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Sarbanes-Oxley (SOX)and

Business Mail Acceptance

Greater NY PCC Monthly MeetingJune 16, 2010

Robert GalaherManager Business Mail Acceptance

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Agenda

Sarbanes Oxley (SOX)

Next Schedule Full Service Software Release

Advisories

Business Mail Acceptance Direction

® SOX

Sarbanes-Oxley (SOX) Overview

What SOX Means for the Postal Service

What SOX Means for Our Customers

Questions?

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®SOX Overview

What is SOX?

The Sarbanes-Oxley Act of 2002 (SOX) is administered to:● Improve confidence in financial reporting through increased

corporate governance ● Reduce fraudulent practices and accounting

inconsistencies

We must comply with the Sarbanes-Oxley Act by September 30, 2010 as a result of the Postal Accountability and Enhancement Act of 2006

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®What SOX Means for the Postal Service

Certification Requirements

The Postal Service must certify the strength of its internal controls over financial reporting

Certification requires:● A quarterly certification (Section 302), started

December 31, 2007● An annual certification (Section 404), as of September

30, 2010● Senior management must:

State its responsibility for establishing and maintaining adequate internal controls for financial reporting

Make an assertion on the effectiveness of the internal controls for financial reporting

Provide annual certifications for FY 2010 and beyond● Our external auditor annually certifies all internal

controls

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®What SOX Means for the Postal Service

SOX Accomplishments

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Determine Materiality and Scope

Establish Steering Committee

Develop Communications and

Training plan

FY 2007Prepare

FY 2008Document

Prepare Documentation

Identify Controls and Gaps

Initiate Gap Remediation

Continue Gap Remediation

Update Documentation as Needed

Perform Readiness Testing

FY 2009Test

Update Documentation

Test Controls

CEO and CFO Certification

FY 2010Full Assessment

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Update Documentation

Test Controls

CEO and CFO Certification

FY 2010Full Assessment

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What SOX Means for the Postal ServiceFY 2010 SOX Milestones

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Complete first round of FY 2010 testing Remediation of gaps from first round

testing Complete second round of FY 2010

testing Remediation of gaps from second round

testing Finalize testing of Q4 quarterly and

annual key controls PMG and CFO conclude on effectiveness

of internal controls over financial reporting as of September 30, 2010

®What SOX Means for the Postal Service

Our Vision

The SOX vision is a strategic transformation beyond compliance to improve business performance

Our goal is to continuously improve our processes and financial performance

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What Does SOX Mean for Customers?

The majority of SOX efforts will take place away from customer-facing roles

The standard of service will not change – SOX will make the Postal Service a better run business

Customers can support SOX efforts in several ways, including:

● Accurately preparing mailings ● Completing postage statements● Submitting documentation electronically

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The focus remains on moving the mail

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SOX Internal Testing

SOX Testing

● Who, When

● Results of Reviews, Issues

● Impact on Mailers

● Visibility into DM-109 and Revenue Deficiencies

● Staffing at DMUs

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SOX Testing- Who and When

Financial Control Group

Testing began June 1, completed by August 31

● BMEUs, Associate Offices/Post Offices, Detached Mail Units

● Induction Sites

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National Implementation

Results of Reviews, Issues

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Results of Reviews, Issues

386 NDC and P&DC sites have been reviewed to date

National Implementation

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Impact on Mailers

Focus Areas

● BMEUs, Associate Offices

● DMUs

● Induction Sites, NDCs, SCFs, etc

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Verification

• Perform initial verification • Perform in-depth verification if necessary• Record results, contact mailer if necessary

Finalize/Clear

• Finalize postage statements • Affix 3607P/ Complete 8017/8125• Move to cleared staging area

Reconciliation

• Perform management concurrence• Print End-of-Day Reconciliation Report• Ensure all mailings are accounted for• Sign End-of-Day Reconciliation Report

Check-in

• Ensure funds on hand and fees paid• Ensure completed postage statements • Check mailing into PostalOne!

Standardized Process for BMEU / AO

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Profile of DMUs

All DMUs must follow the DM-109 DMUs with SPPS must have

● An agreement on file

● A verification SOP on file Standardized SOPs Customized SOPs

● SOP Supersedes DM-109

Acceptance and Verification at DMUs

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Verification

• Perform cursory verification • Perform in-depth verification if necessary• Perform SOP process if necessary•Record results, contact mailer if necessary

Finalize/Clear

• Finalize postage statements • Complete 5111R/ 8017/ 8125• Observe origin entry vehicle loading

Reconciliation

• Perform management concurrence• Print End-of-Day Reconciliation Report• Ensure all mailings are accounted for• Sign End-of-Day Reconciliation Report

Check-in

• Ensure funds on hand and fees paid• Ensure completed postage statements • Check mailing into PostalOne!

Standardized Process for DMU

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Special Postage Payment System (SPPS) Type

Combined Mailings (Value Added Refunds) (COM, CVAR)

Optional Procedures (OP)

Drop-Ship Management System (DSMS)

Manifest Mailing Systems (MMS)

Copal/Co-tray (Copal)

Postage Due Weight Averaging (PDWA)

One-Pass Finalization (One-Pass)

Alternate Mailing System

eVS

Profile of DMUs

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Review

• Ensure 8125 is complete and accurate

• Ensure 8125 is not altered

• Contact origin to resolve issues

Receive

• Match 8125 against mail

• Contact origin to resolve issues

Record

• Record issues on 8125, eMIR

• Close out appointment in FAST

• Retain 8125s for 1 year

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Standardized Process for Drop-Ship

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Your Role

Look for your support in:

● Complete Postage Statements and Documentation

● Complete Clearance Documents 8125 8017

● Work with Postal acceptance in support of SOPs

● Access to Mail for Verification

● Current Agreements

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Escalation

Support for Mailers

● Manager, Business Mail Entry● District Marketing Manager● Business Mailer Support● PostalOne! Help Desk/email

Updating RIBBS to include Access

USPS verification processes will be posted on RIBBS

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Any Questions?

