U.S. Postal Service
More Consistent Implementation of Policies and Procedures for Cash Security Needed
Gao ID: GAO-03-267 November 15, 2002
In fiscal year 2001, the United States Postal Service reported that it lost about $6.3 million in remittances (cash and checks) to robberies, internal theft, and mishandling. One particular loss--a June 2001 theft of over $3.2 million from a Phoenix, Arizona, postal facility by a Career Service employee--received considerable media attention. Pursuant to the request of the Chairman, House Committee on Government Reform, we agreed to review Service policies and procedures for the security of remittances by addressing the following questions: (1) Does the Service have reasonable physical controls and security to safeguard its remittances? (2) Does the Service have policies for conducting background checks of employees who process remittances? (3) Does the Service provide training to its employees who process remittances?
The Service has policies and procedures for physically controlling and securing remittances. These include a number of control activities that, if properly implemented, would be effective in helping to safeguard vulnerable assets, such as cash. The control activities include, among others, requirements for continuous individual accountability of remittances. However, Service management does not always provide appropriate oversight of these activities and Service employees do not always follow the Service's policies, procedures, and activities for controlling and physically securing remittances. The Service requires a background check as part of a suitability test for all prospective new employees. The background check includes a review of any criminal or military records, a fingerprint check by the Federal Bureau of Investigation (FBI), and a drug screening. The Service's training for postal employees who process remittances includes both on-the-job training and the use of self-paced training and development manuals related to the control and security of remittances. However, the Service's training manuals have not been appropriately updated, and in August 2001, the Service's Chief Postal Inspector cited the lack of training as a possible condition leading to the Postal Service's remittance losses.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
GAO-03-267, U.S. Postal Service: More Consistent Implementation of Policies and Procedures for Cash Security Needed
This is the accessible text file for GAO report number GAO-03-267
entitled 'U.S. Postal Service: More Consistent Implementation of
Policies and Procedures for Cash Security Needed' which was released on
December 02, 2002.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products‘ accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
Report to the Chairman, Committee on Government Reform, House of
Representatives:
United States General Accounting Office:
GAO:
November 2002:
U.S. Postal Service:
More Consistent Implementation of Policies and Procedures for Cash
Security Needed:
GAO-03-267:
Contents:
Letter:
Results in Brief:
Background:
Scope and Methodology:
Established Remittance Control Procedures Are Not Consistently
Followed:
Background Checks Not Updated Before Employees Process Remittances:
Training May Not Be Adequate:
Recent Service Efforts to Improve Remittance Security:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Acknowledgments:
Abbreviations:
FBI: Federal Bureau of Investigation:
OIG: Office of Inspector General, U.S. Postal Service:
OPM: Office of Personnel Management:
PPO: Postal Police Officer:
November 15, 2002:
The Honorable Dan Burton
Chairman, Committee on Government Reform
House of Representatives:
Dear Mr. Chairman:
In fiscal year 2001, the United States Postal Service (the Service)
reported that it lost about $6.3 million in remittances (cash and
checks) to robberies, internal theft, and mishandling.[Footnote 1] One
particular loss--a June 2001 theft of over $3.2 million from a Phoenix,
AZ, postal facility by a career Service employee--received considerable
media attention. Pursuant to your request, we agreed to review Service
policies and procedures for the security of remittances by addressing
the following questions:
* Does the Service have reasonable physical controls and security to
safeguard its remittances?
* Does the Service have policies for conducting background checks of
employees who process remittances?
* Does the Service provide training to its employees who process
remittances?:
The Service considers the specific policies and procedures for securing
and transferring its remittances from postal retail facilities to banks
as law enforcement sensitive information. Therefore, these policies and
procedures are not described or discussed in detail in this report.
Similarly, for the same reason, our specific observations and
information that the United States Postal Inspection Service included
in its reports we reviewed relating to instances where Service policies
and procedures were not followed are described only in general terms in
this report.
