U.S. Postal Service:

Revenue Losses From Express Mail Accounts Have Grown

GGD-97-3: Published: Oct 24, 1996. Publicly Released: Oct 24, 1996.

Additional Materials:


Bernard L. Ungar
(202) 512-4232


Office of Public Affairs
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Pursuant to a congressional request, GAO reviewed the U.S. Postal Service's controls over Express Mail Corporate Accounts (EMCA), focusing on: (1) whether there is any basis for the allegation of EMCA abuse; and (2) if so, what steps the Service is taking to help avoid or minimize EMCA revenue losses.

GAO found that: (1) some mailers obtained Express Mail services using invalid EMCA in fiscal year 1995; (2) the Service did not collect the postage due or verify EMCA which were later determined to be invalid; (3) some EMCA customers overdrew their accounts and carried negative balances; (4) the Service plans to provide post office employees with automated access to valid EMCA numbers and fund balances, but has no plans to provide similar access to employees at mail-processing plants; (5) although the Service's planned actions to improve controls over EMCA operations will take a considerable amount of money and time to complete, they will not have addressed several other EMCA control weaknesses; (6) to determine whether EMCA continue to be necessary or desirable, the Service could evaluate the relative customer convenience, cost-effectiveness, and other relevant factors; and (7) if EMCA are continued, Service employees need to follow new and existing procedures designed to help prevent EMCA revenue losses.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The Postal Service responded in a letter dated January 7, 1997, to Chairman McHugh that it has decided to continue to allow customers to use EMCAs.

    Recommendation: To help reduce revenue EMCA losses and other related problems, the Postmaster General should require Service executives to determine if EMCA are the most cost effective method for achieving the purpose for which they were intended, in light of all relevant factors.

    Agency Affected: United States Postal Service

  2. Status: Closed - Implemented

    Comments: The Postal Service implemented revised regulations that went into effect as of March 27, 1997, to ensure proper accounting procedures are in place to reduce uncollectible EMCA revenue. The new regulations: (1) required postal service employees to verify the mailing address on new account applications to ensure the service can collect the postage due; (2) increased the initial deposit required to open an EMCA to $250 or the total of 4 weeks expected postage and fees, whichever is higher; (3) increased the minimum account balance to $250 or 4 weeks' average postage and fees; and (4) permitted the Service to close any EMCA that remains below the minimum account balance for two consecutive accounting periods.

    Recommendation: If EMCA are determined to be a necessary or desirable method, the Postal Service should: (1) establish stronger requirements for opening EMCA; and (2) hold managers and employees accountable for handling EMCA transactions in accordance with the new requirements as well as existing Service policies and procedures for verifying EMCA numbers, closing EMCA with negative balances, and recording required data for all Express Mail packages accepted.

    Agency Affected: United States Postal Service


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