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Postal Inspection Service Combined)3 Semiannual Report on the Audit, Investigative, and Security Activities of the United States Postal Service April 1 — September 30, 2008 AUDIT INVESTIGATIONS SECURITY SUMMARY OF PERFORMANCE SUMMARY OF PERFORMANCE For the period of April 1 — September 30, 2008 AUDIT Reports issued 222 Signifi cant recommendations issued 112 Total reports with fi nancial impact 83 Funds put to better use $387,560,085 Questioned costs1 $163,436,940 Revenue Impact $4,217,803 TOTAL FINANCIAL IMPACT2 $555,214,828 INVESTIGATIONS (OIG & POSTAL INSPECTION SERVICE COMBINED)3 Investigations completed 7,955 Arrests 4,392 Indictments/informations 2,119 Convictions/pretrial diversions4 4,191 Administrative actions 2,592 Cost avoidance $109,663,743 Fines, restitutions, and recoveries $10,985,189,460 Amount to Postal Service5 $18,913,765 OIG HOTLINE CONTACTS Telephone calls 55,844 e-Mail 13,158 Virtual Front Offi ce calls 5,266 Standard Mail 946 Voice mail messages 666 Facsimile — FAX 394 TOTAL CONTACTS 76,274 1 Includes unsupported costs of $52,847,385. 2 The Postal Service agreed to recommendations or proposed alternative corrective actions that, if implemented, could result in more than $555 million in savings. 3 Statistics include joint investigations with other law enforcement agencies. 4 Convictions reported in this time frame may be related to arrests made in prior reporting periods. 5 Amount included in fi nes, restitution, and recoveries. MESSAGE FROM THE INSPECTOR GENERAL AND THE CHIEF POSTAL INSPECTOR MESSAGE FROM THE INSPECTOR GENERAL AND THE CHIEF POSTAL INSPECTOR At the beginning of the fiscal year, the Postmaster General challenged all U.S. Postal Service executives and managers to look for ways to cut costs and increase revenue. Based on this directive, the U.S. Postal Service Office of Inspector General (OIG) and the U.S. Postal Inspection Service combined their support and legal services. The Joint Mission Support Center and Joint Legal Services Center now provide these critical functions for both agencies. The heads of the two centers report directly to the Inspector General and the Chief Postal Inspector. The creation of these centers represents a positive step for both agencies and is expected to result in cost savings by combining and more efficiently using resources. The Inspector General and Chief Postal Inspector further agreed to issue a combined comprehensive statement of audit and law enforcement work in this Semiannual Report on the Audit, Investigative, and Security Activities of the United States Postal Service. In this inaugural issue, the OIG reports statistics and activity for April 1 through September 30, 2008, as required by statute. For this issue only, the Postal Inspection Service reports statistics and activities for the entire fiscal year, October 1, 2007, through September 30, 2008. Future statistics will be semiannual. The OIG and Postal Inspection Service thank Postal Service officials, the Governors, and members of Congress for their continuing support and important feedback, and look forward to addressing the challenges and risks that lie ahead for the Postal Service in FY 2009. David C. Williams William R. Gilligan Inspector General Acting Chief Postal Inspector TABLE OF CONTENTS TABLE OF CONTENTS AUDIT WORK BY RISK CATEGORY ........................................................ 1 Strategic Risk .............................................................................................................................................................. 1 Financial Risk .............................................................................................................................................................. 5 Operational Risk ........................................................................................................................................................... 8 INVESTIGATIONS ................................................................................. 15 Revenue and Asset Protection ..................................................................................................................................... 15 Workers’ Compensation Fraud .................................................................................................................................... 18 Mail Theft .................................................................................................................................................................. 19 Identity Theft .............................................................................................................................................................. 21 Mail Fraud ................................................................................................................................................................. 23 Contract Fraud ........................................................................................................................................................... 24 Homicides, Assaults, and Threats ................................................................................................................................ 25 Official Misconduct .................................................................................................................................................... 26 Executive Investigations and Internal Affairs ................................................................................................................. 27 Illegal Drugs and Narcotics Trafficking ......................................................................................................................... 27 Robberies .................................................................................................................................................................. 28 Burglaries .................................................................................................................................................................. 29 Dangerous Mail Investigations..................................................................................................................................... 29 Child Exploitation via the Mail...................................................................................................................................... 31 SECURITY AND CRIME PREVENTION ..............................................33 Security ..................................................................................................................................................................... 33 Homeland Security ..................................................................................................................................................... 34 Global Security and Investigations ............................................................................................................................... 36 Cyber Intelligence ...................................................................................................................................................... 37 Consumer Education and Fraud Prevention .................................................................................................................. 39 APPENDICES ....................................................................................... 41 Appendix A – Reports with Quantifiable Potential Monetary Benefits Report Listing ........................................................ 41 Appendix B – Findings of Questioned Costs ................................................................................................................. 50 Appendix C – Recommendations That Funds Be Put to Better Use ................................................................................ 51 Appendix D – Reported Non-monetary Benefits ........................................................................................................... 52 Appendix E – Reports with Significant Recommendations Pending Corrective Actions ..................................................... 53 Appendix F – Significant Management Decisions in Audit Resolution ............................................................................. 65 Appendix G – Investigative Statistics ........................................................................................................................... 66 Appendix H – Summary of Postal Service Investigative Activities Under Title 39 USC § 3013 .......................................... 68 Appendix I – Closed Congressional and Board of Governors’ Inquiries .......................................................................... 70 SUPPLEMENTAL INFORMATION ........................................................... 74 Freedom of Information Act ......................................................................................................................................... 74 Workplace Environment .............................................................................................................................................. 75 Jurisdiction and Laws ................................................................................................................................................. 76 STRATEGIC RISK AUDIT WORK BY RISK CATEGORY The Office of Audit (OA) uses a risk-based planning approach to identify audit work. In this way, it can identify the most important work that needs to be done, and then position itself to do it via risk deployment. This approach enhances its value
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