The Audit and Finance Committee assists the full Board of Governors in fulfilling its fiduciary requirements. The Chairman of the Board of Governors selects the members of the Committee for each calendar year. This year, the Committee, whose members are Governors Dyhrkopp, McWherter and I, met ten times in conjunction with the regularly scheduled monthly Board meetings.

In 2001, the Audit and Finance Committee’s responsibilities were expanded to include oversight of postal rate case development, cash management and financial performance. The Committee’s other responsibilities, on behalf of the Board of Governors, include oversight of the financial reporting process, the soundness of the internal accounting and control practices and the integrity of the financial statements, as well as postal rate case development, cash management and overall financial performance. The Committee also recommends to the Board of Governors the selection of the independent certified public accounting firm responsible for the external audit work and oversees compliance with the terms of the contract.

During 2001, the Committee focused on both market and economic uncertainty. We recommended actions to maximize our liquidity and cash management flexibility and to minimize issuance of new debt. The more significant actions taken include a new rate case and a capital spending freeze.

We have reviewed and approved the scope of work for the 2001 financial statement audit. We have met jointly and independently with Ernst & Young, LLP, the Inspector General, management and the General Counsel to discuss the progress of the audit. We have ensured independence and objectivity in the OIG and external audit programs.

Accordingly, the Committee recommended, and the Board approved, the financial statements for 2001.


Ernesta Ballard,
Chairman, Audit and Finance Committee
December 3, 2001