"The Inspector General Act of 1978 (Public Law 95-452, 5 U.S.C. Appendix 3), as amended in 1988 (P.L. 100-504), established the Office of Inspector General for Amtrak to consolidate existing investigative and audit resources into an independent organization headed by the Inspector General (IG) to promote economy, efficiency, and effectiveness; and to prevent and detect fraud, waste, and abuse. Subsequently, the Inspector General Reform Act of 2008 (P. L. 110-409) amended and strengthened the authority of the Inspectors General."
Amtrak's IG reports to the President and Chief Executive Officer of Amtrak, with an independent reporting relationship to the Board of Directors and the Congress. His role is similar to that of the chief audit executive of a large corporation, educational institution, etc.
The IG is required to provide an independent report to the Board and the Congress on the findings of his audit and investigative teams, which are made up of a variety of professional persons. Many of them have advanced degrees across a wide spectrum of disciplines, including engineering, accounting, finance, law, IT, etc.
If the IG suspects improper behavior on the part of any member of the management team, he is authorized to report it directly to the board and, if necessary, the Congress. Independence is a key element in any auditing and investigative organization. Amongst other things it helps insure objectivity in what is audited, how it is audited, and how the audit findings are reported.
Amtrak's IG is subject to periodic peer reviews. This means that its work as well as its work processes are evaluated by an outside organization, usually an independent auditing firm, although in the case of the government it could be the GAO.
I worked for several Fortune 500 corporations for nearly forty years; 22 of them were as an Audit Manager, IT Audit Manager, and Director of Internal Audit. I know a bit about how audit work is performed. Although I don't have any personal knowledge of Amtrak's audit and investigation methodologies, I have met many government auditors at audit and fraud management conferences. My discussions with them have led me to believe that they follow the same methodologies that we followed in the corporate world. Here is how it generally works in all large audit departments.
Audits are placed on the annual audit plan, after a risk assessment, and assigned to an audit manager. They are usually performed by an audit team, which is led by a senior auditor, who is assisted by one or several associate and junior auditors. Senior auditors in large organizations, e.g. Amtrak, usually have more than 10 years of experience as well as the educational credentials mentioned above. The audit is executed according to a carefully structured audit plan.
Throughout the course of the audit the work is reviewed at least weekly by the senior auditor, who in turn discusses the progress of the audit with the audit manager. Each fact uncovered during the audit is verified by one of the other team members, as well as the senior auditor, and if necessary by a specialist, i.e. IT auditor, legal specialist, etc. At key points in the audit the work is reviewed thoroughly by the audit manager and, as a rule, the results of audits in progress are summarized for the IG.
Finally, when the audit is completed, it is reviewed by the audit manager, and it may be reviewed by the IG. In any case, the IG will be kept informed of the results as the audit progresses. After review by the audit manager, the results are presented to the client for his or her comments. If they don't agree with the findings, providing they have sufficient evidence to refute them, additional audit work may be performed or the initial findings may be changed.
Once everyone is in agreement with the results of the audit, a report is generated. It contains the major findings of the audit, management's comments on the results, including agreed upon actions to implement the auditor's recommendations, and a detailed description of the audit methodology. A copy of the audit report is sent to the Audit Committee of the Board of Directors. Moreover, at least twice a year the IG's activities are summarized for the Congress.
The point of this discussion is to refute the notion that Amtrak's Office of Inspector General is not professional, i.e. uses slipshod methods, makes the numbers come out the way Amtrak's management wants, or slants its findings for political or media reasons, as suggested in a number of posts to this thread, is wrong.
Sam1 The point of this discussion is to refute the notion that Amtrak's Office of Inspector General is not professional, i.e. uses slipshod methods, makes the numbers come out the way Amtrak's management wants, or slants its findings for political or media reasons, as suggested in a number of posts to this thread, is wrong.
I am thinking that puts it too mildly. If the least hint of criticism of Amtrak aimed at making Amtrak better by freeing up money to improve food service or other aspects of operations provokes reflexive cries of "Biased source! Liars!" from members of the advocacy community, that community is in real trouble.
I am not in the pure free market camp that Amtrak or that transit agencies should do without subsidy. But just because something is operated by the government doesn't mean that it cannot or should not be subject to governmental and outside-of-government oversight. Just because something is operated by the government doesn't mean we should throw up our hands and say, "trains and dining cars have always lost money" and write Amtrak a blank check.
And just because someone is an anti-Amtrak critic, a charge leveled against the reporter/blogger, doesn't mean that we can dismiss the criticism they offer.
I am getting to understand that trains are so full of inherent goodness to some people and such a magic-bullet solution to our environmental and resource-depletion woes that people can't in good faith discuss the engineering and economic tradeoffs of in what ways is Amtrak good and in what ways is Amtrak in need of improvement.
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
With this paragraph in mind this is why the point of view of the writer and The Caller has to be understood. Who are they that they are making the accusation? If you don't know who, then you have to question their credentials, credibility, source of income, ownership, and find out why they are reporting from this angle. Is there anybody reporting from the angle that the IG's report is acceptable, who are they and why are they reporting a different view than reported here?