Results in Brief:
The Service has policies and procedures for physically controlling and
securing remittances. These include a number of control activities
that, if properly implemented, would be effective in helping to
safeguard vulnerable assets, such as cash. The control activities
include, among others, requirements for continuous individual
accountability of remittances. However, Service management does not
always provide appropriate oversight of these activities and Service
employees do not always follow the Service‘s policies, procedures, and
activities for controlling and physically securing remittances. For
example, the Postal Inspection Service found that the June 2001
employee theft of remittances in Phoenix occurred and was not promptly
identified and reported because established control procedures were not
followed. This occurred even though the previous failure of employees
to follow established policies and procedures had been brought to the
attention of the facility‘s management by the Postal Inspection Service
prior to the incident. Further, at selected postal facilities, we
observed that Service policies and procedures for controlling and
securing remittances were not always followed, and accountability for
remittances was not always maintained. Over the last few years, the
Postal Inspection Service has made similar observations at numerous
postal facilities throughout the country.
The Service requires a background check as part of a suitability test
for all prospective new employees. The background check includes a
review of any criminal or military records, a fingerprint check by the
Federal Bureau of Investigation (FBI), and a drug screening. Although
only career employees are allowed to process remittances, there is no
requirement to update the background checks of these employees
regardless of how much time has elapsed since the initial check was
performed.
The Service‘s training for postal employees who process remittances
includes both on-the-job training and the use of self-paced training
and development manuals related to the control and security of
remittances. However, the Service‘s training manuals have not been
appropriately updated, and in August 2001, the Service‘s Chief Postal
Inspector cited the lack of training as a possible condition leading to
the Postal Service‘s remittance losses.
The Service has recently initiated efforts to strengthen security for
remittances. However, until these policies and procedures are
effectively implemented, the Service‘s remittances remain at risk.
Accordingly, we are making recommendations to the Postmaster General
concerning the need to (1) more rigorously reinforce to managers and
employees the importance of and need to follow Service policies and
procedures for controlling and physically securing remittances and hold
managers and employees accountable for following the policies and
procedures, (2) reassess its policies for updating background checks on
employees selected to process remittances, and (3) update its training
manuals and determine whether additional training on the control and
security of remittances is needed.
The Service agreed with our recommendations and stated that it is
already well on the way to implementing procedures that will fully
address them. It said it had some legal and cost concerns relating to
updating background checks of career employees and said that it would
need to consider these issues as it studies this matter. We agree that
the issues the Service identified are valid concerns that should be
considered.
Background:
Traditionally, the Service‘s local post offices deposited their daily
remittances of coin, cash, and checks in accounts with local banks.
Before 1997, according to the Service‘s Assistant Treasurer for
Banking, the thousands of individual retail postal units deposited
their daily remittances in some 9,300 bank accounts with 5,500 banks
across the country. In 1997, to help reduce banking costs and improve
funds availability, the Postal Service implemented consolidated
banking--a Service-wide process whereby the daily remittances from the
Service‘s retail postal facilities are consolidated and transferred by
armed bank couriers to a relatively few commercial banks for deposit.
The Postal Inspection Service, one of the nation‘s oldest law
enforcement agencies, is the Postal Service‘s law enforcement arm. With
a force of about 1,400 uniformed Postal Police Officers (PPOs), over
1,900 postal inspectors, and five forensic crime laboratories, the
Postal Inspection Service is responsible for ensuring the safety and
security of postal employees, facilities, and assets. PPOs provide
security at postal facilities where the Postal Inspection Service has
determined that risk and vulnerability demonstrate a need for this
level of security. Postal inspectors help enforce and investigate
infractions of over 200 federal laws applicable to crimes that
adversely affect or involve fraudulent use of the U.S. mail. Matters
investigated include criminal incidents, such as mail theft, robberies,
burglaries, and embezzlement; and the criminal use of the mail for
money laundering, fraud, child exploitation, and the movement of
illegal drugs.
The Postal Inspection Service periodically performs reviews of
remittance-processing procedures at selected individual postal
facilities or at a cross section of facilities within a postal
district. These reviews are security reviews focused primarily on
compliance with the applicable policies and procedures to help prevent
instances of mishandling and losses. Results of these reviews are
reported to the appropriate postal district manager, and districtwide
review results are reported to the appropriate postal area manager.
According to the Postal Inspection Service, although its reports
apprise postal officials of its findings and recommend corrective
action(s), district and area managers are not required to implement
these recommendations.
