OIG: Are Clerk and Mail Handler Costs Correctly Attributed to USPS Products?

clerk-cost-segment-oig-audit-projectProject Title:
Cost Segment 3 – Clerks & Mail Handlers
Start Date:
Tuesday, September 6, 2016
Estimated Report Release Date:
March 2017

We are conducting an audit to verify the accuracy of clerk and mail handler costs attributed to products and services. The Postal Service categorizes all costs as either attributable costs, which are directly or indirectly related to products, or institutional costs, which are not related to products. By law, each mail class and service type must cover the costs attributable to its products and services. For this reason, it’s imperative that the Postal Service accurately calculate and report the attributable costs of products and services. These costs also affect product pricing.

Cost segment 3 covers the salaries, benefits, and related costs of clerks and mail handlers. Cost segment 3 is the largest of the Postal Service’s 17 cost segments, comprising 29 percent of the total attributable costs reported in the fiscal year 2015 Cost Segments and Components report. The primary data inputs to cost segment 3 derive from the payroll system, the Management Operating Data System (MODS), and the In-Office Cost System (IOCS). MODS provides workhour and mail volume data, and IOCS uses statistical sampling to provide cost variability information as well as the distribution keys used to allocate costs to products and services.

  • Do the data collection and quality review procedures for MODS help to produce sufficiently reliable data to support accurate cost allocation?
  • Does the manual data collection model of IOCS, consisting of on-site tests and telephone readings of employees’ activities, produce reliable sampling results to support accurate cost allocation?
  • Are the Postal Service’s costing methods practical considering its business environment, or would other efficient and cost-effective alternatives yield more reliable cost data?
  • Do you have confidence that the Postal Service appropriately allocates clerk and mail handler costs to products and services?

Source: Are Clerk and Mail Handler Costs Correctly Attributed to USPS Products? | USPS Office of Inspector General

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