Home
»
Trains Magazine
»
Forums
»
Passenger
»
If I were the head of Amtrak what would you do

Edit post

Edit your reply below.

Post Body
Enter your post below.
Since I began participating in the Train's forums, I have seen allegations that Amtrak cooks the books.  The most common allegations are that it shifts costs from one product line, i.e. the NEC to another, most often the long distance trains.The assertion that Amtrak arbitrarily assigns costs to a route without any justification for the assigns is saying in a nutshell that it is cooking the books, i.e. not reporting truthfully.Depreciation is not money set aside for a rainy day.  It is the amortization of a capital expenditure, i.e. money that was used to buy equipment, materials, property improvements, etc.  Money that is put aside for a rainy day is a reserve.Cost accountants identify the costs associated with an organization.  Looking back they are historical numbers.  Looking forward they are projections based on historical trends and regression analysis. Projections usually require a range of scenarios, i.e. how much will fuel cost in six months, twelve months, eighteen months, etc., and what is the likely low to high range.  Cost accountants can tell management which product lines are covering their costs and which ones are not.  But they cannot and do not tell management how to run the business, i.e. what business to be in, what product lines to offer, how to run it, etc.   Whether a business or a product line will be successful is a function of the entities' business model.  Putting together a successful model requires a variety of disciplines, i.e. marketing, engineering, accounting, finance, economics, IT, HR, etc.  The cost accountants can tell the planners what they need to charge to cover the cost of a product line; that is to say, the breakeven point, but the other disciplines are required to put together a successful business plan.  Economists can tell the planners whether market economics will support the service.  Marketing people can make the business plan salable; pricing specialists can determine how much to charge for the services.  Financial people are necessary to fund the plan.  IT, HR, procurement, etc. are necessary to support it.  A successful business plan can not be put together by controlling costs.  But if the costs are not known and controlled, the plan will ultimately fail.  The long distance train has been a money sponge since Amtrak came into existence.  If it was run like a real business, as opposed to a government handout, the long distance train would have disappeared decades ago.  The reason that it has not been successful or expanded is because there is very little market demand for it.  People traveling long distances, e.g. greater than 200 miles or thereabouts prefer to fly.  And no amount of wishing is going to change this dynamic.  Just because one cannot find out how much Amtrak spends on fuel for the Hiawatha Service does not mean that they don't have the numbers.  My guess is that they do, but they choose not to make the information available to an outsider who has not demonstrated a need to know them.The external auditors, when performing their audit of Amtrak's financial statements, perform reasonable tests for all allocations, estimates, depreciation schedules, projections, etc. that impact the financial statements.  Anything having to do with cost allocation impacts them.  If they found that Amtrak parceled costs out to the different trains without regard for the actual costs on each route, they would raise an audit exception.  If it is serious, it could produce a qualified audit report, which is the last place in the world that management wants to go.  Moreover, the internal auditors, who are in a good position to catch improper allocations, would also raise an audit finding.  What is meant by people in high places?  Who are these people?  Are they inside Amtrak?  What is the definition of high places?  I have met people in my career as an accounting and auditing manager who believed that the Accounts Payable Manager was a person in high places.  That would have been news to executive management.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag