Need for Adequate Accounting Controls Over Philatelic Stamp Material

Published by the Government Accountability Office on 1971-02-05.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                                                             ( FEB5      1971               ” .
              Dear Mr. Postmaster                             General:

                    During our review of certain aspects of philatelic          stamp activities,
              we noted that the Post Office Department does not have adequate accounting
              controls   to safeguard philatelic    stamp material.       This material    consists
              of such items as postage stamps, die proofs (cards showing the first               im-
              pression made by the metal engraving of stamps prepared for the Postmaster
              General's approval),     and artists*  designs of stamps. Since this stamp
              material is not available     for s&e, an accurate market value cannot be
              ascertained.     However, we were informed that the estimated philatelic
              value of postage stamps on hand is about $5 million           and that the stamp
              material   is irreplaceable   and has historical    significance.      Accordingly,
              we believe there is a need for establishing       adequate accounting records
              and controls    to safeguard this valuable philatelic        stamp material.

                     Our findings    and recommendations                               are discussed    in more detail   in the
              following    sections.


                    The Division   of Philately    (Division),   Office of the Deputy Special
              Assistant  for Philatelic    Affairs    and Special Projects,   is responsible for
              matters relating   to philately,     including   new stamp sales, "first-day"
              ceremonies for new stamp issues, and processing of suggestions for new
              stamps. The Division      is also responsible for the Philatelic       Exhibition
              Room (Exhibition   Room), where foreign and domestic stamps are displayed.

                    Philatelic   stamp material is received by the Accountable Paper Branch,
              Office of Procurement, Bureau of Fadilities,      from the Bureau of Engraving
              and Printing,    Department of the Treasury.    The Accountable Paper Branch
              transmits    the philatelic stamp material   to the Division.

                     The Accountable Paper Branch does not maintain inventory records for
              philatelic    stamp material received from the Bureau of Engraving and Print-
              ing.     However, when stamp material   is transferred from the Accountable
              Paper Branch to the Division,     shipping documents are maintained by the
              Division    and the Accountable Paper Branch to show the transfer of stamp

                   We selected 125 items of stamp material for review that the Division
              had received during calendar year?969 from the Accountable Paper Branch

                                                          __-__-~_c-___-_   .--                                _.   -
          ,        1.   ;         v     ----.-   --                               7.--c-                                      ,C ,- * :
                                   (8,             /.>’
‘,            ,’                                                                           :’       ’                             ,t         ,’
                             I\      ,f
                            ,:’                                                       I         .                        ,’            .,
     I’                           ‘       !
            as shown by shipping documents.     We found by physical inspection     that 66
            items were not on hand and Division    personnel could not specifically     ac-
            count for these items.    These items included such philatelic    material as
            a duplicate  of the approved die proof of the 1969 Football Commemorative
      .     stamp, 5 sketches of the 1968 Veterans of World War I Commemorative stamp
            (not issued), and 20 perforated and cut stamps of the 1969 Beautification
            of America Commemorative stamp. According to a Division official,         3 die
            proofs included among the 66 items are philatelically    valued at about
            $5,000 each, or a total of $15,000. Also, 30 items had no philatelic
            value and no estimate was made of the value of the remaining 33 items.

            Philatelic              Exhibition   Room

                  The Philatelic    Exhibition    Room-of the Division     is responsible for main-
           taining an exhibit of all United States postage stamps issued since 1847.
           The exhibit also includes approximately           40,000 stamps from other countries
           of the world.       In addition,    other items of philatelic     interest  are on dis-
           play,    such as  the  equipment    used  in the  production   of postage  stamps.  A
           specific    value for the stamp material        in the Exhibition    Room has not been
           established'by      the Department.      However, the curator of the Exhibition     Room,
           who is responsible      for the custody and safeguarding of stamp material,         esti-
           mated the philatelic       value of the stamps to be about $5 million.

