U.S. Postal Service: More Consistent Implementation of Policies
and Procedures for Cash Security Needed (15-NOV-02, GAO-03-267).
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?
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-267
ACCNO: A05509
TITLE: U.S. Postal Service: More Consistent Implementation of
Policies and Procedures for Cash Security Needed
DATE: 11/15/2002
SUBJECT: Facility security
Human resources training
Internal controls
Postal facilities
Postal service
Postal service employees
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-03-267
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
Page i GAO- 03- 267 Control and Security of Remittances Letter 1
Results in Brief 1 Background 3 Scope and Methodology 4 Established
Remittance Control Procedures Are Not Consistently
Followed 5 Background Checks Not Updated Before Employees Process
Remittances 9 Training May Not Be Adequate 10 Recent Service Efforts to
Improve Remittance Security 11 Conclusions 12 Recommendations for
Executive Action 12 Agency Comments and Our Evaluation 13
Appendix I GAO Contacts and Staff Acknowledgments 15 GAO Contacts 15
Acknowledgments 15
Abbreviations
FBI Federal Bureau of Investigation OIG Office of Inspector General, U. S.
Postal Service OPM Office of Personnel Management PPO Postal Police
Officer Contents
Page 1 GAO- 03- 267 Control and Security of Remittances
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. 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.
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
1 According to the Service, a substantial portion of these initial losses
was eventually recovered.
United States General Accounting Office Washington, DC 20548
Results in Brief
Page 2 GAO- 03- 267 Control and Security of Remittances
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
Page 3 GAO- 03- 267 Control and Security of Remittances
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.
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
remittanceprocessing 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 Background
Page 4 GAO- 03- 267 Control and Security of Remittances
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.
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, 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
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. Scope and
Methodology
Page 5 GAO- 03- 267 Control and Security of Remittances
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. 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.
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.
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
3 The specific locations we visited are not provided because of security
concerns expressed by the Service. Established
Remittance Control Procedures Are Not Consistently Followed
Service Policies and Procedures for Controlling and Securing Remittances
Page 6 GAO- 03- 267 Control and Security of Remittances
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.
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. Service
Policies and
Procedures for Controlling and Securing Remittances Are Not Always
Followed
Page 7 GAO- 03- 267 Control and Security of Remittances
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 remittancehandling
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.
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 Service
Management Has
Not Effectively Addressed Weaknesses in Remittance Controls
Page 8 GAO- 03- 267 Control and Security of Remittances
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
Page 9 GAO- 03- 267 Control and Security of Remittances
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.
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. Background Checks
Not Updated Before Employees Process Remittances
Page 10 GAO- 03- 267 Control and Security of Remittances
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.
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 Training May Not Be
Adequate
Page 11 GAO- 03- 267 Control and Security of Remittances
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.
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 Recent Service
Efforts to Improve Remittance Security
Page 12 GAO- 03- 267 Control and Security of Remittances
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.
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.
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; Conclusions
Recommendations for Executive Action
Page 13 GAO- 03- 267 Control and Security of Remittances
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.
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
Agency Comments
and Our Evaluation
Page 14 GAO- 03- 267 Control and Security of Remittances
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
remittanceprocessing 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, Director, Physical Infrastructure Issues
Appendix I: GAO Contacts and Staff Acknowledgments
Page 15 GAO- 03- 267 Control and Security of Remittances
Bernard L. Ungar (202) 512- 2834 Sherrill H. Johnson (214) 777- 5600
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. Appendix I: GAO Contacts and Staff
Acknowledgments GAO Contacts Acknowledgments
(543042)
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.
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 fulltext 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.
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
Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm E- mail:
fraudnet@ gao. gov Automated answering system: (800) 424- 5454 or (202)
512- 7470
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 GAO*s Mission
Obtaining Copies of GAO Reports and Testimony
Order by Mail or Phone To Report Fraud, Waste, and Abuse in Federal
Programs
Public Affairs
*** End of document. ***