Misclassified Training Expenses
Background
The U.S. Postal Service relies on monthly, quarterly, and annual financial reports to make informed decisions, which include monitoring training expenses. The Postal Service uses a comprehensive financial accounting data collection and processing system to prepare these financial reports and collect reliable and meaningful information to manage the organization.
A key component of the accounting system is the use of 8-digit account numbers that segregate accounting data into the proper accounts within the chart of accounts. In fiscal years (FYs) 2013 and 2014 (through March 31, 2014), the Postal Service charged $60 million to the “Training - Instructor and Fees” account. Postal Service employees use this account to record tuition and contract or fee-based payments to instructors.
Our objective was to determine whether the Postal Service properly classified training expenses within general ledger accounts.
What the OIG Found
Postal Service employees misclassified $18.9 million of operating expenses all as training expenses. Employees also misclassified $32.7 million of travel for training costs as training for instruction and fees.
Postal Service employees misclassified these expenses because a budget memorandum provided incorrect guidance, and management did not properly configure the eTravel system to identify travel expenses associated with training.
As a result, the Postal Service overstated the general ledger expense account balances for “Training - Instructor and Fees” by $51.6 million for FYs 2013 and 2014 (through March 31, 2014), potentially impacting its ability to make informed financial decisions.
What the OIG Recommended
We recommended the Postal Service correct the misclassification of expenses identified during the review for FY 2014; issue a memorandum outlining the correct procedures