                   The curator is also responsible for sets of stamp exhibit    panels which
            are available    for display at stamp exhibitions  and conventions.   A stamp
            exhibit panel is a rectangular     display with dimensions of about 3 feet by
            4 feet and includes items used in the development of a stamp, such as the
            art work, die proofs, and first-day       covers.

                 A ledger (inventory    listing) is,maintained   for the exhibit   panels avail-
           able for loan to stamp exhibitions      and conventions.    The ledger showed that.
           836 panels were prepared for United States stamps issued between 1953-1969.
           We observed, however, that the ledger does not indicate whether panels are
           on loan or on hand. Also, officials       of the Exhibition   Room informed US that
           postings to the ledger are made from time to time based on estimates and
I -        without definite   knowledge as to how many stamp panels had been prepared.
           Moreover, the exhibit     panels and the stamp material affixed to the panels
           cannot be accounted for because

                   --the            stamp panels are not serially                     numbered, and                                    \

                   --records are not maintained              describing                         the stamp material            affixed                 to
                      the stamp panels.

                 We observed that an exhibit                panel had certain stamp material    removed.
            We were advised that the material                had been removed by Division   personnel,

                                                                                                                                                                         _   2’   ,:

        - --1-                          --   *                      .       ‘,        ,’                 ---”   --:-   __ I -. .- -.    7---t                      -   -(I
      ,, I ,         ,:,Fl-------                                       ;        3,                                                    ,!’    I            !‘,I’
but because of the conditions   of the accounting records,             we were unable to
determine which phi'latelic  material had been removed.


       In April 1969, the Department's Internal Audit Division,            Bureau of the
Chief Postal Inspector,        reported that there was a lack of adequate accounting
controls over exhibit        room material on hand and on loan.       The Internal Audit
Division    recommended that (a) a perpetual inventory record be established
and maintained for all philatelic           exhibition materials,  (b) monetary values
be assigned these materials        and accountability    be recorded in the general
ledger, and (c) written procedures*be established            for maintaining   physical
inventories    of philatelic     materials.

        In September 1969, the Assistant      Postmaster General, Bureau of Finance
and Administration,       concurred that a need existed for improved control over
philatelic    exhibition    materials   and stated that consideration    would be given
to assigning monetary values to these materials          and recording these values
in the general ledger accounts.          On June 15, 1970, an official     of the Bureau
of Finance and Administration         advised the Deputy Special Assistant     for Phila-
telic Affairs     and Special Projects that inventory records for philatelic         ex-
hibition    materials    should be set up and controlled,'but     that it would be
impractical     to assign monetary values to the exhibition      materials    and record
them in the general ledger accounts.          However, on December 8, 1970, we were
advised by a Division official         that no other action has been taken on the
internal    audit recommendations.


      We believe that there is a need to improve accounting controls to safe-
guard stamp material    in the Division   and in the Exhibition Room. We recommend
that the Department establish     accounting controls to safeguard philatelic
material.    Such controls should include:

     --the establishment    of complete and up-to-date           inventory   records   of phila-
        telic stamp material,

     --writtene,instructions       for maintaining   inventory     records   to account for        =*
        all philatelic       stamp material,

     --separation   of duties between those maintaining            records* and those
        having custody of the stamp material,  and

     --periodic    inventory   of philatelic     stamp material.

                     We wish to acknowledge the cooperation given to our representatives
            during     the review.  We would appreciate receiving your comments on any
            action    taken pursuant to our recommendations.

                                                            Max A. Neuwirth
                                                            Associate Director                            '.

           The Honorable
           The Postmaster            General

                                                                                                                                                        -.4-        I
                                       ~ 7'
sr,: -T---I_-            _--   _..
    I’ *                                                        --7.   ---------_--   ----.-_   .______   .- __.. 7’;‘7B       ..-.   r       ,. -..-   .;     ..
                                                        r   a                                                                             ,
                                                                                                                  ,!’ I,   I                  ,