Audit Reports

BACKGROUND:

U.S. Postal Service Headquarters Finance establishes accounting policies and provides guidelines for recording and reporting Postal Service financial transactions. The Postal Service’s Financial Testing Compliance group is responsible for examining key financial reporting controls.

Our objectives were to determine whether Headquarters Finance:

 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 and regulations 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 its examination of key financial reporting controls.

WHAT THE OIG FOUND:

Headquarters accounting transactions were fairly stated and general ledger account balances conformed to the general classification of accounts. Also, the Financial Testing Compliance group properly tested, documented, and reported its examination of key financial reporting controls.

However, the Postal Service did not comply with all material laws and regulations. Specifically, it defaulted on the required $5.6 billion prefunding payment to the Retiree Health Benefit Fund and continued to suffer from a severe lack of liquidity in fiscal year 2013 (which is expected to continue into fiscal year 2014).

Management also reported a significant deficiency related to the revenue, pieces, and weight process in fiscal year 2012 but took sufficient corrective actions to remediate it as of September 30, 2013. We did not propose any account balance adjustments.

WHAT THE OIG RECOMMENDED:

Because management took corrective action to remediate the significant deficiency, we are not making any recommendations. We will continue to monitor prefunding payments in fiscal year 2014.