Office of Inspector General (OIG) uses data analytics, including predictive risk models and tripwires, to evaluate the U.S. Postal Service’s financial information. The analytics seek to target financial anomalies that occur at a field unit.
The OIG’s Field Financial Risk Model and the Office of Investigations’ Local Payment Tripwire identified that the Norwalk Main Office made $61,489 in local purchases and payments using no-fee money orders from October 1, 2015, to September 30, 2016.
The Postal Service prefers to pay for its goods and services through its electronic purchasing system. When that is not possible, authorized users may use assigned credit cards. Cash not to exceed $25 or a no-fee money order not to exceed $1,000 may be used to make a one-time emergency payment.
In addition, local payments made to individuals, proprietorships, or corporations with cash or money orders must be reported for tax purposes.
The objective of this audit was to determine whether internal controls were in place and effective for making local purchases and payments at the Norwalk Main Office.
What the OIG Found
Local payments were not always authorized, and internal controls needed improvement. We verified the unit made 74 local payments valued at $58,925 for electrical services from October 1, 2015, to September 30, 2016, without an authorized contract. In addition, the unit exceeded the single payment limit for no-fee money orders and split payments for invoices over $1,000.
The supervisor was aware of the preferred method of payment but stated the vendor wanted to be paid with money orders. Four months after the first payment, the postmaster contacted Postal Service Supply Management personnel to request lighting repairs and initiate the contract process. He did not receive a response and did not follow up on the request. In the meantime, the unit continued paying the vendor with no-fee money orders without an authorized contract.
Further, the unit did not report tax reportable no-fee money order payments as required. We referred this issue to the OIG’s Office of Investigations for further review.
What the OIG Recommended
We recommended management implement procedures to ensure the Norwalk Main Office uses the preferred payment methods and adheres to the no-fee money order single payment limit policy; follows up with applicable Postal Service personnel to establish a contract for electrical services; and submits required tax documentation for payments made to the vendor.