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Next Full Service ReleaseNovember 07, 2010

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PostalOne! Release 25 & Full Service compliance

PostalOne! ® Release 25.0.0 will deploy on November 7, 2010. The key features of this release are: ● Deploy a process for verifying Intelligent Mail® Full-

Service electronic documentation.  ● Fees will be charged by Full-Service ACS™ Billing for

ACS® records when the same record was provided more than 60 days prior for Full-Service Periodicals and more than 95 days prior for Full-Service Standard Mail® and Bound Printed Matter.

● Full-Service ACS Billing will also charge for records delivered when Full-Service Service Type Identifiers are in the barcodes but they do not match the eDoc. In this case, the fees are chargeable for all classes of mail.

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Full-Service eDOC Verification Process• Mailer Submits eDOC

• eDOC File Checks performed

• Postage Statement Finalized

• Full Service eDOC is verified for

• Barcode Uniqueness

• Mailer IDs, Service Type, By/For

• FAST/CSA

• Results in MicroStrategy reports

• Provide Full Service eDoc Verification Error Report within 30 days

• Notify Mailer via email & PO! Dashboard

• Allow payment or reconciliation

• Track error reports and payments

PostalOne! Release 25 & Full Service compliance

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Any Questions?

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Recent Advisories

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Plant-Verified Drop Shipment (PVDS) – Nonpostal Documentation

We posted on Postal Explorer® the “Plant-Verified Drop Shipment (PVDS) – Nonpostal Documentation,” Federal Register final rule regarding bills of lading presented by mailers’ transportation providers.

Postal personnel may sign a bill of lading, upon request, as long as it is presented separately from required documentation. A bill of lading is not a substitute for PS Form 8125, Plant-Verified Drop Shipment (PVDS) Verification and Clearance, or for any form of official documentation for USPS® acceptance purposes.

This final rule will be incorporated into the July 6 DMM® update.

May 26, 2010

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DMM Advisory on Courtesy Reply Mail

We recently revised the Domestic Mail Manual (DMM®) to postpone the Intelligent Mail® barcode (IMb) requirement for Qualified Business Reply Mail® (QBRM) and permit reply mail (PRM) pieces until May 2011. Current DMM standards, which we are not proposing to change, require an IMb on all BRM letters and on all PRM pieces as of May 2011.

This advance announcement is intended to provide customers with reasonable time to use up existing stock. We will be publishing a Federal Register proposed rule to require BRM flats (in addition to letters as stated above) to use an Intelligent Mail Barcode as of May 2011.  In addition, in the Federal Register proposed rule, Courtesy Reply Mail™ that does include a barcode must bear an Intelligent Mail barcode effective May 2011.

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Any Questions?

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BMA Direction

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Challenges

Revenue Loss at Acceptance

SOX Compliance Challenges

Manual/Legacy Processes and High Labor Costs

Complex Mail Preparation

Strategies

Standardize Processes

Automate & Streamline Services

Optimize Network

Optimize Resource allocations

Lights Out

Business Mail Entry Direction

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Business Mail Entry Direction

Standardize Processes● Acceptance Processes

Automate & Streamline Services● Streamline Business Mail Entry● Streamline Support Activities● Enterprise Payment● Just-in-Time Entry and Results Based Verification● Expand/Simplify Induction Visibility: Start-the-

Clock

Optimize Network● Integrate Access and Induction Activities● Right Size

Strategy 2010 – and beyond

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Change Process

Improve Existing Processes● LEAN/Six Sigma Value Stream Mapping and CPI● Implement transitional improvements

Business Process Reengineering (BPR) – Leveraging Technology to Change the Process● LEAN/SixSigma● Conduct End-to-End Analysis on Existing● Understand Customer Needs/Issues● Develop Solution Models – Test and Justify● Customer/Stakeholder Needs, Business

Models, Technology/Innovations, Environmental Impacts

● Make Changes

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Business Mail Entry Direction

How Are We Going To Get There?● Transitional Activities

eInduction Specialized Full Service eDoc Verification

Results Helpdesk Expanded Start-the-Clock Visibility

● Business Process Reengineering (BPR) – Leveraging Technology to Change the Process – Four Strategic Initiatives Streamlined Mail Entry Enterprise Payment Customer Support Service Network (Access and Induction)

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Automate & Streamline Services

Business Process Re-engineering Streamline the mail acceptance and

induction processes through automation and technology innovations Results-based Automated Verifications

Assess Key Acceptance and Verification Functions for Automation, Streamlining, and Gap Solutions

Provide single account management and payment features to mail customers for greater access to and visibility of products and services

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Automate & Streamline Services

Business Process Re-engineering● Integrated Customer Support/Feedback

Develop model for centralized/automated key support activities IM Barcode Support and Approval BRM Sample Approval

Design Customer Self Service features Mail piece Design Mailing Standards Information

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Optimize Network

Business Process Re-engineering

● Optimize BMA Network Optimize Automated vs. Non-Automated

Mail Flows Leverage Technology and Automation to

Optimize Activities Integrate Access Points (Acceptance and

Induction) Leverage Staffing Model to Right-Size

acceptance sites

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Any Questions?

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