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Introduction
The United States Postal Service is an independent and self-sufficient federal agency that provides mail delivery services across the United States. The organization is mission-driven and continuously works towards its goal of connecting people across the country, rather than being focused solely on profitability (Lawson, 2020). The number of employees working for the USPS reaches almost 600,000, making the company the second-largest employer in the United States (Lawson, 2020). Despite claiming to be fully self-sufficient, the USPS relies on financial support from the government, as there are critical issues in the company that make it operate at a loss.
Nowadays, the organization experiences severe budgetary issues and continues to accumulate debt. The companys financial statement from FY 2020 shows that the USPS operates at a substantial net loss that continues to grow for the past three years at an accelerated pace (United States Postal Service, 2020). Duc and Hung argue that the USPS should rely on outsourcing as a major method to control costs to achieve sustainable financial viability (p. 73). Although the accelerated accumulation of financial debt can be attributed to COVID-19, the company has been showing a net loss for the past several years in a row (United States Postal Service, 2020). This glaring issue makes it more important than ever for analysts to acquire all the data regarding the USPS budget to explore the opportunities for its improvement. This paper will discuss the financial documentation of the United States Postal Service. The document in question is the Form 10-K for the fiscal year 2020.
Examination of the Budget Document
This budget document was released by the USPS on 13 November 2020. Form 10-K is an annual report that describes the companys structure and history, and all current business activities, and often includes the firms plans and future prospects (Kang et al., 2018). This form is mandatory and must provide detailed information regarding the financial aspects of the firm to avoid asymmetrical access to data between people inside the company and the potential investors or partners (Kang et al., 2018). The USPS Form 10-K FY 2020 consists of 4 parts with a total of 15 items.
The budget documents play a vital role in the structural solidity of the entire government, as they allow analysts to assess the full extent of the current financial state. The practice of public finance and budgeting enables further optimization of budget systems and mechanisms, thus increasing stability in the country (Mikesell, 2018). This is especially vital for the USPS to produce a high-quality annual report nowadays due to the necessity to decrease the growing gap in the budget.
There are several paragraphs that cover the extensive impact of the current virus outbreak on the financial status of the organization. According to the USPS Form 10-K FY 2020, the Coronavirus Aid, Relief, and Economic Security Act allowed the company to exceed its current limits on new and total borrowings by an additional $10 billion (United States Postal Service, 2020). The primary sources of these unexpected expenditures are the increased strain on the organization during the pandemics and new safety measures that had to be taken to protect both employees and customers (United States Postal Service, 2020). The annual report clearly shows what exactly influenced these numbers and how the company is planning to address this issue, although, partially, the rise in expenditures was unavoidable due to COVID-19.
The annual report also shows how sociopolitical factors influence the companys performance. It is also worth mentioning that the USPS puts an emphasis on the value and safety of its employees. These claims are supported through the financial statements, as they show that the companys expenses on employee compensation, healthcare, and retirement plans remain stable or show annual growth (United States Postal Service, 2020). The document has a clear explanation of employee-related concerns and can provide crucial information to the USPS workers, who are perceived as stakeholders of the organization.
This annual report contains an extensive amount of data regarding the financial statements from the past and the present, the depiction of the current state of the company, and outlines the companys plans. The authors of this document clearly show their ability to reflect upon this data and take meaningful action to mitigate the lacking points revealed by the financial performance of the organization. The organizations stakeholders are the government of the United States, its citizens, and employees of the USPS. Although it might be difficult for a large company and with a mission-focused vision to turn a profit, optimization of the budget by the USPS is achievable by following the GFOAs guidelines and standards. The statement of the United States Postal Service (2020) regarding stakeholders points out that the company has a wide variety of stakeholders whose interests and needs are sometimes in conflict. This claim, along with the financial performance of the USPS, shows that the company puts the stakeholders concerns first.
GFOA Criteria
The criteria set by the Government Finance Officers Association aim to assess and award the performance of the financial departments of state and local governments and governmental structures. The GFOA demands that several crucial aspects of the company must be thoroughly described in the document. However, there are numerous additional parameters that are being counted by the GFOA when it chooses winners for the award. Research by Guo and Neshkova (2018) shows that local governments who followed the GFOAs recommendations tended to pursue a wider variety of tactics to handle economic hardship (p. 311). These criteria will be listed in accordance with the Distinguished Budget Presentation Awards Program document.
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#C1: The document contains a table of contents with hooks to the respective pages.
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#C2: The company releases information regarding its budgetary items and trends in a clear format.
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#C3: Due to the sheer size of the organization, it does not disclose the majority of statistical data regarding its population, although it shows its efforts to promote diversity.
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#C4: While the document provides an explanation for any abbreviature used in it, it does not contain a glossary of terms.