Scope and Methodology:
To meet our objectives, we obtained and reviewed Service policies and
procedures for controlling and securing remittances and for requiring
background checks and training for employees who work with remittances.
We used the Standards for Internal Control in the Federal Government,
as well as the Internal Control Management and Evaluation
Tool,[Footnote 2] to help assess the Service‘s policies and procedures.
We also obtained and reviewed applicable training manuals, orders,
directives, and handbooks. Also, for each of our objectives, we
discussed the applicable policies, procedures, and practices with
appropriate Service officials, including headquarters officials in
Postal Operations, Corporate Accounting, Corporate Treasury, Human
Resources, Network Operations Management, and the Postal Inspection
Service. Further, we had similar discussions with postal facility
managers, supervisors, employees who process remittances, and Postal
Inspection Service inspectors in the various field locations we
visited.
We did not review all aspects of the Service‘s internal controls or its
systems for accounting for remittances. For example, we did not
evaluate the Service‘s assessment of the risks that it faces from both
internal and external sources or perform a comprehensive assessment of
the Service‘s security for its post offices or processing centers.
To help determine how well the Service‘s policies, procedures, and
control activities are working, we obtained and reviewed Postal
Inspection Service reports of investigations and other Postal
Inspection Service reports dating back to fiscal year 1999. We
judgmentally selected reports for review on the basis of our
discussions with Postal Inspection Service officials about the
remittance loss history of the various postal districts and to provide
geographic dispersion. We also visited Service facilities at six
locations--three in Arizona; one in Texas; one in Maryland; and one in
Washington, D.C.--to observe Service policies and procedures in
practice.[Footnote 3] The facilities in Arizona were chosen because
they were at or near the location where a postal employee stole a
substantial amount of remittances in June 2001. The other facilities
were chosen to provide geographic dispersion for our observations. We
performed our work between July 2001 and November 2002 in accordance
with generally accepted government auditing standards. We obtained
comments on a draft of this report from the Postal Service.
Established Remittance Control Procedures Are Not Consistently
Followed:
The Service‘s policies and procedures include a number of remittance
control activities that, if properly implemented, would help prevent
remittance losses. However, Service employees are not always following
established policies and procedures, and Postal Service management does
not appear to have taken effective actions to address this problem.
Service Policies and Procedures for Controlling and Securing
Remittances:
The GAO-issued Standards for Internal Control in the Federal Government
defines the minimum level of acceptable internal controls in
government. Although the standards provide a general framework, the
management of each agency is responsible for developing the detailed
policies, procedures, and practices to fit its operations. For example,
one of the standards for internal control states that internal control
activities--the policies, procedures, techniques, and mechanisms that
enforce management directives--should be effective and efficient in
accomplishing the agency‘s control objectives. A key control activity
includes establishing physical control to secure and safeguard
vulnerable assets, including limiting access to such assets and
ensuring that they are periodically counted and compared with control
records. Thus, effective control activities at the Service would be
expected to include such reasonable activities as are necessary to
physically secure, safeguard, and account for its remittances.
Service polices and procedures incorporate a number of activities for
controlling and securing remittances that we believe, if effectively
implemented, would help prevent loss of these assets. The Service‘s
control activities or procedures include, among others, the requirement
that there is to be continuous individual accountability of
remittances, including hand-to-hand exchanges at all transfers. In
addition, employees are to document the progress of remittances moving
through the system to banks and notify the Postal Inspection Service
immediately when discrepancies or losses are noted. Finally, postal
district accounting personnel are to reconcile the electronic record of
each post office‘s daily sales with the bank information showing
remittance deposits received from each post office.
Service Policies and Procedures for Controlling and Securing
Remittances Are Not Always Followed:
Our observations and the findings of the Postal Inspection Service show
that many of these policies, procedures, and activities for controlling
and securing remittances are not always followed or practiced by
employees at numerous postal facilities across the country. In
addition, even though the Postal Inspection Service has brought this
issue to the attention of Service management over a period of several
years, it appears that the Service has not taken effective actions to
address the problem.
In July 2002, we visited three locations in the Service‘s Arizona
district. At each location, Postal Inspection Service officials
accompanied us. The officials agreed with our observations that at each
of these locations, Service employees carried out a number of practices
that are inconsistent with Service policies and procedures for
controlling and securing remittances.
