Auditors raise concerns over USPS bookkeeping

The US Postal Service is at risk of under-charging for its business mail delivery services because of poor financial record keeping, federal auditors have warned. The Office of the Inspector General carried out unannounced checks on 96 of the Postal Service’s Business Mail Entry Units (BMEUs) from October 2009 to September 2010, finding there was a “unacceptably high degree of noncompliance” with key financial controls.

The audited sites represented $2.5 billion in annual revenues for the USPS, which last year reported an $8.5 billion loss.

Gaps in the USPS mail acceptance and verification process at its BMEUs, where mailers take presorted mail and pay the USPS for delivery, meant that business mailings may not be accurately accounted or billed, the OIG said.

Although the USPS has been working to improve its business mail acceptance periods since OIG recommendations were made in 2007, a fresh report from the OIG this month said it was “concerned that risks remain”.

John E Cihota, deputy assistant inspector general for financial accountability, said that as a result of the findings of the audit, the OIG would continue to test and monitor procedures at the US Postal Service.

“Given the high level of non-compliance we found throughout the year,” he said, “we believe risks remain with the BMEU mail acceptance and verification process and work remains to ensure all revenue is appropriately recognized.

“Consequently, in FY 2011, the OIG plans to continue a body of work that will further test Postal Service actions to address BMEU mail acceptance and verification process and procedural issues,” Cihota stated.

Among the problems highlighted by the audit were failures in dealing with inactive accounts, handling customer account statements in a “reasonable” amount of time, and the correct recording of information via PostalOne, the electronic system used for recording business mail transactions.

The OIG raised a particular concern that problems cropped up when operations of the PostalOne system were disrupted, such as during a four-day outage suffered last February.

Previous OIG reports have also flagged up similar issues since 2007, while the latest audits highlighted problems the OIG claimed had cost the USPS $148,480 in monetary impacts and $336,807 in other impacts last year.

Responding to the findings of the audits, the USPS management said its Business Mail Acceptance (BMA) group had made “significant progress” in addressing issues with verification and business mail acceptance controls in 2010.

It said this year further training would be provided for employees on acceptance processes and financial controls.

Pritha Mehra, vice president of mail entry and payment technologies, told the OIG that no further PostalOne outages had occurred since February, and that revenue had been protected during the February outage through a contingency plan.

“As the USPS continues to migrate into an electronic and automated environment, BMA is moving aggressively to automate the acceptance, verification and induction of business mailings,” said Mehra.

• Read a response to this article from the US Postal Service here.