Chapter 2 Postal Operations

as signature capture. The Postal Service expects to deploy more than 300,000 devices to support the Mobile Data Collection Device replacement program during 2006 and 2007.

6. Intelligent Mail Infrastructure Upgrades

The backbone of all Postal Service automation programs is a local area network (LAN) at each plant that provides the underlying data handling infrastructure. The LAN is the conduit for downloading ZIP Code directories and sort plans to mail processing equipment, moving images of individual mailpieces for ZIP Code resolution, and transmitting operating and mail tracking data to computer servers for processing. With the increase in scope and sophistication of automation, these LANs must be replaced. The Postal Service continued the LAN, replacement deployment program, known as Mail Processing Infrastructure (MPI) and now has upgraded more than 200 plants. MPI uses a flexible, structured wiring infrastructure to provide the highest reliability, scalability, and manageability at the least cost.

N. Financial Management

1. Activity-Based Costing

Activity-Based Costing (ABC), a cost management system, is designed to assist managers in reducing expenses by assigning both direct and overhead costs to an organizational unit’s activities and outputs. The Postal Service has implemented three ABC models that provide information about the costs of activities at each major mail processing facility. ABC expanded its portfolio with the development and publication of the Logistics & Distribution Center (L&DC) model. With ABC’s existing plant and bulk mail center (BMC) models, this provides metrics by total cost, individual cost component, and cost per thousand pieces processed. Having this data helps the Postal Service identify money makers and money losers as well as discover opportunities for cost improvement.

The Postal Service developed new ABC reports that integrate financial and productivity indicators at the activity level for both plants and BMCs. A user can view employee straight-time and overtime salary costs. They can also view actual and target productivities and the approximate costs of not achieving productivity targets for each major activity by facilities. Other reports provide the capability of drilling down further for more detailed data on labor and support costs. Reports are updated each month and are available to postal managers and staff on the internal ABC Web site in both Adobe PDF and online analytical processing formats. Ongoing training in the use of ABC models and reports is provided as required.

2. Financial Reporting

Since 2004, the Postal Service has complied voluntarily with the Securities and Exchange Commission (SEC) financial reporting requirements to the extent that those requirements can be applied to a nonpublicly traded, government-owned entity that sets prices to cover costs. Voluntarily complying with SEC financial reporting requirements has further enhanced the Postal Service’s financial reporting and transparency. Postal Service quarterly reports conform to SEC Form 10-Q

reporting requirements and include an enhanced management discussion and analysis section as well as sections reporting revenue by major product and expense by function.

The Postal Service changed from accounting period to monthly reporting in 2003, to align its quarterly reports with traditional calendar quarters. This facilitates comparison of Postal Service financial reports with those of other federal agencies and of private sector competitors. The Postal Service provides public notice of significant actions and events that could impact finances. These notices are posted as Financial News Releases on the Postal Service’s Web site at

The Financials section of the Postal Service’s publicly accessible Web site provides in-depth reporting on the organization’s financial performance. This section provides traditional financial reports for both current and some prior years, including monthly reports; quarterly financial reports; annual reports; annual cost and revenue analysis reports; annual cost segment and components reports; quarterly and annual revenue, pieces, and weights reports; annual comprehensive statements on postal operations; and annual integrated financial plans. Additional Postal Service reporting is available to the public on the PRC Web site at

3. Bank Secrecy Act Compliance

In order to combat money laundering and terrorism, Congress enacted a series of laws from 1970 to 2001 that require banks and money services businesses (MSBs), including the Postal Service, to detect, deter, track, and report certain cash transactions to the U.S. Department of the Treasury. This legislation, together with amendments and promulgated rules and regulations, are known as the Bank Secrecy Act (BSA) and further mandate that regulated institutions monitor and ensure their employees’ compliance with the BSA. The Postal Service, which sells postal money orders and provides international funds transfers with its Sure Money product, is specifically named in the BSA and must meet all of the requirements of the law related to MSB.

The Postal Service maintains an automated reporting system to comply with BSA. This system supplements the point-of-sale efforts and detects potentially suspicious activity that may not be discernible at point-of-sale transactions. To ensure compliance with the BSA’s reporting and record keeping requirements, annual training is provided to all employees associated with the sale of money orders or the Sure Money product as well as to those who supervise such employees. The Postal Service continued to provide a series of focused communications on anti-money laundering compliance to all officers, area, and district managers.

The Postal Service ensures the security of data gathered through the BSA compliance system. Understanding that gathering information from members of the public is a sensitive issue and that information must be safeguarded, all sensitive information in the BSA database is restricted, thereby reducing the risk of unauthorized disclosure. The Postal Service ensures that the proper balance is maintained between compliance with law and regulation and protection of the public’s right to privacy.