Each year, the Postal Inspection Service reviews control and security
procedures at selected postal districts and facilities throughout the
country to identify opportunities for security improvements and to
measure and improve compliance with the Service‘s policies and
procedures. A primary goal of these reviews is to help protect
remittances from mishandling, loss, and theft. The findings from these
reviews are reported to Service management at the respective districts.
We reviewed a number of Postal Inspection Service reports on the
results of these reviews, which were completed in fiscal years 1999,
2000, 2001, and 2002.
A May 1999 Postal Inspection Service report on performance audits
performed at various postal facilities in the Service‘s Northeast Area
found that a number of policies and procedures for processing and
securing remittances were not being followed. Specifically, the Postal
Inspection Service found that individual accountability for remittances
was not being maintained as required by Service policy and procedures.
Also, in a February 1999 performance audit report, the Postal
Inspection Service found that at a California postal district, postal
personnel were handling remittances without signing for and accepting
accountability for them.
Postal Inspection Service reports of districtwide reviews conducted
during May through July 2000 in six districts in the Service‘s Western
Area disclosed that local post offices in each of these districts often
failed to take the appropriate actions required for ensuring that
remittances could always be accounted for. For example, remittances
were sometimes left unattended and unsecured. Also, certain restricted
access areas were not locked, and unauthorized personnel were permitted
entry.
In August 2001, the Postal Inspection Service reviewed remittance-
handling practices at 25 post offices in a district in the Service‘s
Southeast Area. Its report on these reviews stated that losses due to
internal causes (employee theft and mishandling) in the district during
fiscal year 2001 to date totaled about $150,000, an increase of 375
percent over the previous year‘s total. The report said that these
losses were attributable to practices in the district that failed to
establish individual accountability for remittances and to properly
secure them.
During the period from early September through late December of 2001,
the Postal Inspection Service reported visiting over 2,000 postal
facilities nationwide and observed 252 lapses of remittance security.
Its inspectors also found lapses in individual accountability of
remittances and instances of unauthorized access into postal facilities
through unsecured doors, including doors that were propped open and
left unattended.
Service Management Has Not Effectively Addressed Weaknesses in
Remittance Controls:
An important internal control standard established in the Standards for
Internal Control in the Federal Government pertains to the control
environment. It states that management and employees should establish
and maintain an environment throughout the organization that sets a
positive and supportive attitude toward internal control and
conscientious management. However, it appears that even though
significant weaknesses in the Service‘s controls over its remittances
have been brought to the attention of Service management by the Postal
Inspection Service numerous times over the last few years, Postal
Service management has not taken effective action to address these
weaknesses--leaving its remittances vulnerable to theft or loss. For
example, during our visit to the Phoenix mail processing facility, a
manager acknowledged that there had been deficiencies and that
compliance with procedures had probably been lax for several years.
In August 2001, after the theft in Phoenix, the Chief Postal Inspector,
who is the head of the Postal Inspection Service, wrote to the Postal
Service‘s Chief Operating Officer about the Postal Inspection Service‘s
concern over continuing problems with remittances. The Chief Postal
Inspector pointed out that losses had begun to increase in late fiscal
year 1999 and were continuing to increase. He stated that since 1997,
the Postal Inspection Service has frequently brought proper procedures
and policy to the attention of postal management through its
investigations and other reviews, and the intention of management to
adopt the recommendations of the Postal Inspection Service appears
genuine. He stated, however, that the implementation of proper
procedures and ongoing security of remittances continue to erode and
that causes could include the following:
* Postal Service management has been unable or unwilling to comply with
procedures that will properly secure remittances. Some postal district
managers have refused to comply with certain procedures to protect
remittances. (In our discussions with the Postal Inspection Service, we
were told that some postal district managers balked at implementing
certain remittance handling procedures because they believed that the
procedures would result in additional costs that would have to be
absorbed by each Service district.):
* Other postal areas have not implemented Postal Inspection Service
recommendations to improve the security of remittances. For example, in
2000 a report was issued to the manager of the Phoenix facility that
detailed security issues that, had they been corrected, the Postal
Inspection Service believes could have deterred or prevented the June
2001 loss of over $3 million.
