Lax controls at postal facilities result in missing money

About $6.3 million in cash and checks were stolen or embezzled from the Postal Service during fiscal 2001 because employees failed to follow security procedures, according to a new General Accounting Office report.

The theft and financial mismanagement could be eliminated with better training, more supervision and more accountability for employees, GAO said in its report, "U.S. Postal Service: More Consistent Implementation of Policies and Procedures for Cash Security Needed" (03-267).

The watchdog agency reviewed the Postal Service's policies on managing cash, checks and coins received daily by local post offices, as well as its policies and procedures for employee background checks and training, and concluded the controls in place were sufficient.

"The Postal Service has policies and procedures that, if properly implemented, would help to control and physically secure its [cash]," the report said.

Those policies include holding employees accountable for any loss of money, documenting cash as it moves through the system until it arrives at the bank and reporting discrepancies to the postal inspection service. In addition, accounting employees are required to reconcile the electronic record for each post office's daily sales with bank deposit records.

But GAO found that employees at many postal facilities did not follow the procedures. In June 2001, a $3 million embezzlement case in Phoenix, Ariz., went undetected because control procedures weren't followed, the report said. A year before the money was stolen, the postal inspector had made recommendations for better cash maintenance at the Phoenix, Ariz., facility. But those recommendations went unheeded, according to the report.

"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," the report said.

Other problems with cash control at postal facilities included resistance from postal managers who do not want to implement cash oversight procedures because they feel the measures would put a dent in their budgets. Additionally, employees are sometimes not held accountable when their actions lead to money being stolen. One employee left money in the lobby of a 24-hour postal facility and it was stolen, but the employee was never disciplined, the report said.

GAO recommended that Postmaster General John Potter communicate to employees and managers the importance of following cash oversight procedures, hold employees accountable for correcting problems identified by the postal inspection service and make following policies and procedures part of the agency's strategic goals.

In a written response to the report, Postal officials said they had already developed procedural changes to address the shortcomings identified by GAO, including establishing an internal control unit in each district office and requiring area vice presidents to ensure that employees who handle money are trained.