The Postal Service launched its automated reporting system in compliance with BSA in 1997 and enhanced the system to include electronic reporting in 2001. In 2003, the Postal Service further enhanced its BSA compliance efforts by implementing a back-office analysis system. This system supplements the Postal Service's point-of-sale efforts that comply with the BSA and is able to detect potentially suspicious activity that might not be discernible at the point-of-sale due to the sophistication of some criminal activities. In 2005 the Postal Service provided further training of all its sales and services associates to ensure compliance with the BSA's reporting requirements.

The BSA Compliance Office partners with Information Technology to ensure the security of data gathered through the BSA compliance system. It reduces risk to the Postal Service by ensuring that the organization complies with all requirements of the BSA. The Postal Service understands that gathering information from members of the public is a sensitive issue and that information must be safeguarded. Additionally, to ensure that the proper balance is maintained between compliance and the public's right to privacy, the BSA compliance officer works closely with the chief privacy officer.

4. Internal Controls

The Internal Control Group (ICG) was established in 2003 to oversee compliance with Postal Service policies and processes and enhance the transparency of financial reporting. The ICG operates as an internal consultant for enterprise risk management, assisting management in proactively improving processes. Trained internal control analysts partner with management to identify weaknesses in controls through analysis, risk assessment, and review, and to determine the root causes for deficiencies and make recommendations for improvement.

In 2005 the Postal Service established the eRise project to integrate enterprise risk management and Sarbanes-Oxley Act compliance efforts. Replacing the Internal Control Reporting System, eRise will use a more comprehensive commercial off-the-shelf package to document processes, associated risks, and controls; identify review and audit procedures to test controls; and collect data on the results of reviews and audits. The eRise program will be implemented in 2006.

In 2005 ICG initiated a master trust reconciliation review process. This nationwide review of customer trust accounts reduced unreconciled differences in these accounts by 35.8 percent compared to 2004. Local internal control groups are now conducting master trust reconciliation reviews on their own.

ICG also conducted a formal analysis of 1,219 business mail acceptance reviews conducted by local internal control groups. On the basis of its analysis, ICG recommended modifications to PostalOne!, the system used to track business mail activity and revenue. Scheduled for implementation in 2006, the modification will integrate multiple reporting systems, reduce out-of-balance conditions in customer trust funds, eliminate redundant records systems, and reduce irregularity in reporting.

Local ICG's conducted 1,679 retail floor stock reviews in 2005, which resulted in a 19.3 percent reduction in losses from 2004 levels. This success followed the review program's achievement of a 26.3 percent reduction in retail floor stock losses in 2004, as compared to 2003. The program will continue in 2006.

ICG coordinates an annual Risk Assessment and Prioritization (RAP), a systematic approach to promote broad-based risk identification, ensure that significant data is included in risk analysis, build work plans targeted to achieve risk reduction, and communicate risk priorities within the organization. RAPs are formulated at the performance cluster and area levels and are used to develop internal control work plans. Recommendations are also formed from data provided by other functions and by the Office of Inspector General (OIG), the Postal Inspection Service, the Government Accountability Office (GAO), and external auditors. A subgroup of ICG, Corporate Audit Response Management (CARM), coordinates corporate responses to all audits and inquiries by the OIG and the GAO, promoting a collaborative approach with these agencies to effectively address audit findings.

5. Capital and Program Evaluation Project Management Web Site

Capital and Program Evaluation (CAPE), in partnership with Corporate Business Systems Solutions, developed an internal Web site for enhanced management of the capital investment process. The new project management Web site better meets the goals of the former management system it supercedes. The new CAPE Web site improves the development, preparation, and review of investment decision electronic documents; provides a centralized, secure, and easily accessible Web-based repository for investment decision documents; and provides a more efficient and streamlined Decision Analysis Report (DAR) development process that can advance projects and their potential savings. CAPE's project management Web site uses a collaboration portal and commercial off-the-shelf applications to manage site content. Initial applications became available to Postal Service managers in October 2005 and training for site users took place between October and December 2005. All new DAR submissions are using the site as of October 2005.