1. CONDUCTING FINANCIAL AUDITS Pacific Area Finance Training February 2008

2. 2 Counts/Audits - Tips  Audit is an integral part of the overall internal control system.  Keep stamp stock clean and organized.  Select a quiet area away from the retail operation.  Credits not used at least once a month must be canceled.  Counts conducted by the assignee and another employee; one must be a non- bargaining employee.

3. 3 Counts/Audits – Tips (Cont.)  Unit Postmaster/Manager is still responsible in managing and monitoring counts conducted by employee assigned the unit reserve (i.e., LSSA) in financial units with no domiciled supervisor including performing counts at unit no less than once every 3 months.  All out-of-tolerance results must be reported on the same day they are discovered.

4. 4 Scheduling Audits  Unannounced stamp credit examinations.  Stagger the dates for audits to prevent a pattern.  RAs with multiple credits – count all credits at the same time to the maximum extent possible.  Count credits, to the extent practicable, at the beginning of the RA’s tour of duty or at least before the RA has made any transactions.

5. 5 Forms – Document Count Results  PS Form 3294-P, Cash and Stamp Stock Count and Summary.  Designed to contain complete record of the examination of a stamp credit. Retention Period 2 Years After Cancellation of Credit.

6. 6 PS PSPS PS PS PS PS Form 3294-P

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10. 10 Forms – Document Count Results (Cont.) POS ONE Sites only  PS Form 3294-C, Cash Credit Count and Summary audit for cash retained.

11. 11 PS Form 3294-C

12. 12 Forms – Document Count Results (Cont.) PS Form 3368-P, Accountability Examination Record  Recording audit results.  Contains the history of stamp credit examinations/counts.  Used as reference for scheduling future counts.  Source of information for PS Form 571. Retention Period 3 years after the last entry.

13. 13 PS Form 3368-P

14. 14 Forms – Document Count Results (Cont.) PS Form 571, Discrepancy of $100 or More in Financial Responsibility  Use this form to report all differences of $100 or more.  Information may be a lead-in to employee theft or embezzlement. Four page form:  1 st page – OIG (no longer to the Postal Inspectors).  2 nd page - District Finance Manager.  3 rd page - Host Postmaster/MPOO or designee.  4 th page – File Copy.

15. 15 Forms – Document Count Results (Cont.) Mail or Fax at the time of the audit to OIG: North - 3 Twin Dolphin Drive, Suite 225 Redwood City, CA 94065-9601 Fax: (650) 412-3050 South - 2201 Dupont Drive, Suite 700 Irvine, CA 92612-1515 Fax: (949) 442-0073 Annotate on PS Form 3294-P or 3294-C Retention Period – 2 Years After Cancellation of Credit.

16. 16 PS Form 571

17. 17 Conducting the Physical Count  2 independent counts. At least one must be by a non-bargaining employee.  Results are entered on a separate PS Form 3294-P or 3294-C.  Results are compared and any discrepancies resolved.  Both employees who performed the count must sign the forms in black or blue ink.  Forms are retained in the office.

18. 18 Frequency of Counts CASH AND STAMP STOCK CREDIT  Individually accountable stamp stock and cash credits.  Bargaining - No less frequently than once every 4 months.  Non-Bargaining/PMR - No less frequently than once every 12 months. UNIT CASH RESERVE  Counted each month.  Count performed by the assignee and a witness (one must be a non-bargaining employee).

19. 19 Frequency of Counts (Cont.) UNIT RESERVE (UR)  Counted anytime custody of the unit reserve changes.  All credits held by the custodian must also be counted when UR is counted.  If custodian has floor role, audit floor concurrently. Assigned to non-bargaining employee  Once every 12 months. Assigned to bargaining employee  No less frequently than once every 4 months.

20. 20 Frequency of Counts (Cont.) For POS ONE Sites  UR conducted in conjunction with a count of the retail floor at least once every 12 months.  Floor stock count exceeds the.1 percent threshold (over/short). Count unit reserve stock

21. 21 Frequency of Counts (Cont.) CASH CREDIT  Counted randomly at least once a month. PB 22206, dated 5/10/2007.  Domestic, international and bait money orders must be counted/recorded on PS Form 3294-C.  If RA has custody of unit cash reserve it must be counted in conjunction with the cash credit count.

