US Postal Service 2003 Annual Report Download - page 18

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The Audit and Finance Committee assists
the Board of Governors in fulfilling its fiduciary
responsibilities. The Chairman of the Board
selects the members of the Committee
for each calendar year. The Committee met six
times in conjunction with regularly scheduled
monthly Board meetings.
The Committee’s primary responsibility is
oversight of the integrity of Postal Service
financial statements. The Committee reviews
the soundness of internal accounting and
control practices and major financial state-
ment accruals. The certified public
accounting firm responsible for the inde-
pendent audit of Postal Service financial
statements, Ernst & Young LLP, reports to the
Board through the Committee.
The Committee monitors financial
performance, debt levels and cash manage-
ment. The Committee reviewed and endorsed
a management proposal to refinance Postal
Service debt, which will substantially reduce
interest expense. The Committee has also
been monitoring the Postal Service’s continu-
ing multi-year program to modernize its
accounting systems.
Each year the Committee reviews analy-
ses of cost and contribution by major
category of mail and special service. When
omnibus rate changes are required, the
Committee monitors management’s develop-
ment of rate case filings.
During the year, the Committee assessed
the impact on Postal Service financial state-
ments of PL 108-18, the Postal Civil Service
Retirement System Funding Reform Act of
2003. The legislation reduces the Postal
Service’s funding requirement for Civil Service
Retirement System pensions. Management
presented its determination of the pensions
accounting treatment resulting from that Act,
noting that it changed nothing in the retire-
ment plan. The Board’s auditors reviewed
management’s determination and concurred
with management’s conclusion.
The Committee asked management to eval-
uate its ability to comply voluntarily with
the Sarbanes-Oxley legislation as it relates to
internal controls. The Committee also reviewed
the recommendations of the President’s
Commission on the United States Postal
Service regarding enhanced financial trans-
parency. Management is assessing the
feasibility and cost of implementing these
recommendations. The Committee will continue
to monitor this work.
Ernst & Young LLP presented their work
plan for the financial statement audit, and the
Committee concurred with the scope and
materiality levels they established. The
Committee met jointly and independently with
Ernst & Young LLP, the Postal Service’s
Inspector General, management and the
General Counsel to discuss the progress of
the audit and ensure independence and
objectivity in the audit programs.
Accordingly, the Committee recom-
mended, and the Board approved, the
financial statements for 2003.
Albert V. Casey
Chairman, Audit and Finance Committee
December 9, 2003
a message from the
audit and
finance committee
16 | 2003 annual report united states postal service