* Historically, employees have not been held accountable for
mishandling and subsequently losing remittances. For example, in the
Postal Inspection Service‘s Mid-Atlantic Division, an employee left
remittances in a 24-hour lobby after the post office had closed. The
remittances were stolen, but no disciplinary action was initiated
against the employee.
* Employees may not be trained properly in processing remittances. For
example, in a Washington, D.C., postal facility, a training course for
clerks was discontinued in 1986. Although a reliable Service-wide
sample has not been taken, the Postal Inspection Service sees this lack
of training as a common inadequacy throughout the Postal Service.
Certain reference material has not been updated since 1982.
* During a postal reorganization, a key supervisor position was
abolished, leaving employees without direct supervision.
* The security of remittances or prevention of losses was never an
established goal for postal management, unlike overnight and 2-to 3-day
mail delivery scores. Therefore, compliance is not a priority. He said
that a measurable security goal that includes the security of
remittances should be considered.
He closed by stating that the Postal Inspection Service is committed to
assisting the Postal Service through aggressive remittance loss and
other investigations and initiatives. He said that the Postal
Inspection Service recognizes the risk this matter poses to Service
employees and to the Service, and he wants to ensure this risk is
minimized through proper remittance handling procedures.
In December 2001, the Service‘s Chief Operating Officer issued a
memorandum to the Service‘s Area Vice Presidents; District Managers;
Processing and Distribution Center Plant Managers; and the Manager,
Capital Metro Operations, stating that the Postal Inspection Service‘s
recent oversight work had repeatedly found that remittances were not
always being controlled and protected as required. He said that this
was not an issue of incidental oversight, but rather a condition in
which ’basic work processes were either not in place, or were being
routinely compromised.“ He concluded by pointing out that postmasters
and postal employees are personally responsible for depredation or loss
of remittances due to negligence or disregard of instructions and
asking the addressees to ensure that appropriate controls are in place
throughout their respective operations.
Background Checks Not Updated Before Employees Process Remittances:
The Service performs background checks for all prospective employees as
part of a suitability test to identify applicants who possess the
necessary skills, abilities, and qualifications to perform specific
jobs in the Postal Service. The Service does not, however, require
updated background checks for employees who are selected to process
remittances.
The employee suitability test is a two-part review. The first part
includes an examination, which tests memorization and provides a
behavioral rating; veterans‘ preference check; criminal records check;
military records review; drug screen; driving record review; and
interview.
The second part of the review takes place after the job offer and
includes a medical assessment, fingerprint and Office of Personnel
Management (OPM) Special Agency Check, and an evaluation that places
the employee into a 90-day probationary period during which he/she
receives orientation and whatever training is needed.
Our review of summary documentation on remittance losses during 2001
and discussion with Postal Inspection Service officials did not
indicate that updated background checks of employees selected to
process remittances would have prevented any losses that have occurred.
However, because employees‘ background checks could have been performed
years earlier, when they were initially hired, additional or updated
background checks for employees before they are allowed to process
remittances might reduce the risk of theft to an asset as vulnerable as
cash.
In our discussions of this issue with Postal Service officials, they
pointed out that the Service had legal concerns about its authority to
unilaterally impose a requirement for updated employee background
checks on bargaining unit employees and that such a requirement would
be subject to collective bargaining with various postal employee
unions. They also said that certain employment law issues would have to
be considered, such as the permissibility of drug testing and the use
of arrest and conviction information. We agree that these types of
issues would need to be considered in any reassessment the Service
would do in connection with requiring updated background checks for
employees processing remittances. However, we believe that such a
reassessment is warranted given the higher risk levels associated with
responsibilities that involve processing remittances. Furthermore, if
the Service determines that requiring employees to undergo periodic
background check updates is subject to the collective bargaining
process, the issue could be raised by the Service during negotiation of
the next collective bargaining agreement.
Training May Not Be Adequate:
The Service provides training to its employees who process remittances.
However, the training materials for clerks and supervisors are
outdated. In addition, the Postal Inspection Service has indicated that
a lack of training could be contributing to remittance losses.
Postal career employees who apply for the job are selected to process
remittances on the basis of their seniority. There are no special
skills or abilities required for selection other than those required of
a mail distribution clerk. Those who are selected are to be trained in
the specific roles they will be performing with remittances. Unit
supervisors are responsible for ensuring that the employees in their
units are trained. The training includes on-the-job training as well as
a requirement that the employees complete self-paced training manuals
pertaining to their specific responsibilities.
