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GAO-03-26R 1 (2002-11-13)

handle is hein.gao/gaocrptapfa0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 November 13, 2002 The Honorable Daniel K. Akaka Chairman The Honorable Thad Cochran Ranking Minority Member Subcommittee on International Security, Proliferation, and Federal Services Committee on Governmental Affairs United States Senate Subject: U.S. Postal Service Actions to Improve Its Financial Reporting Given the vital role of the nation's postal system and the importance of its financial viability, it is imperative that the U.S. Postal Service (the Service), the Congress, stakeholders, and the public have adequate information available to them to understand the Service's financial situation and assess its progress towards meeting its performance goals and planning for its future. During the first part of fiscal year 2001, the Service made numerous revisions to its estimated net income with little or no public explanation. The Service's financial outlook changed from a $480 million deficit in its fiscal year 2001 budget approved in November of 2000, to a $2 billion to $3 billion deficit projected 3 months later in February 2001. Likewise, at the beginning of fiscal year 2002, the Service estimated that it would end the year with a $1.35 billion deficit and then stated, in May 2002, that its net loss for the year could have reached $4.5 billion. Despite the fact that the Service publicly released periodic financial information, these significant changes in financial outlook were not evident from publicly available information and came as a surprise to many stakeholders. More recently, the Service announced the results of a new financial analysis that could significantly reduce its Civil Service Retirement System (CSRS) pension liability if Congress takes related legislative action, which would significantly impact the Service's financial outlook.' It will be important for the Service to keep stakeholders well informed about this issue. Over the past 2 years, we have been raising concerns and have made recommendations regarding the lack of sufficient and timely periodic information on the Service's financial condition and outlook available to the public between publications of its audited year- end financial statements. This report responds to your July 31, 2002, request that we provide periodic updates on several key areas related to the Service's financial outlook, 'In May 2002, we asked the Office of Personnel Management (OPM) to, among other things, estimate how much of the underfunded CSRS pension liability is attributable to the Service. OPM's projections indicate that the Service's future payments required under current legislation would overfund the CSRS liability by $71 billion over the remaining benefit period. Legislation would be required to modify the existing funding method so as to prevent overfunding of benefits in the future. GAO-03-26R Postal Financial Reporting

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