During the year, the Committee heightened its focus on:
- Postal Service cost control efforts to respond to growing weakness in the U.S. economy,
- Effective transition to full compliance with Securities and Exchange Commission financial reporting rules,
- Progress toward 2010 compliance with section 404 of the Sarbanes-Oxley Act of 2002 (SOX),
- Monitoring efforts to increase the efficiency and effectiveness of internal controls,
- Enterprise Risk Management assessments.
The Committee strongly supported enterprise-wide, sustained actions to streamline work processes and reduce work-hour usage. The Committee also encouraged the Office of Inspector General (OIG) and outside auditors to look for similar process improvements and cost reduction opportunities in the conduct of their audits.
As part of its commitment to increased transparency and accountability, the Postal Service filed its first Form 10-Q with the Postal Regulatory Commission for Quarter I, ending December 31, 2007. The Committee was pleased to see a smooth adoption to the new format and continued improvements in subsequent quarterly 10-Q filings. These are positive developments and management is to be commended as the Postal Service transitioned to a new regulatory framework.
Preparation for SOX compliance featured prominently in the Committee’s activities during the year. The Committee received a number of briefings on SOX requirements. We provided oversight on the strategic direction and guidance on decisions related to readiness, process improvement opportunities, and sustained compliance efforts.
In directing the conduct of the 2008 financial statement audit, the Committee met with Ernst & Young, LLP, and concurred with the scope and materiality levels they established in their work plan. The Committee met jointly and independently with Ernst & Young, LLP; the Inspector General; management; and the General Counsel throughout the year to discuss the progress of the audit and ensure independence and objectivity in the audit programs.
As a result, the Committee recommended, and the Board approved, the financial statements for 2008.
Katherine C. Tobin
Chairman, Audit and Finance Committee