Policy Formulation and Financial Controls

The U.S. Postal Service prepares and certifies to financial reports that tell the story of its overall financial health. In addition, the Postal Service makes corporate choices regarding its financial environment with the goal of maximizing its value to customers and stakeholders within the context of governing laws and regulations. At the close of fiscal year 2011, the Postal Service had a net loss of $5.1 billion, bringing its 5-year net losses to $25 billion. To assist the Postal Service in improving its financial reporting and control environment, the Policy Formulation and Financial Controls Directorate plans and conducts audits to address economy, efficiency, and effectiveness in areas of financial controls, financial reporting, and financial policy formulation.

The Postal Accountability and Enhancement Act of 2006 requires compliance with Section 404 of the Sarbanes-Oxley (SOX) Act of 2002, which integrates an audit of internal control over financial reporting into the financial audit. In addition, the Postal Reorganization Act of 1970 requires an annual audit of the Postal Service’s financial statements. The Policy Formulation and Financial Controls Directorate plans and conducts audits in support of both these laws. These audits assist in determining whether the Postal Service complies with direct and material laws and regulations, whether internal controls are in place and effective, and addresses strategic questions related to Postal Service corporate financial policy. We observe Postal Service data collectors conducting statistical tests of cost, revenue, and volume data at different district locations to verify the accuracy of data used as part of the ratemaking process. We also developed and maintain one model containing financial data to assess financial risk and performance of Postal Service business mail entry units. Further, we conduct other financial audits to identify areas for improvement. We conduct these audits at Postal Service Headquarters, the accounting service centers, and at field level Postal Service facilities. Finally, we coordinate the Office of Inspector General's SOX responsibilities in support of the independent public accountant’s opinion on the effectiveness of the Postal Service’s internal control over financial reporting with the Financial Reporting and the Information Technology directorates.