Postal Service Has No Annual Financial Statement Because of Hack

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Agency has to ensure the integrity of its financial data systems post-breach before gathering information for its annual report.

The U.S. Postal Service is not filing its required yearly financial report because management does not know if business data was altered during a recent data breach, USPS officials said.

As part of an ongoing investigation, "the Postal Service is seeking to confirm that the cyber intrusion did not affect the internal controls over financial reporting," USPS General Counsel Thomas Marshall said in a Nov. 28 late-filing notification

It is already known that attackers in September copied the Social Security numbers and other personal data on about 800,000 USPS employees. Compensation files might also have been compromised.

The annual statement -- or 10-K form -- covers the federal fiscal year that ended Sept. 30. The extension gives the Postal Service 15 more days to file. USPS officials today told Nextgov they do not believe an additional postponement will be needed.

"An extensive process" is underway at USPS to "ensure that the integrity of its financial data systems and financial information was not comprised," Marshall said in the notification. "These efforts have caused a delay in obtaining all of the information required for the annual report." 

Unaudited figures disclosed Nov. 14 show USPS suffered a $5.5 billion loss, which, officials say, was largely because of declining mail volume and retirement funding mandates from Congress. Operating revenue was up by $1.9 billion, as a result of price increases and growth in shipping and packaging. 

Officials do not expect the breach or the cost of dealing with the fallout to have a significant impact on the Postal Service's financial condition. But out of "an abundance of caution," the agency needs time to conduct an additional audit to make sure the attack did not compromise financial data, Marshall said.

scheduled Dec. 5 board meeting is slated to set aside time for approving the annual statement, USPS said Monday.   

Failure to firm up the statement could obscure the finances of an agency already facing money woes. The USPS board of governors, which must approve the report, loses its voting quorum Dec. 8. The Senate has yet to confirm a group of five nominees -- two Republicans and three Democrats -- to the board.

If they are not confirmed, the board cannot conduct business, congressional overseer Sen. Tom Carper, D-Del., recently pointed out.  

"At a time when the Postal Service is struggling to address a number of financial challenges and to adapt to the digital age, this would be an avoidable disaster," Carper, outgoing chairman of Homeland Security and Governmental Affairs Committee, said on the Senate floor last month. It would make customers’ “uncertainty even worse if Dec. 8 comes and goes and our five Postal Board nominees are still waiting for us to act.”

On Monday, a committee aide told Nextgov that Carper “continues to urge his Senate colleagues to vote on the five bipartisan nominees,” adding that he is “optimistic that his colleagues will do the right thing” and endorse the nominations before Dec. 8.

That afternoon, USPS spokeswoman Patricia Licata said the agency already has carried out a contingency plan to provide lawmakers and customers with financial clarity.

“In the interest of transparency, the Postal Service presented preliminary unaudited financial results for fiscal 2014 at its open board of governors meeting Nov. 14, 2014, and again presented the preliminary unaudited financial results at a financial briefing the same day,” she said in an email.