22. 22 Frequency of Counts (Cont.) RETAIL FLOOR STOCK (POS SITES)  Frequency once a FY Quarter.  If over/short the.1% threshold, Unit Reserve (stock) must also be counted. Recommendation:  Complete count early in the month/quarter, based on local policy.

23. 23 Frequency of Counts (Cont.) Calculating Threshold  Net stamp sales (=852-011-012-086-094-096) from day after last count through date of present count X.001. AIC 852 - Total stamp sales. AIC 011 - Forever Stamp Sales-Mail,Phone AIC 012 - Forever Stamp Sales-Vending AIC 086 – Pre-cancelled stamp sales. AIC 094 – Stamps by mail and Stamps by fax. AIC 096 – Vending sales.

24. 24 ADM Report – SIA Sales by Site https://crpl.usps.gov/ Accounting>Shared Reports>SAFR> Stock Ledger Reports>SIA Sales by Site Selections  Beginning Date – Date after last count.  Ending Date – Date of current count.  Unit Finance Number – 6 digit finance number + 4 digit unit ID.  SIA Sales Calculation 852-011-012-086-094- 096.  Threshold Percentage – Set to.001.

25. 25 ADM Report – SIA Sales by Site (Cont.)

26. 26 Preparing the Count FIXED STAMP CREDITS  Counts will be based on the value of the stamp stock credit as reported on the last PS Form 1412 in AIC 853, Stamp Accountability Closing Balance. RA CASH RETAINED  Count will be based on the amount shown in AIC 753, Cash Retained Today, on the Clerk’s Balances Report from the most recent Unit 1412. NOTE: Check the Money Orders assigned to RA  IRT: Refer to the most recent Money Order listing.  POS: Print the Inventory by Category to show the money orders remaining in the RA inventory.

27. 27 Preparing the Count (Cont.) UNIT RESERVE  Print Reports PS Form 3958, Unit Reserve Transaction Record, Inventory by Category, and Clerk Balances Report.  Verify that the Unit Reserve totals match on each report.  Verify that Unit Reserve and all stamp credits/segments on the Clerk Balances Report equal AIC 853 on the latest final Unit 1412.  All counts will be based on the value of the Unit Reserve Stock as shown on the most current PS Form 3958.  Money Orders are included in the count. Note for POS Sites  Print Internal Transfer Report and clear all pending transfers.

28. 28 Preparing the Count (Cont.) UNIT CASH RESERVE  Counts will be based on the value as shown on the PS Form 3369-P. RETAIL FLOOR STOCK (POS Sites)  Print the Inventory by Category Report and the Clerk Balances Report.  Verify the Retail Floor Stock totals match on each report.  Verify all segments on the Clerk Balances Report equal AIC 853 on the recent Unit 1412.

29. 29 Preparing the Count (Cont.) RETAIL FLOOR STOCK (POS Sites)  Verify there are no pending transfers or stock revaluations affecting the Retail Floor Stock.  Counts are based on the Clerk Balances Report AIC 853 (Not Inventory by Category).  Can only be counted prior to the start of business or after the close of business; never during the business day. APC  Counts are based on AIC 853, Total Kiosk Inventory, from the most current PS Form 1412.

30. 30 Tolerance FIXED STAMP CREDITS AND UNIT RESERVE

31. 31 Tolerance (Cont.) Tolerance is not applied to the unit reserve when transferred or to a stamp credit when canceled. RA CASH RETAINED  $5.00 or less. UNIT RESERVE CASH RETAINED  No tolerance. FLOOR STOCK  No tolerance.

32. 32 Tolerance (Cont.) VENDING CREDIT  No tolerance. APC  No tolerance. RURAL CARRIER FIXED CREDIT  No tolerance.

33. 33 Posting Audit Results STAMP STOCK ACCOUNTABILITY Overage  AIC 057, Employee Stamp Credit Overage.  If within one year an overage is found to be related to a shortage, use AIC 457, Employee Overage Withdrawal, to offset part or all of the shortage.  Managers should exercise prudent judgment when determining the existence of a relationship that may warrant the offsetting of shortages.  Maintain appropriate documentation when offsetting.

