NAPS REGIONAL CABINET MEETING

1. NAPS REGIONAL CABINET MEETING January 14, 2011 Charlotte NC

2. SOX COMPLIANCE Sarbanes-Oxley Act of 2002 H. R. 3763 January 23, 2002

3. USPS ACCOUNTABILITY Postal Accountability and Enhancement Act H. R. 6407 December 3, 2006

4. Approach of SOX Initiative FY 2007 FY 2008 FY 2009 Prepare Document Test FY 2010 FY 2011 Full Assessment Standard Ops.

5. SEPTEMBER30, 2010 THE POSTAL SERVICE MUST BE COMPLIANT WITH THE SARBANES OXLEY ACT (SOX) • THE POSTMASTER GENERAL MUST CERTIFY THAT WE ARE COMPLIANT. • THE AREA VICE PRESIDENT MUST CERTIFY THAT WE ARE COMPLIANT. • THE DISTRICT MANAGER MUST CERTIFY THAT WE ARE COMPLIANT

6. Testors • Area--Field Financial Specialist-- Testing/Remediation • HQ--Financial Testing & Compliance Analyst--Testing • OIG—Testing • Ernst & Young--Testing

7. THE SOX INDICATORS EVALUATE HOW WELL WE ARE ADHERING TO THE KEY CONTROLS AND FINANCIAL PROCESSES. EVERYONE PLAYS A ROLE, EITHER DIRECTLY OR INDIRECTLY, EVERYONE IS INVOLVED IN OUR FINANCIAL REPORTING.

8. SOX INDICATORS BANKING DIFFERENCES 247/647 NET YTD TIMELY MAILING STATEMENTS PERFORMANCE BASED VERIFICATION STAMP CREDIT AUDITS FLOOR STAMP CREDIT AUDITS UNIT RESERVE

9. CALL TO ACTION INDICATORS EXCESS STAMP STOCK OPEN EMPLOYEE ITEMS RETAIL ASSOCIATE CASH COUNTS ACCOUNTS RECEIVABLE EXCESS FLOOR STOCK POS COMPLIANCE

10. VITAL FEW REPORTSOX/CTA NPA • Performance Based Verifications • Unit Reserve Audits—POS Sites only • SIA Retail Floor Stock Counts—POS only • Banking Differences—All Sites • Timely Entry of Mailing Statements—BMA • Employee Cash Counts • 247/647 Net YTD Indexed

11. SOX/CTA cont’d. • Excess Floor Stock—POS only • Excess Unit Stock • Employee Items • Accounts Receivable • APC Counts • Bank Secrecy Act (BSA) Compliance • Unit Reserve Cash Counts

12. Functions Currently Being Tested • Smart Pay • Automated Postal Centers • Voyager • Postal Retail Units • Business Mail Entry • Banking

13. HOT SOX ITEMS DAILY 1) BSA (Bank Secrecy Act) 2) Clerk Cash Retained 3) No Fee Money Order Index a) Not Applicable b) One Time Local Purchase c) No Available Cash – Customer Change MONTHLY 1) Voyager 2) SSA Cash Count 3) Unit Reserve Cash Count 4) Inactive clerk credits > 30 days with cash--Must be closed 5)Retail Floor Stock Count Quarterly –First Month 1) APC Count 2) Unit Reserve Stock Count “ A new level of Responsibility” The SOX Drawer Welcome to the SOX Drawer This is one article in a series of Metro Leader articles that feature Finance Activity Tips and Best Practices to stay in SOX compliance.

14. Future Testing • GATS • Payroll • BRM • VMAS • JVs

15. BANKING DIFFERENCES POSSIBLE CAUSES (OCCURRENCES): • CHECK AMOUNTS DO NOT MATCH DEPOSIT SLIPS • COUNTERFEIT BILLS • DEPOSIT SLIPS DO NOT MATCH AIC 752 ON UNIT 1412 IMPROVE SCORE: • DO NOT MAKE ERRORS • DETERMINE CAUSE AND PUT A PROCESS IN PLACE

16. AIC 247/647 NET YTD OVERAGES/SHORTAGES CHARGED TO THE UNIT (DOLLARS) IN-TRANSIT STAMP STOCK: STOCK NOT PICKED UP TIMELY STOCK PICKED UP WITH INCORRECT SHIPMENT NUMBER OR AMOUNTS BANKING DIFFERENCES DEBIT CREDIT CARD DIFFERENCES

17. Performance Based Verifications Timely Entry of Mailing Statements • PBV is determined by a mailer’s past record with mailings • PBV is determined by Postal One • Timely Entry--Confirm postage statement is checked-in to Postal One! with required fields!

18. Continuing SOX Compliance in FY 2011 BME Managers – Did you know in November 2010, BMA SOX Compliance testing began at the 60 largest revenue generating units across the country? In addition, a sampling of 60 sites which generated revenue in excess of $1 million in FY 10 was also performed. Is your unit in compliance? FY11 Q1 preliminary results of the 6 Financial Controls tested are as follows:  Controls Number of Exceptions Top 60 Random 60 Total BMEU Check-In Procedure -- 2 2 Verification of Mail Contents 3 11 14 Use of PS Form 3607-P Clearance Document 3 1 4 End-of-Day Reconciliation 7 5 12 SOX Certification Questionnaire 5 10 15 Postage Statement Completion 9 2 11 TOTAL 27 31 58 The results identify how critical it is that each site follow the policies for mail acceptance each day to meet all of the SOX Financial Controls. Employees should be aware of available resources such as job aids and user guides which can be found at: http://blue.usps.gov/bma/dm109.htm A New Level of Responsibility The SOX Drawer Welcome to the SOX Drawer Managers – Did you know that following policy and procedures will keep you in SOX compliance?

19. Stamp Credit Audits—Floor (RFS)Stamp Credit Audits—Unit Reserve • RFS Audits are completed monthly by the 21st of each month • Unit Reserve Audits are completed the first month of each quarter

20. OPEN EMPLOYEE ITEMS EMPLOYEE ITEMS MAINTAINED AT THE LOCAL OFFICE. AIC 754 – SALARY ADVANCE AIC 755 – TRAVEL ADVANCE AIC 764 – EMPLOYEE CASH CREDIT SHORTAGE AIC 767 – EMPLOYEE STAMP CREDIT SHORTAGE

21. ACCOUNTS RECEIVABLE EMPLOYEE DEBTS OWED THE POSTAL SERVICE HEALTH BENEFITS CASH SHORTAGES STAMP CREDIT SHORTAGES SALARY OVERPAYMENT

22. Credit Counts/AuditsPOS • Retail Floor Stock (RFS)—monthly • Individual Cash Credits—monthly • Unit Cash Retained—monthly • Unit Reserve Stock—first month of the quarter UNLESS the RFS count is out-of-tolerance

23. Credit Counts/Auditsnon-POS • Craft employee credit counts—every 4 months • PM & PMR counts—once each FY • Unit Reserve counts—annually (unless assigned to a craft employee)

24. A FINAL POINT PAY ATTENTION TO DETAILS