FSM auditors make recommendations for improvements in the FSM Postal Service

By Bill Jaynes

The Kaselehlie Press

February 13, 2021

FSM—An audit of the FSM National Postal Service covering fiscal years 2017 through 2019 released to FSM President David Panuelo on February 11, 2021 listed several weaknesses in management and internal controls that if corrected would “greatly assist the FSM National Postal Service (to) improve its service delivery.  While identifying some weaknesses, auditors also commended the Postmaster General for taking fast steps to deal with some of the items contained in the audit even before the audit was published.

The Office of the National Public Auditor held up the interaction with the National Postal Service (NPS) as a practice that needs to be emulated by other public institutions in response to audits. “In most cases, government departments, agencies and entities have negative perspectives whenever it comes to being audited, but this was not the case with the management of the NPS.  Through our various meetings with the Acting Postmaster General, we observed a true desire for improvements. The management was positive in their facilitation and stated that they looked forward to more audits and recommendations for improvement in the future,” the audit said.

The Postmaster General, in her response to the audit, in addition to immediately setting up some mechanisms to deal with two of the audit findings, committed to specific dates for dealing with each of the audit exceptions.  She also pointed out that NPS has already been dealing with other matters through the establishment of a Financial Management System but that due to the COVID-19 pandemic, training ability has been limited within the last year.

In 2019, the FSM Congress amended the Financial Management Regulation (FMR) Act to require departments and agencies of the National Government to report their performance accomplishments and shortcomings to Congress and to the President within 30 days of the end of each quarter. Auditors concluded that the NPS was not aware of the change and so they established no internal mechanisms to enable effective reporting of performance. Auditors pointed out that the establishing Act that set up the NPS did not require reporting of activities to the executive and legislative branches other than to provide an accounting of funds in excess of $20,000 that remained in the revolving fund at the end of a fiscal year. Any amount in excess of $20,000 that were in that fund at the end of the year were deposited directly into the FSM general fund.

Auditors also found that the Act establishing the NPS did not require an oversight function from a Board of Directors, Committee, Councils or external bodies to drive and ensure effective decision making. They recommended that the FSM President should take necessary actions to recommend changes to the established Act of NPS so that the law requires the appointment of an oversight body, and then appoint suitable people to be members of any new oversight body if established by law.

Auditors pointed out that though the NPS has a five-year plan covering the years up to 2024, it is not currently translated into an operational plan. As a result, decisions are made based on historical indicators rather than future plans for improvement. It says that one of the potential effects could be poor postal services since the “entity is managed based solely on what the head of the organization thinks and not based on an established long-term strategic direction that integrates inputs of the entire organization, actual results, potential risks, required improvement, stakeholders, and the surrounding environment within which the NPS operates.”

Auditors said that poor internal controls, including lack of policies and procedures, pose a threat to efficient postal services.  NPS needs to implement (actualize, as the auditors called it) the procedures it has recently developed. One of the findings resulted in new and implemented procedures for dealing with segregation of duties for managing the stockroom for philatelic stamps and products in order to eliminate any possibility of fraud. The same holds true for the process of receipting customer payments.

Another audit suggestion was that NPS should establish an adequate internal control mechanism to handle customer complaints. The NPS since developed a form for customer complaints and is in the process of implementing it.  The form instructs customers to contact their local FSM Post Office if they are having a problem with delivery of mail such as “late arrival, tracking, attempted delivery, misdelivery, etc.”  The form as developed thus far is for missing or damaged mail, or “other” item not on the list.

The audit said that NPS management informed auditors that there were no guidelines of procedures in place for handling customer complaints regarding missing, returned, damaged, and delayed mail.  Customer complaints are recorded in a Microsoft Excel spreadsheet by the Postal Inspector, “however, some cases were still filed (pending) unresolved and (a) few others were closed, while some have no status of activities taken to address them,” the auditors wrote.

The auditors said that one of the effects of the lack of a customer complaint process was that “customers are expressing their dissatisfaction and complaints on social media, jeopardizing the reputation of the NPS including the employees.”  As an appendix, auditors included a small selection of examples of customer complaints expressed against NPS on social media. Auditors intimated that since it is difficult to determine or document whether management is addressing customer complaints in a timely manner, dissatisfaction is a continuing problem.

Auditors also found that there is no assurance that all fees for box rental are collected even after the NPS established a policy requiring box renters to pay rental fees at the beginning of each calendar year rather than on an anniversary date based on when the box was initially rented as had been the previous practice.

Auditors also found that NPS lacks a framework to provide reasonable assurance that there is a process of managing risk to manage uncertain events that may affect or disrupt postal services.

The final finding was that NPS had not implemented all of the audit recommendations of the previous audit that was conducted in 2013.

All 31 pages of the audit can be found online at www.fsmopa.fm.

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