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Audit flags weak controls at State Mail Services Division; missing metering records and refund handling errors
Summary
Auditors found the Department of Administration’s Mail Services Division lacked controls over postage meters, remote meters and refund handling, producing billing errors, untracked refunds and hundreds of thousands in transactions with missing credentials.
The Legislative Counsel Bureau reported to the Audit Subcommittee that the Department of Administration’s Mail Services Division has control weaknesses that increase the risk of fraud, billing errors and loss of funds.
Auditors reviewed Mail Services activity through May 2024 and said the division changed postage metering systems in April 2023 but that weaknesses remained. The audit found more than 6,200 metered envelopes were charged at higher than United States Postal Service rates, creating at least $22,000 in overpayments. Auditors also identified metering transactions that lacked clerk credentials or had inaccurate credentials; based on available documentation they found more than 406,000 pieces of mail costing over $168,000 with missing or inaccurate credentials.
Auditors noted unsecured meter errors left in unlocked offices and boxes of unrefunded envelope errors that the division estimated were worth about $1,000 each; the division sometimes issued refunds to customer agencies on an equal‑share basis rather than allocating refunds based on which agency actually incurred the overcharge. The audit also found the division could not provide a complete list of remote postage meters; of 33 meters connected to division accounts, the division said it was aware of only 17. Auditors reviewed remote‑meter transactions and found customer agencies loaded funds onto meters without prior approval for some transactions.
The audit also documented billing system errors: duplicate charges, 1,052 metering transactions recorded shortly after midnight that inflated counts by roughly 1.6 million pieces and $756,000 in postage records the division could not confirm were valid. Auditors found $83,000 in underbillings and $59,000 in overbillings in tested months and nearly $178,000 billed but without supporting documentation. The Mail Services Division accepted all 15 recommendations in the audit.
"Metered envelopes are easily converted to cash," Deputy Legislative Auditor Parker Cole said during the presentation, noting envelope errors and weak controls increase vulnerability to fraud.
Division officials told the subcommittee they changed metering systems in 2023 and revised processes after auditors raised issues. The audit recommended stronger controls over metering documentation, refund processing, remote meter approvals, background checks for staff with access to mail contents, and improved billing reconciliations.
Ending: The subcommittee approved the report; Mail Services accepted the recommendations and said it was revising procedures and implementing stronger monitoring of meters and refunds.