Service training manuals have not been updated to address the
processing of remittances. For example, one of the Service‘s principal
policy handbooks for operations that include processing remittances was
updated in 1997; however, the training manual that addresses certain
remittance processing procedures has not been similarly updated.
Although we cannot say that the failure of employees to follow Service
policies and procedures for securing remittances that we observed was
the result of inadequate or incomplete training, the Chief Postal
Inspector stated in his letter to the Postal Service‘ Chief Operating
Officer mentioned earlier that a lack of employee training in proper
handling of remittances was among the conditions contributing to
remittance losses.
Recent Service Efforts to Improve Remittance Security:
Within the last year, the Service established a team to develop a
standard operating plan that provides detailed policies and procedures
for processing remittances. According to the Service, the draft plan
was recently completed, and the plan should be approved by, and
implementation should begin in, November 2002. The plan is to become
the national standard for processing remittances through the Service.
The Service‘s new policies and procedures do not address the issue of
background checks for employees.
According to the Service, Area managers will have responsibility for
ensuring that field management train and hold accountable employees who
process remittances, and all deviations from the plan are to be
reported and approved by Area management. All approved deviations are
to be submitted to Service headquarters. In addition, according to the
Service, it is in the process of redesigning training for employees who
process remittances. It said that the new training manuals and
handbooks would incorporate the new policies and procedures for
processing remittances. Finally, according to the Service, the
Service‘s Chief Operating Officer will disseminate the new plan through
formal channels of the organization to the Area Vice Presidents, who
will be instructed in their responsibility for providing the proper
training in policies and procedures to employees who process
remittances. In addition, the message to the Area Vice Presidents is to
be reinforced by having employees watch a recently developed video that
pertains to their areas of responsibility, and all training is to be
documented by management.
The establishment of these new policies and procedures for processing
remittances is an important step in the right direction. Also, it is
particularly encouraging that the Service plans to emphasize management
accountability for implementing the new policies and procedures.
However, until these new policies and procedures are finalized and
address the remittance control problems we have identified, employees
are trained in how to follow them, and they are effectively
implemented, the Service‘s remittances continue to be at risk.
Conclusions:
The Service has policies and procedures that, if properly implemented,
would help to control and physically secure its remittances. However,
the Service‘s policies, procedures, and control activities are not
consistently followed by employees and it appears that Service
management has not taken effective actions to address the problem. The
Chief Postal Inspector has cited a lack of (1) training, (2) adequate
supervision, (3) postal management follow-through, and (4)
accountability as contributing factors. The Service has not updated its
relevant training manuals and does not update background checks for
employees selected to process remittances--thus possibly subjecting the
Service to increased vulnerability to the theft of its cash. Until
Service management actively addresses the problems of controlling and
securing its cash remittances, widely identified throughout the Service
by the Postal Inspection Service and by us at locations we visited, its
remittances will continue to be vulnerable to mishandling, loss, and
theft.
Recommendations for Executive Action:
We recommend that the Postmaster General:
* more rigorously reinforce to managers and employees at facilities
throughout the Postal Service the importance of following Service
policies and procedures for controlling and securing remittances;
* hold Service managers and employees accountable for following Service
policies and procedures for controlling and securing remittances and
correcting the control problems identified by the Postal Inspection
Service;
* include adherence to policies and procedures for securing remittances
and minimizing remittance losses in its organizational goals and
performance management and pay systems and define and enforce
supervisory responsibilities to achieve these reinforcement and
accountability objectives;
* reassess current Service policy of not updating background checks of
career employees prior to their being selected to process remittances;
and:
* update applicable training manuals that predate the Service‘s
adoption of its consolidated banking policy and determine whether
additional training for managers and employees on the Service‘s
policies and procedures for physically controlling and securing
remittances is needed and, if so, see that such training is developed
and provided.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from the Postal
Service‘s Chief Operating Officer. In his comments he stated that the
Service appreciated the thoroughness of our review and the disclosure
of some shortfalls in the physical security of postal remittances. He
said that our findings are extremely serious, and the Service is
committed to improving the current process. He said that to that end,
management teams from several departments have already developed
changes in procedures to address our findings, including improvements
to the procedures to secure and account for remittances. He said that
the Service is well on the way to implementing procedures that will
fully address the recommendations contained in our report. For example,
he said that the Service is establishing an internal control unit in
each district office to assess risk and compliance with remittance
handling as well as other financial and operational policies and
procedures. He further said that the Area Vice Presidents will be held
responsible for ensuring that field managers provide training to all
employees who process remittances.