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#C5: A significant amount of numerical data is put into tables for a more detailed view, but the report does not contain any charts or graphs.
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#C6: The annual report is easy to read and navigate for an average reader. The level of detail is sufficient to gain an understanding of the material.
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#P1: The company states its goals and plans to address the long-standing issues, albeit shortly.
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#P2: Since there is a presence of a critical short-term issue, the company describes how it plans to alleviate its influence in the next year.
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#P3: In this document, the USPS shows how its priorities will shift in the next year.
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#P4: The organization describes its financial policies regarding all aspects of its operations.
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#P5: The annual report shows what factors and concerns had been taken into consideration for the allocation of the budget for the next year.
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#F1: There is a narrative overview of the funds that are appropriated.
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#F2: The USPS explains what was used as a basis of budgeting for all funds.
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#F3, F4: The annual report includes a complete summary of all significant sources of revenue and expenditures, as well as specifies the exact uses of finances. Moreover, it provides information for the comparison of these values among the past, the current, and the following year.
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#F5: Being an independent governmental agency, the USPS does not disclose equity and other securities (United States Postal Service, 2020).
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#F6: The annual report describes all sources of revenue and estimates the expected revenue for the next year.
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#F7: The company provides long-term plans to optimize its budget in Form 10-K.
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#F8: The USPS defines its capital expenditures and states their amount in USD.
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#F9: Since there are significant nonrecurring capital expenditures involved in the budget, the USPS states what funding will be required for them.
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#F10: The organization clearly explains all data related to its debt, and shows its limits and reasons for its growth.
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#O1: The document does not contain an organization chart, although it can be found on the companys website.
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#O2: The report lacks graphical data on the relationship between its units and funds, yet this link is visible in the text.
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#O3: The Form contains the table of workforce composition for the years 2020, 2019, and 2018.
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#O4: The annual report contains a description of all of the companys services and operations, which are divided into categories for easier understanding.
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#O5: The document shows what goals and objectives the USPS pursue.
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#O6: There is information regarding the total output of the efforts from each of the companys departments.
As can be seen, the annual report by the USPS fulfills almost all the parameters required by the GFOA. Moreover, the organization extends its efforts to cover the additional data that relates to the financial statements in this document.
Conclusion
In conclusion, the document provided by the USPS contains all the necessary information, provides a thorough overview of the companys budget, and extends its reach to describe the potential of this business. The document has a clear structure, follows the format of Form 10-K, and supports the reader with an in-depth look at the companys functions, decision-making process, and future prospects. The information in the document is supported by the additional sources located on the USPS website, as well as by the statements of the organizations leaders.
However, the company needs to put additional effort into the analysis of the issues revealed by this document. To incentivize growth, adequate measurement of the performance of the USPS can allow the government to optimize its budget and link it to the outcomes more clearly. Gerard (2017) states that empirical researchers have found mixed results in actual beneficial effects of PM utilization in local governments (p. 4). Therefore, it is essential to extend the GFOAs Distinguished Budget Presentation Awards Program into a fully functioning assessment tool.
There is a specific necessity in upgrading the purpose and the extent of the Distinguished Budget Presentation Awards Program. Currently, it is the only source of meaningful assessment and guidance for governmental organizations on the standards of reporting financial statements (Farley, 2020). Farley (2020) argues that the rating guides used by evaluators in these programs contain no specific standards on substantiating claims of economic development success (p. 316). The GFOA plays a vital role in the optimization of the budget documentation, although its integration might be insufficient at this moment.
References
Duc, D. V., & Hung, N. P. (2017). Cost control in the United States postal service the institutional effects and factors. VNU Journal of Science: Policy and Management Studies, 33(2), 73-84.Â
Farley, B. (2020). Self-report accuracy in local economic development programs. Economic Development Quarterly, 34(4), 315-324.Â
Gerard, T. R. (2017). Exploring the differences in benefits based upon performance measure utilization in US local governments (10638262) [Doctoral dissertation]. ProQuest Dissertations Publishing.
Government Finance Officers Association. (2014). Distinguished budget presentation awards program.Â
Guo, H., & Neshkova, M. (2018). Fiscal severity and the choice of budget gap-closing strategies. Public Money & Management, 38(4), 305-314.Â
Kang, T., Park, D., & Han, I. (2018). Beyond the numbers: The effect of 10-K tone on firms performance predictions using text analytics. Telematics and Informatics, 35(2), 370-381.Â
Lawson, A. D. (2020). Deploying the right technology: A framework for digital strategy and selection at the United States Postal Service to shape the future of work [Doctoral dissertation].Â
Mikesell, J. L. (2018). Fiscal administration: Analysis and applications for the public sector (10th ed.). Wadsworth.
United States Postal Service. (2020). Form 10-K FY 2020.Â
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