Background
As part of its 10-year Delivering for America plan, the Postal Service plans to acquire 106,480 new delivery vehicles, including electric vehicles, between fiscal years 2023 and 2028. The investment in new vehicles will necessitate the replacement and disposal of many long-life vehicles (LLV), which may generate additional revenues. Thus, it is crucial for the Postal Service to establish and maintain internal controls over its evolving disposal processes to mitigate security and financial risks as the 10-Year Plan unfolds.
What We Did
Our objective was to (1) assess the Postal Service’s controls over the disposal process of LLVs and (2) evaluate its disposal plans as it replaces its delivery fleet. For this audit, we statistically sampled 112 LLV disposals and reviewed supporting documentation for completeness, timeliness, and revenue capture.
What We Found
We found that the Postal Service had ineffective internal controls over the LLV disposal program to ensure that management followed established processes and had sufficient revenue recognition and reconciliation practices. These conditions occurred due to a lack of management oversight, existing controls not designed to confirm LLVs received disposal revenues and had been reconciled properly, and leadership prioritizing other strategic initiatives. Ineffective internal controls over the LLV disposal process leaves the Postal Service vulnerable to security and financial risks. As a result, we estimated a total of $452,506 in lost revenue for 11,257 disposals that occurred between October 2023 and April 2024 without associated scrappage payments and $3,828,136 in at-risk revenue for 95,320 LLV disposals that are planned. Lastly, in anticipation of the increase in LLV disposals, the Postal Service awarded a contract on January 23, 2025, for a supplier to manage this program. However, due to the timing, we were not able to opine on the sufficiency of controls with the contract and new disposal processes. Even so, strong internal controls are necessary to successfully transition the disposal function to a nationwide supplier.
Recommendations and Management’s Comments
We made three recommendations to address the issues identified in the report, and Postal Service management agreed with all three. We consider management’s comments responsive, as the corrective actions should resolve the issues. A summary of management’s comments and our evaluation are at the end of each finding and recommendation
