Effective immediately, the following sections of Handbook F-23, Accounting Policy Reference, are revised to reflect current Postal Service™ policy.
Handbook F-23, Accounting Policy Reference
* * * * *
2 General Policies
* * * * *
2-8 Financial Reporting
* * * * *
2-8.1 Closing Checklists
[Revise 2-8.1 to read as follows:]
To ensure that all accounting systems have reported before books are closed, Corporate Accounting monitors the closing checklists that the Accounting Service Centers (ASCs) maintain.
* * * * *
2-10 Audit and Finance Committee
* * * * *
2-10.0.3 Ethical Standards
* * * * *
[Revise the second paragraph of 2-10.0.3 to read as follows:]
As a part of the executive branch of the federal government, all Postal Service employees must comply with federal ethical standards. Additionally, the Postal Service is covered by supplemental standards of ethical conduct in 5 C.F.R. Part 7001. As such, the Postal Service is in compliance with section 406 of the act.
* * * * *
2-12 Financial Testing and Compliance Group
* * * * *
2-12.1 Purpose
[Revise 2-12.1 to read as follows:]
The mission of the Postal Service Financial Control and Support Group is to test key field financial controls in support of compliance with accounting policies and in support of the Postal Service’s external auditors’ audit opinion.
2-12.2 Responsibilities
[Revise the first paragraph of 2-12.2 to read as follows:]
The testers in the Financial Control and Support Group are responsible for performing operational effectiveness testing on key internal controls in the field and for performing the following:
* * * * *
3 Assets
* * * * *
3-2 Receivable and Allowance for Losses
* * * * *
[Revise the fifth and sixth paragraphs of 3-2 to read as follows:]
Interest charges assessed on certain accounts receivable balances are based on decision analysis report interest rate factors utilized by Capital and Program Evaluation. The Postal Service implements changes in interest rates at the beginning of the fiscal year.
The Postal Service maintains an allowance for losses from bad debts. Accounting conducts a corporate level periodic review of the aging of accounts receivable. Based on this review, the recorded allowance is adjusted as necessary. The provisions of the Debt Collection Improvement Act (DCIA) are followed for delinquent debts. The DCIA provides the option of referring delinquent debt to a collection agency or the U.S. Treasury Offset Program (also referred to as cross servicing).
* * * * *
3.5 Inventories
[Revise 3.5 to read as follows:]
Inventories, which are composed principally of supplies and repair parts for mail processing equipment, are classified as current assets on the balance sheet. Retail products are classified as inventory until distributed to retail outlets. The majority of inventory is held at the Topeka Material Distribution Center under the supervision of Operating Asset Management Fulfillment.
For financial statement purposes, inventory includes only those items considered to be usable in future periods. An obsolescence reserve is maintained to provide for any unusable inventory that may exist. Inventories are valued at the lower of average cost or current market price.
Physical inventories must be taken routinely. Unusable or obsolete items are written off when discovered, net of any estimated salvage value. Perpetual inventory records must be maintained per guidelines in Handbook AS-701, Material Management, Chapter 4. Inventory counts for items with balance on hand over $100K will be completed annually and reconciled to the perpetual records. The list of items with balance on hand that exceed the $100K threshold will be updated quarterly. Annually, a statistically significant sample must be selected, counted, and reconciled to the perpetual records.
Operating Asset Management Fulfillment and Finance monitor the reserve for obsolescence throughout the year and reevaluate it annually as part of the year-end close process. An inventory forecasting model developed by Operating Asset Management Fulfillment assists in estimating excess inventory quantities. This estimate together with specific identification reviews for obsolete inventory quantities provides a basis for the annual evaluation process to determine the adequacy of the obsolescence reserve. Accounting monitors the year-end reserve for the obsolescence evaluation process and approves its conclusions.
The Postal Service does not record stamp stock inventory in its financial statements. Stamp stock inventory is an accountable item for the field including the stamp distribution offices.
* * * * *
3-7 Property and Equipment
* * * * *
3-7.2 Specific Policies
* * * * *
3-7.2.1.3 Depreciation
[Revise 3-7.2.1.3 to read as follows:]
The Postal Service depreciates most buildings over a service life of 40 years. Trailer units and modular buildings have a service life of 10 years. Depreciation is calculated on a straight line basis over the useful life of a building, starting the month following capitalization. At the point in which a building is marked for disposal, any remaining depreciable amount is put on hold. Building improvements authorized costs are depreciated over the remaining service life of the improved building except for major capital projects. Improvements made to a fully depreciated facility are depreciated over the next 12 months following the month of capitalization. The improvement cost is capitalized by adding to the carrying value of the building.
* * * * *
3-7.2.4 Leasehold Improvements
* * * * *
3-7.2.4.2 Amortization
* * * * *
[Revise the table in 3-7.2.4.2 to read as follows:]
* * * * *
3-7.3 Fully Depreciated Assets
[Revise 3-7.3 to read as follows:]
Fully depreciated assets that remain in service including leasehold improvements are carried at their salvage value except for capital leased assets, which revert to the lessor at the end of the lease.
* * * * *
3-7.5 Disposal
[Revise the first sentence of 3-7.5 to read as follows:]
Disposal is the process of properly relinquishing possession and ownership of property and equipment that is unrepairable, obsolete, unusable, or surplus to Postal Service needs through trade-in, sale, cannibalization, sale for recycling, transfer, donation, or placement in a landfill.***
* * * * *
3-7.6 Physical Inventory
[Revise 3-7.6 to read as follows:]
The Postal Service performs physical inventories of capital assets semiannually. Asset Management oversees the physical inventory process. Oracle Financials IT in Eagan randomly selects approximately one-eighth of the capital inventory to review for each Semi-Annual Capital Property Review. The methodology used ensures that every item except capitalized software is inventoried once during a given 4-year cycle. The MAO certifies the Semi-Annual Capital Property Certification Report after each semi-annual review.
* * * * *
6 Revenue
[Revise the first sentence of 6 to read as follows:]
The Postal Service™ records revenue from the sale of mail delivery services at the time the postage is sold except for foreign mail delivered in the US which is billed to the foreign posts after the fact.***
* * * * *
7 Expense
* * * * *
7-3 Offset of Emergency Preparedness Expense
* * * * *
[Add the following paragraph as the second paragraph of 7-3 to read as follows:]
Fully depreciated LHIs remain on the books until the USPS exits the leased property at which time they are removed from the accounting records.
8 Commitments
* * * * *
8-1 Expense Commitments
[Revise 8-1 to read as follows:]
Expense commitments represent orders placed, a contract awarded, or a similar transaction that will result in a liability to pay when products or services are provided pursuant to the terms of the order or contract.
* * * * *
We will incorporate these revisions into the next printed version of Handbook F-23 and into the next online update, available on the Postal Service™ PolicyNet website:
n Go to http://blue.usps.gov.
n In the left-hand column under “Essential Links”, click PolicyNet.
n Click HBKs.
(The direct URL for the Postal Service PolicyNet website is http://blue.usps.gov/cpim.)
— Revenue and Field Accounting,
Controller, 1-10-13
