Audit Reports

Background

The U.S. Postal Service Office of Inspector General (OIG) used data analytics to identify post offices with significant increases in refunds for postage and fees and miscellaneous non-postal revenue. The data showed that refunds at the Eufaula, OK, Post Office increased from $738 during fiscal year (FY) 2015 to more than $19,500 in FY 2016. It also refunded an additional $4,273 in quarter 1, FY 2017.

Customers may request refunds for postage and fees when they paid for special services, such as delivery confirmation or sending a letter certified, in which the Postal Service did not render the service. Refunds for miscellaneous non-postal revenue occur when funds previously collected as revenue are refunded, such as unclaimed customer account funds or advance deposit account balances.

Refunds may be processed using cash for $25 or less and no-fee money orders between $25 and $1,000. Refunds greater than $1,000 generally are not processed at the unit level.

We identified 172 cash refund transactions for postage and fees and miscellaneous non-postal revenue from October 1, 2015, through January 31, 2017, valued at $23,755.77. We randomly sampled 91 of the 172 (53 percent) cash transactions valued at $13,403.30. The objective of this audit was to determine whether internal controls for issuing refunds for postage and fees for special services not received and miscellaneous non-postal revenue were in place and effective at the Eufaula Post Office.

What the OIG Found

Internal controls over refunds for postage and fees and miscellaneous non-postal revenue at the Eufaula Post Office needed improvement. The office did not follow Postal Service policy for all 91 randomly sampled cash refunds. Specifically:

• The unit did not have the required applications for refund on file for 88 of 91 cash refunds (97 percent).

• Of the remaining three cash refunds where applications were on file, one did not have a witness signature.

• Eighty-seven of the 91 cash refunds (96 percent) exceeded the $25 maximum cash refund amount.

We also found the 91 sampled refunds occurred on 60 dates. We verified that one retail associate (RA) made 90 of the 91 refunds, valued at $13,383.70, and certified the unit’s daily financial report on 58 of the 60 dates. Further, we identified the same RA issued 169 of the 172 total cash refunds during the scope period.

The postmaster stated he did not review, as required, the daily financial report for supporting refund documentation to ensure the refund was warranted, completed properly, and filed with the daily financial report. He stated he trusted the closeout RA to certify all daily financial information.

If refunds are not completed properly, filed with daily documentation, and properly reviewed there is an increased risk of theft and incorrect financial reporting. As a result of this audit, management reiterated that cash refunds must not exceed $25 and trained employees to properly complete and submit refund application documentation.

We referred this information to the OIG’s Office of Investigations for further review.

What the OIG Recommended

Because management took corrective actions, we are not making a recommendation at this time. However, we may follow up in the future as part of our ongoing financial control audits.