US Postal Service 2007 Annual Report Download - page 12

12 | 2007 Annual Report United States Postal Service
The Audit and Finance Committee assists
the full Board of Governors in fulfilling its
fiduciary responsibilities. The Chairman
of the Board selects the members of the Audit
and Finance Committee for each calendar year.
This year the committee, whose members are
Governor Louis J. Giuliano, Governor Carolyn
Lewis Gallagher, Governor Thurgood Marshall,
Jr, and I, met seven times in conjunction with
the regularly scheduled monthly Board meetings.
The certified public accounting firm responsible
for the independent audit of the Postal Service
financial statements, Ernst & Young, LLP, reports
to the Board through the Audit and Finance
Committee. The Postal Service Inspector
General also reports to the Governors and is
represented at all Committee meetings.
The Audit and Finance Committee’s primary
responsibility is oversight of the integrity of
the Postal Service financial statements. The
Committee monitors the Postal Service financial
reporting process, the soundness of internal
control procedures, cash management, and
overall financial performance of the Postal
Service to ensure the integrity of its financial
statements.
The passage of the Postal Enhancement
and Accountability Act of 2006 had, and will
continue to have, a significant impact on the
work of the Committee. Three new requirements
in particular will impact its work: the rulemaking
process governing the regulatory accounting for
the newly-created competitive and market-dom-
inant product categories; the mandate for fully
SEC-compliant financial reporting, beginning in
2008; and compliance with section 404 of the
Sarbanes-Oxley Act of 2002, beginning in 2010.
Each of these items is significant in its own
right. Beginning shortly after the passage of
the Act, the Committee began monitoring
closely management’s plans and efforts toward
compliance with Section 404 of Sarbanes-Oxley.
Likewise, we monitored developments in the
rulemaking process governing the accounting
for competitive and market-dominant products.
These efforts will be ongoing until both
processes are successfully implemented.
The Postal Service will begin filing with the
Postal Regulatory Commission financial reports
that are fully compliant with SEC requirements
beginning in 2008, and the Committee will
supervise those processes as well. Although the
Postal Service has been issuing financial reports
in formats similar to SEC forms 10-K and 10-Q
for a number of years, this was done on a strictly
voluntary basis, in the spirit of full disclosure and
transparency.
During the year, the Committee also reviewed
its charter, the attribution of cost and estimation
of revenues by class of mail, the preparation of
the Postal Service’s Integrated Financial Plan
for 2008, and the Office of Inspector General’s
Audit Plan for 2008.
In directing the conduct of the 2007 financial
statement audit, the Committee met with Ernst
& Young LLP and reviewed their work plan for
the financial statement audit. We concurred with
the scope and materiality levels established. We
met jointly and independently with Ernst & Young
LLP, the Inspector General, management and
the Postal Service General Counsel to discuss
progress on the audit. We determined that the
work of the Office of Inspector General and our
external auditor was independent and objective.
Accordingly, the Committee recommended, and
the Board approved, the financial statements
for 2007.
Katherine C. Tobin
Chairman, Audit and Finance Committee
November 15, 2007
A Message from the Audit and Finance Committee