RIDEWITHMEHENRY is the name for our almost monthly day of riding trains and transit in either the NYCity or Philadelphia areas including all commuter lines, Amtrak, subways, light rail and trolleys, bus and ferries when warranted. No fees, just let us know you want to join the ride and pay your fares. Ask to be on our email list or find us on FB as RIDEWITHMEHENRY (all caps) to get descriptions of each outing.
Pretty clearly if you want knowledge of a document without any bias by whoever reports it, whether Jim Doofus' blog, FOX, the WSJ or NYT, it's best to go to that document (primary source) whenever possible. Questioning the accuracy or claiming various forms of bias on the part of Amtrak's IG without a shred of evidence is simply engaging in speculation and name-calling. If one actually reads the document, it seems clear better management of Amtrak food services is needed. Whether that means bringing in a private contractor, such as Compass or Aramark or others, or reorganizing that component internally is another question.
C&NW, CA&E, MILW, CGW and IC fan
henry6 Sam1: The point of this discussion is to refute the notion that Amtrak's Office of Inspector General is not professional, i.e. uses slipshod methods, makes the numbers come out the way Amtrak's management wants, or slants its findings for political or media reasons, as suggested in a number of posts to this thread, is wrong. With this paragraph in mind this is why the point of view of the writer and The Caller has to be understood. Who are they that they are making the accusation? If you don't know who, then you have to question their credentials, credibility, source of income, ownership, and find out why they are reporting from this angle. Is there anybody reporting from the angle that the IG's report is acceptable, who are they and why are they reporting a different view than reported here?
Sam1: The point of this discussion is to refute the notion that Amtrak's Office of Inspector General is not professional, i.e. uses slipshod methods, makes the numbers come out the way Amtrak's management wants, or slants its findings for political or media reasons, as suggested in a number of posts to this thread, is wrong.
My explanation of the IG's methodologies, which have been and are constantly being verified by a variety of sources, was to make the point that the IG's work product is of the highest quality. It is reviewed repeatedly before it goes out the door. It speaks for itself, at least to those of us who are familiar with the work product of independent auditors.
I am no fan of government, especially when it comes to operating what is in effect a commercial enterprise. Having said that the federal government has some excellent employees. And the inspector general functions of the agencies get very high marks even from those of use who spent our working lives in the private sector. In fact, as part of the training in our company, I had our auditors read the work product of the General Accountability Office (GAO), which is as good an organization as they come. Moreover, I have had, as I may have noted, numerous opportunities to swap methodology insights with GAO staff members.
Irrespective of the fraud problem associated with on-board food and beverage sales, the losses associated with this activity are eye catching. In FY10 Amtrak lost $154 million on these sales. Sales revenues of $131 million were offset by $192 million in direct costs and $93 million in indirect costs.
Sam1 Irrespective of the fraud problem associated with on-board food and beverage sales, the losses associated with this activity are eye catching. In FY10 Amtrak lost $154 million on these sales. Sales revenues of $131 million were offset by $192 million in direct costs and $93 million in indirect costs.
That's $5 per passenger! Ugh.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmannd Sam1: Irrespective of the fraud problem associated with on-board food and beverage sales, the losses associated with this activity are eye catching. In FY10 Amtrak lost $154 million on these sales. Sales revenues of $131 million were offset by $192 million in direct costs and $93 million in indirect costs. That's $5 per passenger! Ugh.
Sam1: Irrespective of the fraud problem associated with on-board food and beverage sales, the losses associated with this activity are eye catching. In FY10 Amtrak lost $154 million on these sales. Sales revenues of $131 million were offset by $192 million in direct costs and $93 million in indirect costs.
Here is another little tid bit that I picked-up from an Amtrak IG report on performance incentive payments.
Between 2002 and 2006 Amtrak paid BNSF approximately $33 million for on-time performance incentives in accordance with the authorizing contract. Of this amount $9.1 million or nearly 17% of the billings were in error.
Amtrak's management agreed with the audit findings and pledged to fix the problem, which it appears to be doing. It has hired two employees to audit all hoist carrier billings. It is likely that the company will get back most of the $9.1 million, which should cover the compensation packages (tongue in cheek) for the two new employees. However, I cannot help but wonder what took them so long to implement this conventional practice.
There is no evidence that BNSF tried to snooker Amtrak. Apparently the billing errors were a function of several variables, including complex contract language. Who would have guessed it? Lawyers writing or at least blessing a contract that most people could not understand. This issue is not fraud or waste per se, but it sure looks like poor accounts payable practices. In our company, anything more than a one per cent error rate set off all kinds of alarm bells.
The Amtrak IG submits biannually a written and oral report regarding its audit and investigative activities to the Congress. I have read the latest two reports. They are professional and as good as anything that I have seen from industry. In addition, I read the report on dinning car fraud as well as two reports on performance payments to the hoist railroads. The audit methodologies and reports comply with government auditing standards and would comply easily with generally accepted auditing standards in any environment.
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