Federal Reports

What We Looked AtThis report presents the results of our quality control review (QCR) of an attestation examination of the Department of Transportation's (DOT) Enterprise Services Center (ESC) controls. ESC provides financial management services to DOT and other agencies and operates under the direction of DOT's Chief Financial Officer. The Office of Management and Budget requires ESC, as a service organization, to either provide its user organizations with independent audit reports on the design and effectiveness of its internal controls, or allow user auditors to perform tests of its controls.We contracted with KPMG LLP to conduct this examination subject to our oversight. The objectives of the review were to determine whether (1) management's description of ESC's systems is fairly presented, (2) ESC's controls are suitably designed, and (3) ESC's controls are operating effectively throughout the period of October 1, 2021, through June 30, 2022. We performed a QCR on KPMG's report and related documentation.What We FoundOur QCR disclosed no instances in which KPMG did not comply, in all material respects, with generally accepted Government auditing standards.Our RecommendationsKPMG made no recommendations.The quality control review and attachments have been marked as For Official Use Only to protect sensitive information exempt from public disclosure under the Freedom of Information Act, 5 U.S.C. § 552. To receive a copy of the report, please contact our Freedom of Information Act Office.

• The magnitude and immediacy of the impact of high inflation on the Postal Service vary widely according to the category of costs and revenue. For example, inflation has a direct impact on cost-of-living adjustments (COLAs), which are pegged to the inflation rate.• Price increases for market dominant products, such as First-Class Mail, are also directly tied to inflation, albeit with a lag.• USPS can only invest cash in short-term Treasury securities, whose low interest rates do not compensate for inflation. A primary way that inflation impacts labor costs, which account for two-thirds of Postal Service’s expenses, is through cost-of-living adjustments (COLAs), which are pegged to the inflation rate. However, COLAs increase wages less than the rate of inflation, and only 72 percent of USPS employees receive COLAs. While inflation also affects the cost of products and services USPS purchases in the market, the immediacy of the impact depends on contract terms concerning price adjustments and contract lengths. For example, fuel price increases can have an immediate impact through monthly adjustments to the contracts with suppliers of contracted transportation services.Price increases for market dominant products, such as First-Class Mail, are directly tied to inflation in the year before USPS filed a notice of price changes, as measured by the Consumer Price Index for All Urban Consumers (CPI-U). However, the Postal Service can increase prices above CPI-U when certain conditions are met.Lastly, inflation erodes the purchasing power of the Postal Service’s cash on hand and borrowing limit. In particular, USPS is restricted to investing its liquidity in short-term Treasury securities, whose low interest rates do not compensate for inflation. The Postal Service should work with stakeholders to strengthen mechanisms in place to mitigate the risks of high inflation.

We audited costs claimed and grant compliance by the CNMI, Department of Lands and Natural Resources, under grants awarded by the FWS.

For our final report on our audit of the United States Patent and Trademark Office’s (USPTO’s) oversight of Patent Data Capture (PaDaCap) contracts, our audit objective was to determine whether USPTO awarded and administered PaDaCap contracts in compliance with applicable laws and federal regulations and U.S. Department of Commerce policies and procedures. To address this objective, we assessed the justification and approval of noncompetitive acquisitions, risk assessment and mitigation activities, and oversight of contractor performance. Overall, we found that USPTO did not fully comply with relevant requirements when awarding and administering the PaDaCap contracts. Specifically, we found the following: I. Ineffective acquisition planning delayed the use of competition and achieving lower prices; II. USPTO inadequately managed contract risks; III. USPTO did not timely inspect contractor deliverables and track errors; and IV. USPTO inadequately addressed contractor security issues.