In fiscal year 1994, the Service recorded revenue from bulk business mail of $23.1 billion—48.4 percent of its total mail revenue. This occurred because clerks often skipped required in-depth verifications of bulk mail. The remaining verifications were either not done or not documented. With the volume of mailer-barcoded mail increasing yearly, the Postal Service recognized the need to try to ensure more standardization of mailer-applied barcodes. Postal management recognized the need for such equipment 5 years ago. The current acceptance system does not produce information on (1) the extent to which improperly prepared mailings are entering the mail stream and the related revenue losses associated with improperly prepared mailings—including mailer-applied barcodes that do not meet the Postal Service’s standards; and (2) the amount of rework required for the Postal Service to correct improperly prepared mailings that enter the mailstream. The Postal Service’s primary procedure for selecting bulk business mailings for in-depth verification is to randomly sample 1 in 10 of each mailer’s statements. Customs must determine whether goods entering the United States are properly classified and correctly valued. Additionally, they said they plan to issue a new bulk mail acceptance manual when the new acceptance system is put in place. Specifically, we recommend that the Postmaster General direct bulk mail acceptance program supervisors and managers to periodically report to appropriate Service levels on operation of the bulk mail acceptance system, initiatives, and the progress and effectiveness of related improvements so management can be reasonably assured that required mail verifications, including supervisory reviews, are done and that the results are documented as required; mailings resubmitted following a failed verification are reverified and acceptance clerks and supervisors are provided with adequate, up-to-date procedures, training, and tools necessary to make efficient and objective verification determinations; information on the extent and results of verifications, including supervisory reviews, is regularly reported to appropriate levels, including Postal Service headquarters, and that such information is used regularly to assess the adequacy of controls and staffing, training needs, and acceptance procedures; and risk becomes the prominent factor in determining mailings to be verified. The Inspection Service reported that internal controls were not effectively or consistently applied and that there was a significant risk that mail could be entered into the mailstream without payment of postage and that mailers could claim unearned discounts. Comments From the U.S.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the U.S. Postal Service's (USPS) controls over postage paid on presorted and barcoded mail, focusing on whether USPS controls ensure that mailer-claimed discounts are earned.

What GAO Found

GAO found that during fiscal year 1994: (1) 40 percent of required bulk mail verifications were not performed and postal supervisors did less than 50 percent of required follow-up verifications; (2) rejected mailings were resubmitted and accepted into the mail stream without proper corrections or postage; (3) mail acceptance clerks were not given adequate tools to determine whether increasing volumes of mailer-applied barcodes met USPS standards; and (4) postal management was unable to make informed decisions concerning the adequacy of bulk mail acceptance controls or determine the amount of revenue lost through improperly prepared mailings. GAO also found that: (1) USPS needs to determine the management strategy and financial investment necessary to minimize revenue loss; (2) the random method of selecting bulk business mailings for in-depth verification may not result in the best use of available staff; (3) USPS could better target its verification efforts based on risk by considering such factors as mailer histories and the postage value of mailings; (4) postal managers are developing a bulk business mail acceptance system, updating acceptance handbooks, acquiring barcoding verification equipment, and requesting field units to submit verification reports; and (5) USPS is also exploring a new risk-based approach for in-depth verification, improving revenue controls, and planning to install its new bulk mail system by 1997.