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Jan
29
2016
Report Number:
FT-FC-16-002
Report Type:
Audit Reports
Category: Finance

Management Advisory - FY 15 Financial Testing Compliance Oversight Review

Background

The Postal Accountability and Enhancement Act of 2006 requires the U.S. Postal Service to comply with Section 404 of the Sarbanes-Oxley Act and report on the effectiveness of the agency’s internal controls over financial reporting. The Financial Testing Compliance (FTC) group tests these financial controls at postal units.

This report addresses financial reporting control testing related to:

  • Business mail entry units and detached mail units, where postal employees verify the eligibility of mail and charge the mailer’s account.
  • Business reply mail services that provide customers with a convenient, prepaid way to reply to mailings.
  • Plant verified drop shipments transported by mailers from their plants to postal facilities.

The overall objective of our review was to evaluate whether the FTC group proprly tested, documented, and reported its examination of key financial reporting controls at selected postal facilities for fiscal year 2015. We conducted this review in support of the independent public accounting firm’s overall opinions on the Postal Service’s financial statements and internal controls over financial reporting.

What the OIG Found

We observed the FTC group conduct 244 internal control tests at 130 randomly selected units. During the review, the FTC group reported 11 exceptions, and we agreed with those results. However, we determined the FTC group did not properly test, document or report its examination of 13 additional key financial reporting controls at nine units. Specifically:

  • During testing, FTC group analysts asked leading questions and prompted the control performer where to locate specific information.
  • FTC group analysts documented different responses than those provided during testing and did not always post accurate results. Further, management did not always detect documentation errors.
  • Regarding reporting, management discarded a control test because the FTC group analyst’s questions interfered with the control process, but OIG concluded they were clarifying questions.

What the OIG Recommended

FTC management recognized the challenges in fiscal year 2015 and provided training to analysts prior to starting fiscal year 2016 testing. Therefore, we are not making recommendations.

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