Audit Reports

Background

The U.S. Postal Service Office of Inspector General (OIG) used data analytics to identify offices that issued large amounts of no-fee money order refunds for business reply mail (BRM). We identified the Washington, D.C., Main Office Window (MOW) issued refunds totaling $171,555, the largest amount compared to other offices nationally, from March 11, 2016, to January 6, 2017.

BRM is a service provided by the Postal Service that enables a sender to provide a recipient with a prepaid method for replying to their mailing. Customers request refunds when postage has been applied to the prepaid mailing. To obtain a refund, customers must submit the mailpiece with postage affixed, and the required refund application. The Postal Service assesses charge fees to process the refunds and deducts those fees from the customer’s refund amount.

The objective of this audit was to determine if internal controls were in place and effective for issuing no-fee money order refunds for postage applied BRM at the Washington, DC, MOW.

What the OIG Found

The Washington, DC, MOW issued more BRM refunds compared to other post offices because companies in other states purchased their BRM permits with a Washington, DC, address. However, internal controls for issuing no-fee money order refunds needed improvement. Specifically:

• The employee responsible for processing refunds did not include a witness in the process or obtain a supervisor’s certification signature prior to sending the mail for destruction because a supervisor was not always available. She keeps the refund form until the supervisor returns when both a witness and supervisor sign and backdate it. Also, the employee did not properly calculate charge fees for processing the refunds. The employee was not properly trained and was instructed to use a locally-developed process for calculating charge fees.

• Another employee responsible for the daily financial closeout did not verify information on the daily financial reports matched the customer’s refund applications. The employee was not aware of the requirement.

If controls over no-fee money order refunds for BRM are not followed, improper payments may occur and go undetected. We referred this to the OIG’s Office of Investigations for review.

What the OIG Recommended

We recommended district management reiterate the processes for charge fees and mail destruction related to BRM refunds to all Washington, DC, MOW employees. We also recommended management train employees on the daily closeout process and monitor it to ensure policies are followed.