Ernst & Young LLP Westpark Corporate Center 8484 Westpark Drive McLean, VA 22102 Tel 1-703-747-1000 Fax 1-703-747-0100 www.ey.com Report of Independent Registered Public Accounting Firm The Board of Governors of the United States Postal Service We have audited United States Postal Service's internal control over financial reporting as of September 30, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). United States Postal Service's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the United States Postal Service's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company' s internal control over financial reporting includes those policies and procedures that (I) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company' s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, United States Postal Service maintained, in all material respects, effective internal control over financial reporting as of September 30, 20 I0, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Oversight Board (United States), the balance sheets of United States Postal Service as of September 30, 2010 and 2009, and the related statements of operations, changes in net (deficiency) capital, and cash flows for each of the three years in the period ended September 30,2010 of the United States Postal Service and our report dated November 15, 2010 expressed an unqualified opinion thereon that included an explanatory paragraph regarding the significant uncertainty as to whether the United States Postal Service will generate sufficient cash flow to avoid a shortfall of cash required to meet its obligations throughout their fiscal year ended September 30, 2011 and make the $5.5 billion payment on September 30,2011 required by Public Law 109-435, the Postal Accountability and Enhancement Act. Ernst & Young LLP November 15, 2010 Ernst & Young LLP Westpark Corporate Center 8484 Westpark Drive McLean, VA 22102 Tel 1-703-747-1000 Fax 1-703-747-0100 www.ey.com Report of Independent Registered Public Accounting Firm The Board of Governors of the United States Postal Service We have audited the accompanying balance sheets of the United States Postal Service as of September 30,2010 and 2009, and the related statements of operations, changes in net deficiency, and cash flows for each of the three years in the period ended September 30, 2010. These financial statements are the responsibility of the United States Postal Service's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the United States Postal Service at September 30, 20 I 0 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 20 10, in conformity with US generally accepted accounting principles. As discussed in Note 2 to the financial statements, the United States Postal Service, an independent establishment of the executive branch of the Government of the United States, is dependent upon future actions of the Government to continue its operations in the ordinary course. The Postal Service has experienced increasing losses primarily related to a downward trend in mail volume. The ability of the Postal Service to execute strategies to increase efficiency, reduce costs and retain and grow revenue is constrained by statutory and regulatory restrictions. It is unlikely that without regulatory or statutory changes the Postal Service will generate sufficient cash flow to avoid a shortfall of cash required to meet its obligations throughout their fiscal year ended September 30, 20 II and make the $5.5 billion payment on September 30, 2011 required by Public Law 109-435, the Postal Accountability and Enhancement Act. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the United States Postal Service's internal control over financial reporting as of September 30, 20 10, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 15,2010 expressed an unqualified opinion thereon. In accordance with Government Auditing Standards, we have also issued our report dated November IS, 2010 on our consideration of the United States Postal Service's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Ernst & Young LLP November 15, 2010