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Feb
04
2016
Report Number:
CP-AR-16-004
Report Type:
Audit Reports
Category: Cost & Pricing

Market Dominant Billing Determinants: Special Services

Background:

U.S. Postal Service employees manually prepare billing determinant spreadsheets to report volume and revenue for every price in the five market dominant classes of mail: First- Class Mail, Periodicals, Standard Mail, Package Services, and Special Services.

Special Services supplement or enhance mail services, such as Post Office (PO) Boxes, for a fee. The Postal Service obtains data for Special Services billing determinant spreadsheets from sources such as its published price list, the Revenue, Pieces, and Weight Report, and the Web Box Activity Tracking System. This is the third in a series of five audits on billing determinants. The first audit reviewed First-Class Mail and the second reviewed Periodicals.

The Postal Accountability and Enhancement Act requires the Postal Service to produce an Annual Compliance Report within 90 days of the end of each fiscal year. The report analyzes cost, revenue, pricing, and quality of service for all products. The Postal Service files billing determinant spreadsheets to support this report and ensure that price adjustments do not exceed price caps for each market dominant class of mail. The manual preparation and complexity of the billing determinant spreadsheets used to prepare fiscal year FY 2013 and FY 2014 Special Services billing determinants create a risk of data entry errors.

Our objective was to assess the accuracy and completeness of data used to prepare fiscal year FY 2013 and FY 2014 Special Services billing determinant spreadsheets.

What The OIG Found:

We did not identify issues with data completeness but found inaccuracies the Postal Service could prevent by improving procedures used to prepare the Special Services billing determinant spreadsheets. Specifically, the FY 2013 spreadsheets had errors because employees used outdated source data and in FYs 2013 and 2014 employees did not correctly calculate PO Box billing determinants. Further, the Postal Service did not establish adequate controls over the Special Services billing determinant calculation process.

As a result of our previous billing determinant audits, the Postal Service is documenting repeatable processes for preparing billing determinant spreadsheets. But, there were no internal reviews of Special Services billing determinant spreadsheets prior to FY 2015 and errors existed in the FY 2013 and 2014 spreadsheets.

Management uses the spreadsheets to help make decisions regarding price adjustment filings. Although these errors did not impact compliance with price cap requirements, future billing determinant calculation errors might.

What The OIG Recommended:

We recommended the vice president, pricing and costing, submit corrected Special Services billing determinant spreadsheets for FYs 2013 and 2014 with the Postal Regulatory Commission; ensure billing determinant spreadsheets include the most current data; and complete ongoing internal efforts to ensure all Special Services billing determinant spreadsheets are produced using documented and repeatable processes that include an in-depth internal review process.

Report Recommendations

# Recommendation Status Value Management Response OIG Response USPS Proposed Resolution
1

R - 1 -- 1. Submit corrected Special Services billing determinant spreadsheets for fiscal years 2013 and 2014 to the Postal Regulatory Commission.

Closed $0 Disagree
2

R - 2 -- 2. Complete ongoing internal efforts to ensure that all Special Services billing determinant spreadsheets are produced using documented and repeatable processes that include an internal review process.

Closed $0 Agree