In 1997, the U.S. Postal Inspection Service, in coordination with the Department of Justice, established the Consumer Fraud Fund (CFF) to receive proceeds recovered in fraudulent cases when it is not feasible to return proceeds to the victims. The purpose of the CFF is to supplement Postal Inspection Service consumer education initiatives and consumer fraud investigations. In fiscal year (FY) 2016, the CFF’s balance was $44 million.
The Postal Inspection Service is subject to U.S. Postal Service procurement and purchasing guidelines for all expenditures charged to the CFF. In addition, the Postal Inspection Service has an internal guide that provides instructions on requesting funds for consumer fraud or asset forfeiture funded projects.
Our objective was to determine whether the Postal Inspection Service complied with applicable policies and procedures for CFF deposits and expenditures and, specifically, determine whether CFF funds were properly received and accounted for and whether expenditures were appropriate for FYs 2014 through 2016.
What the OIG Found
The Postal Inspection Service generally complied with applicable policies and procedures in managing CFF deposits and expenditures for FYs 2014 to 2016. In addition, all six deposits were accurately recorded and supported by court decrees, fines, settlement agreements or judgements. Of the $38 million in expenditures reviewed, all expenditures met the criteria for using the CFF and were accurately recorded and supported by invoices and source documents; however, all CFF funding requests did not always include the six required elements to support the request.
Additionally, opportunities exist to improve CFF processes and procedures. Specifically, goods and services funded by the CFF did not always have measurable performance goals to evaluate effectiveness. For example, five suppliers who were paid $7.4 million did not have performance goals or a measure for performance progress. In addition, the Postal Inspection Service did not develop written procedures to track, monitor, and reconcile expenditures.
These conditions occurred because there is no requirement to evaluate the effectiveness of CFF expenditures using measurable performance goals; and the internal guide was not comprehensive to include processes for requesting CFF funding or for tracking, monitoring, and reconciling expenditures.
Formal written procedures for management of the CFF would help ensure consistency and accountability in how the Postal Service documents and approves CFF requests. Further, without written procedures, there is a risk that expenditures and adjustments will not be reported correctly. An effective control system consisting of well-defined processes and procedures is critical to ensuring consistent process application, retaining institutional knowledge, and protecting the Postal Service brand.
What the OIG Recommended
We recommended management develop a requirement to evaluate the effectiveness of CFF expenditures using measurable performance goals; and develop formal written procedures for managing CFF requests and for tracking, monitoring, and reconciling expenditures.