Specifically regarding our recommendation that the Service reassess its
current policy of not updating background checks of career employees
prior to their being assigned to process remittances, he said the
Service is already in continuing discussion with its General Counsel on
the matter. He said that the Service has legal concerns about its
authority to unilaterally require updated background checks on
bargaining unit employees because such a requirement could be viewed as
a ’term or condition of employment“ subject to collective bargaining.
Also, he said that it would be very costly to periodically recheck the
thousands of employees who process remittances. He stated that with
implementation of the new standardized remittance-processing
procedures, the Service believes that it will have in place
compensating controls that will be more cost effective than periodic
background checks.
We agree that all of these issues are important issues for the Service
to consider as it reassesses its background check policy. If the
Service determines that requiring periodic updated employee background
checks is subject to the collective bargaining process, that issue
could be addressed when the collective bargaining agreement comes up
for renewal. As to the issue of the cost involved in periodically
rechecking the backgrounds of thousands of employees, we believe that
the Service‘s reassessment could include considering updating the
background checks only for employees who process high-value
remittances. As for the issue of the Service having in place
compensating controls that will be more cost effective than periodic
background checks, we plan to do future follow-up work to determine the
effectiveness of the new standardized remittance-processing procedures
once they are in place. (Written comments received from the Chief
Operating Officer are not included in this report because they contain
information the Service considers law enforcement sensitive.) Other
Service officials suggested technical changes, including the exclusion
of information that the Service considers law enforcement sensitive, to
our draft report. We have made these changes where appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to the Ranking Minority Member of your Committee; the Chairman and
Ranking Minority Member of the Senate Subcommittee on International
Security, Proliferation, and Federal Services; the Chairman and Ranking
Minority Member of the Senate Subcommittee on Treasury and General
Government; the Chairman and Ranking Minority Member of the House
Subcommittee on Treasury, Postal Service and General Government; and
the Postmaster General. We also will make copies available to others
upon request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
Major contributors to this report are acknowledged in appendix I. If
you have any questions about this report, please contact me on (202)
512-2834 or at ungarb@gao.gov.
Sincerely yours,
Signed by Bernard L. Ungar:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Bernard L. Ungar (202) 512-2834
Sherrill H. Johnson (214) 777-5600:
Acknowledgments:
In addition to those individuals named above, Tyrone Griffis, Michael
J. Fischetti, Gladys Toro, Heather Dunahoo, Walter Vance, and Donna
Leiss made key contributions to this report.
FOOTNOTES
[1] According to the Service, a substantial portion of these initial
losses was eventually recovered.
[2] GAO issues standards for internal control in the federal government
as required by the Federal Managers‘ Financial Integrity Act of 1982.
See 31 U.S.C. 3512(c). GAO first issued the standards in 1983. GAO
revised the standards and reissued them as Standards for Internal
Control in the Federal Government (GAO/AIMD-00-21.3.1, November 1999).
These standards provide the overall framework for establishing and
maintaining internal control and for identifying and addressing major
performance challenges and areas at greatest risk for fraud, waste,
abuse, and mismanagement. GAO issued its Internal Control Management
and Evaluation Tool (GAO-01-1008G, August 2001) to assist agencies in
maintaining or implementing effective internal control and, when
needed, to help determine what, where, and how improvements can be
implemented.
[3] The specific locations we visited are not provided because of
security concerns expressed by the Service.
GAO‘s Mission:
The General Accounting Office, the investigative arm of Congress,
exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO‘s commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO‘s Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as ’Today‘s Reports,“ on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select ’Subscribe to daily E-mail alert for newly
released products“ under the GAO Reports heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. General Accounting Office
441 G Street NW,
Room LM Washington,
D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.
General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.
20548: