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Sarbanes-Oxley (SOX)and

Business Mail Acceptance

Long Island PCC Monthly MeetingSeptember 22, 2010

Cher Rupp-RuggeriMarketing Specialist

Business Mail Acceptance

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Agenda

Sarbanes Oxley (SOX) Next Scheduled Full Service Software

Release Advisories Business Mail Acceptance Direction

® SOX

Sarbanes-Oxley (SOX) Overview

What SOX Means for the Postal Service

What SOX Means for Our Customers

SOX Testing Results

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®SOX Overview

What is SOX?

The Sarbanes-Oxley Act of 2002 (SOX) is administered to:

● Improve confidence in financial reporting through increased corporate governance

● Reduce fraudulent practices and accounting inconsistencies

We must comply with the Sarbanes-Oxley Act by September 30, 2010 as a result of the Postal Accountability and Enhancement Act of 2006

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®What SOX Means for the Postal Service

Certification Requirements

The Postal Service must certify the strength of its internal controls over financial reporting

Certification requires:● A quarterly certification (Section 302), started

December 31, 2007● An annual certification (Section 404), as of September

30, 2010● Senior management must:

State its responsibility for establishing and maintaining adequate internal controls for financial reporting

Make an assertion on the effectiveness of the internal controls for financial reporting

Provide annual certifications for FY 2010 and beyond● Our external auditor annually certifies all internal

controls

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®What SOX Means for the Postal Service

SOX Accomplishments

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Determine Materiality and Scope

Establish Steering Committee

Develop Communications and

Training plan

FY 2007Prepare

FY 2008Document

Prepare Documentation

Identify Controls and Gaps

Initiate Gap Remediation

Continue Gap Remediation

Update Documentation as Needed

Perform Readiness Testing

FY 2009Test

Update Documentation

Test Controls

CEO and CFO Certification

FY 2010Full Assessment

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Update Documentation

Test Controls

CEO and CFO Certification

FY 2010Full Assessment

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What SOX Means for the Postal ServiceFY 2010 SOX Milestones

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Complete first round of FY 2010 testing

Remediation of gaps from first round testing

Complete second round of FY 2010 testing

Remediation of gaps from second round testing

Finalize testing of Q4 quarterly and annual key controls

PMG and CFO conclude on effectiveness of internal controls over financial reporting as of September 30, 2010

®What SOX Means for the Postal Service

Our Vision

The SOX vision is a strategic transformation beyond compliance to improve business performance

Our goal is to continuously improve our processes and financial performance

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What Does SOX Mean for Customers?

The majority of SOX efforts will take place away from customer-facing roles

The standard of service will not change – SOX will make the Postal Service a better run business

Customers can support SOX efforts in several ways, including:

● Accurately preparing mailings ● Completing postage statements● Submitting documentation electronically

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The focus remains on moving the mail

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SOX Internal Testing

SOX Testing● Who, When● Results of Reviews, Issues● Impact on Mailers● Visibility into DM-109 and Revenue

Deficiencies● Staffing at DMUs

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SOX Testing- Who and When

Financial Control Group Testing began June 1, completed by August

31● BMEUs, Associate Offices/Post Offices,

Detached Mail Units● Induction Sites

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National Implementation

Results of Reviews, Issues

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Results of Reviews, Issues

386 NDC and P&DC sites have been reviewed to date

National Implementation

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Impact on Mailers

Focus Areas● BMEUs, Associate Offices● DMUs● Induction Sites, NDCs, SCFs, etc

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Verification

• Perform initial verification • Perform in-depth verification if necessary• Record results, contact mailer if necessary

Finalize/Clear

• Finalize postage statements • Affix 3607P/ Complete 8017/8125• Move to cleared staging area

Reconciliation

• Perform management concurrence• Ensure all mailings are accounted for• Generate and electronically perform End-of-Day Reconciliation

Check-in

• Ensure funds on hand and fees paid• Ensure completed postage statements • Check mailing into PostalOne!

Standardized Process for BMEU / AO

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Profile of DMUs

All DMUs must follow the DM-109 DMUs with SPPS must have

● An agreement on file ● A verification SOP on file

Standardized SOPs Customized SOPs

● SOP Supersedes DM-109

Acceptance and Verification at DMUs

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Verification

• Perform initial verification • Perform in-depth verification if necessary• Record results, contact mailer if necessary

Finalize/Clear

• Finalize postage statements • Affix 3607P/ Complete 8017/8125• Move to cleared staging area

Reconciliation

• Perform management concurrence• Ensure all mailings are accounted for• Generate and electronically perform End-of-Day Reconciliation

Check-in

• Ensure funds on hand and fees paid• Ensure completed postage statements • Check mailing into PostalOne!

Standardized Process for BMEU / AO

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Special Postage Payment System (SPPS) Type

Combined Mailings (Value Added Refunds) (COM, CVAR)

Optional Procedures (OP)

Drop-Ship Management System (DSMS)

Manifest Mailing Systems (MMS)

Copal/Co-tray (Copal)

Postage Due Weight Averaging (PDWA)

One-Pass Finalization (One-Pass)

Alternate Mailing System

eVS

Profile of DMUs

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Review

• Ensure 8125 is complete and accurate

• Ensure 8125 is not altered

• Contact origin to resolve issues

Receive

• Match 8125 against mail

• Contact origin to resolve issues

Record

• Record issues on 8125, eMIR

• Close out appointment in FAST

• Retain 8125s for 1 year

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Standardized Process for Drop-Ship

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Your Role

Look for your support in:● Complete Postage Statements and

Documentation● Complete Clearance Documents

8125 8017

● Work with Postal acceptance in support of SOPs

● Access to Mail for Verification● Current Agreements

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Escalation

Support for Mailers● Manager, Business Mail Entry● District Marketing Manager● Business Mailer Support● PostalOne! Help Desk/email

Updating RIBBS to include Access

USPS verification processes will be posted on RIBBS

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Any Questions?

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Recent Advisories

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Plant-Verified Drop Shipment (PVDS) – Nonpostal Documentation

We posted on Postal Explorer® the “Plant-Verified Drop Shipment (PVDS) – Nonpostal Documentation,” Federal Register final rule regarding bills of lading presented by mailers’ transportation providers.

Postal personnel may sign a bill of lading, upon request, as long as it is presented separately from required documentation. A bill of lading is not a substitute for PS Form 8125, Plant-Verified Drop Shipment (PVDS) Verification and Clearance, or for any form of official documentation for USPS® acceptance purposes.

This final rule will be incorporated into the July 6 DMM® update.

May 26, 2010

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DMM Advisory on Courtesy Reply Mail

We recently revised the Domestic Mail Manual (DMM®) to postpone the Intelligent Mail® barcode (IMb) requirement for Qualified Business Reply Mail® (QBRM) and permit reply mail (PRM) pieces until May 2011. Current DMM standards, which we are not proposing to change, require an IMb on all BRM letters and on all PRM pieces as of May 2011.

This advance announcement is intended to provide customers with reasonable time to use up existing stock. We will be publishing a Federal Register proposed rule to require BRM flats (in addition to letters as stated above) to use an Intelligent Mail Barcode as of May 2011.  In addition, in the Federal Register proposed rule, Courtesy Reply Mail™ that does include a barcode must bear an Intelligent Mail barcode effective May 2011.

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Any Questions?

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