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Audit Reports

May
28
2014
Report Number:
FT-AR-14-010
Report Type:
Audit Reports
Category: Finance

Fiscal Year 2013 Postal Service Financial Statements Audit – San Mateo Accounting Services

BACKGROUND:

U.S. Postal Service San Mateo Accounting Services is responsible for accounting functions related to accounts payable, centralized postage payments, capital property, motor vehicles, and supply inventory. The Postal Service’s Financial Testing Compliance group examines key financial reporting controls.

Our objectives were to determine whether San Mateo Accounting Services:

 Accounting transactions were fairly stated, and selected controls were designed and operating effectively.

 Ensured account balances followed the Postal Service’s general classification of accounts consistent with that of the previous year.

 Complied with laws having a direct and material effect on the financial statements taken as a whole. We also determined whether the Financial Testing Compliance group properly tested, documented, and reported key financial reporting controls.

WHAT THE OIG FOUND:

San Mateo Accounting Services’ accounting transactions were fairly stated and account balances conformed to the general classification of accounts.

In addition, it complied with laws having a direct and material effect on the statements. Finally, the Financial Testing Compliance group properly tested, documented, and reported its examination of key financial reporting controls.

We did not propose any adjustments; however, we identified the need to improve key controls established to ensure that contractor payments are correct and capital property is properly recorded. Specifically, we identified deficiencies related to inaccurate contract labor rates in two of 25 invoices we reviewed and inaccurate capital property reviews. These issues resulted in more than $9,000 in contract overpayments, misclassification of nearly 8,000 potentially obsolete assets, and about $3 million in data integrity issues for fiscal year 2013.

WHAT THE OIG RECOMMENDED:

We recommended management implement a control to verify and collect correct contract data entered into the contract labor system prior to payment. Also, we recommended management revise testing and reinforce procedures for the semi-annual capital property reviews, modify the report and instructions to include additional data for the review, and remove obsolete assets from inventory.

Report Recommendations

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

R - 1 -- Implement as a key control the secondary review verifying correct data is entered into the Program Cost Tracking System, including labor rates and categories, before the system makes payment.

 Closed $0 Agree
2

R - 2 -- Develop and implement procedures to use Postal Service contract information to assign labor categories in the Program Cost Tracking System rather than using information provided by the vendor.

 Closed $0 Agree
3

R - 3 -- Modify the Semi-Annual Capital Property Certification Report and instructions to note whether transfer or disposal forms were completed for assets found, to note the asset locations and detailed descriptions of capital property located at the site, and to require personnel to certify they understand the capital property review policies and instructions.

 Closed $0 Agree
4

R - 4 -- Reinforce semi-annual capital property review and asset identification label acquisition procedures.

 Closed $0 Agree
5

R - 5 -- Research and remove obsolete capital property, as appropriate, from the Property and Equipment Accounting System.

 Closed $0 Agree
6

R - 6 -- Revise semi-annual capital property review control test procedures to ensure proper asset verification and completion of required disposal and transfer forms.

 Closed $0 Agree