34. 34 Posting Audit Results (Cont.) STAMP STOCK ACCOUNTABILITY Overage  All unresolved overage amounts over 1 year old must be transferred to AIC 123, Lobby Services Revenue with an offsetting entry to AIC 457. Shortage  AIC 767, Employee Stamp Credit Shortage.  Shortage amounts resolved must be cleared using AIC 367, Employee Stamp Credit Shortage Cleared.  Local unit management is responsible for monitoring and pursuing collection of shortages while adhering to the National Agreement and the Debt Collection Act.

35. 35 Posting Audit Results (Cont.) STAMP STOCK ACCOUNTABILITY  Amounts reported in AIC 057 and AIC 767 will offset to stamp sales and adjust AIC 853, Stamp Accountability Closing Balance, to the actual amount counted.

36. 36 Posting Audit Results (Cont.) SIA CASH CREDIT ACCOUNTABILITY Overage  Recorded in AIC 068, Employee Cash Credit Overage.  If within 90 days an overage is related to a shortage, use AIC 468, Employee Cash Credit Overage Withdrawal, to offset part or all of the shortage.  Exercise prudent judgment when determining the existence of a relationship that may warrant the offsetting of shortages.  Unresolved overage amounts over 90 days must be transferred to AIC 123, Lobby Services Revenue, with an offsetting entry to AIC 468.

37. 37 Posting Audit Results (Cont.) SIA CASH CREDIT ACCOUNTABILITY Shortage  Recorded in AIC 764, Employee Cash Credit Shortage.  Shortages amounts resolved must be cleared using AIC 364, Employee Cash Shortage Cleared.  Local management responsible for monitoring and pursuing collection of shortages.  Amounts reported in AIC 068 and AIC 764 will offset AIC 752, Cash Remitted (Final) – in employee’s PS Form 1412.

38. 38 Posting Audit Results (Cont.) UNIT RESERVE  Overages recorded in AIC 057, cleared in AIC 457.  Shortages recorded in AIC 767, cleared in AIC 367. UNIT CASH RESERVE  Overages recorded in AIC 068, cleared in AIC 468.  Shortages recorded in AIC 764, cleared in AIC 364.

39. 39 Posting Audit Results (Cont.) SIA RETAIL FLOOR STOCK  Overage recorded in AIC 239, Floor Stock Overage.  Shortage recorded in AIC 639, Floor Stock Shortage. VENDING CREDITS AND APC  Overage – AIC 175, Vending Machine Overage  Shortage – AIC 612, Vending Machine Shortage

40. 40 New Offset AICs (No input to 1412) http://www.usps.com/cpim/ftp/bulletin/2007/pb2220 3.pdf Effective March 1, 2007 SIA (floor stock), Vending and APC  AIC 299, SIA, Vending, and APC Stock Shortage Offset  AIC 699, SIA, Vending, and APC Stock Overage Offset  AIC 843, Stock Adjustment Overage  AIC 849, Stock Adjustment Shortage

41. 41 Recording Stock Overage Stock Credit Overage Posted  AIC 175, Vending Machine and APC Overage  AIC 239, Floor Stock Overage  Stock credit overage will automatically offset to AIC 699 and AIC 843 adjusting accountability. This will adjust the stock credit accountability to the audit count.

42. 42 Recording Stock Shortage Stock Credit Shortage Posted  AIC 612, Vending Machine and APC Shortage  AIC 639, Floor Stock Shortage  Stock credit shortage will automatically offset to AIC 299 and AIC 849 adjusting the accountability. This will adjust the stock credit accountability to the audit count.

43. 43.1.1 Audit Frequency

44. 44 Audit Frequency (Cont.) PS Form 3977  Once every 6 months.  Record results on Form 3902, Form 3977 and Lock Examination. Key check  Once every year.  Record results on Form 3902, Form 3977 and Lock Examination.

45. 45 Related References Handbook F-1 Section 429 http://blue.usps.gov/cpim/ftp/hand/f1/html/f1c4 _002.html Field Accounting Procedures http://blue.usps.gov/accounting/_pdf/draftFAP. pdf PO 209 Retail Operations Handbook Section 11-6 http://blue.usps.gov/cpim/ftp/hand/po209.pdf