The US Postal Service Inspector General says that the USPS needs better oversight of local spending on maintenance and repairs. While the IG found that the system for reviewing major repairs through the EMCOR system was adequate, it noted that there was little if any documentation for work paid for by credit card, representing $22 million in FY 2013. In one case, a project manager charged $278,785 in a single month, most of it “paid to one contractor for 43 repairs and alterations.”
From the OIG report:
While controls over completed repairs and alterations using the national EMCOR contract were adequate, the Postal Service can improve controls over completed repairs and alterations paid for by credit card. Postal Service policy did not require Facilities project managers (PMs) to obtain written certification of completion for these repairs and alterations. Consequently, PMs did not obtain written certification for 16 of 27 repairs and alterations costing over $2,000. We estimated the Postal Service paid $22.2 million via credit card for repairs and alterations in FY 2013 with no written certification that the work was completed.
Also, credit card approving officials (CCAO) did not perform detailed reviews of credit card statement activity and other supporting documentation for any of the 113 credit card statements we reviewed (valued at $237,224). These reviews did not occur because there is no policy requiring CCAOs to perform them. Finally, the Postal Service could not reconcile any repair and alteration costs from the general ledger to the enterprise Facilities Management System (eFMS)2 because identifiers such as invoice numbers are not captured in its general ledger payment system.
Written Certification of Repairs and Alterations Paid for by Credit Card
PMs did not obtain written certifications of completion from Postal Service personnel for 16 of 273 repairs and alterations costing over $2,0004 and paid for by credit card. Costs for the 16 repairs and alterations totaled $104,103. PMs were required to obtain verbal confirmation from postmasters and OICs before paying contractors for the repairs and alterations, but there was no policy requiring PMs to obtain written certification that the work was completed. In contrast, PMs are required to obtain written certifications of completion from postmasters or OICs before paying for repairs and alterations that fall under the national contract with EMCOR. This requirement should also be applied to credit card activity above pre-determined transaction and dollar value thresholds.
Not requiring written documentation certifying the completion of repairs and alterations puts the Postal Service at increased risk of paying for incomplete or faulty repairs. In addition, the Postal Service may not be able to successfully defend itself from potential disputes with vendors about repairs and alterations because it does not document work completion.
Based on our review of the sample, we estimated Facilities personnel used credit cards to pay $22,212,626 million for repairs and alterations costing more than $2,000 in FY 2013 without obtaining written certifications of completion.
Review of Credit Card Statement Activity
CCAOs did not perform a detailed review of credit card statement activity for any of the 113 reviewed credit card transactions, valued at $237,224. They reviewed the credit card charges of Facilities PMs and reconciled them with totals recorded in the Facilities Single Source Provider (FSSP) system5 but did not perform a detailed review of credit card activity to detect anomalies that may represent fraud. A detailed review consists of reviewing invoices, statements of work, and other supporting documentation for repair activity. PMs perform detailed reviews before paying for repairs and alterations that fall under the national contract with EMCOR. CCAOs should also perform such reviews of selected repairs and alterations paid by credit card above pre-determined transaction and dollar value thresholds.
This occurred because Postal Service policy does not require CCAOs to perform detailed reviews. CCAOs can perform detailed reviews of credit card statement activity at their discretion. The four Facilities CCAOs stated they did not review the repair files because they discussed questionable transactions with PMs and were aware of the PMs’ monthly activity. Not performing detailed reviews of credit card statement activity increases the risk of fraud.
For example, we identified a PM who incurred credit card charges totaling $278,785 in 1 month. Fifty-eight percent of the charges ($160,955) were paid to one contractor for 43 repairs and alterations, and there were no internal controls in place that required an additional review of this contractor’s repair activity for this credit card statement period. The CCAO did not review the credit card statement activity in detail for these transactions.