Financial Management:

Amtrak's Route Profitability Schedules Need Improvement

GAO-02-912R: Published: Jul 15, 2002. Publicly Released: Jul 15, 2002.

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Amtrak provides an Annual Operations Report to Congress that shows revenue, cost, and profit or loss on all its train routes in the form of route profitability schedules and an annual audited financial statement. In addition, Amtrak periodically receives congressional requests to provide route profitability schedules at different times of the year. In November 2001, Amtrak changed the way it prepared its route profitability schedules and applied this new method to information previously provided for fiscal years 1999 and 2000. Based on the initial information requested and provided, the schedule totals could not be readily reconciled to the audited financial statements for the corresponding periods. According to Amtrak officials, in order to focus on the operating profitability of Amtrak's routes, they excluded certain items included in the financial statement amounts in preparing the route schedule data. As a result, the totals for both sets of schedules did not tie directly to the audited financial statements. Amtrak also allocated certain profits from its other business activities to its routes as a reduction in route net cost. The allocation of these profits from other business activities undermines the ability to assess whether or not individual routes are operated profitably. Collectively, these practices compromise the usefulness of these schedules to assess route profitability.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Amtrak implemented GAO's recommendation in their fiscal year (FY) 2004 Grant and Legislative Request submitted to Congress dated February 15, 2003. Upon reviewing Amtrak's FY 2004 Grant and Legislative Request (which included Amtrak's route profitability schedule), GAO noted the following: Amtrak did (1) provide an explanation in their FY 2004 Grant and Legislative Request regarding the methodology used in preparing the schedules (found in the body of the request), and (2) include a reconciliation of the route profitability schedule results and how these results correlated to the audited financial statements, specifically to Amtrak's Consolidated Statement of Operations (found on the face of the route profitability schedules).

    Recommendation: To improve the clarity and usefulness of the route profitability schedules provided to congressional staff and others, the President and Chief Executive Officer (CEO) of Amtrak should provide a clear explanation of the methodology used in preparing the schedules, including how they correlate to the audited financial statements.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

  2. Status: Closed - Implemented

    Comments: Amtrak implemented GAO's recommendation in their fiscal year (FY) 2004 Grant and Legislative Request submitted to Congress dated February 15, 2003. Upon reviewing Amtrak's FY 2004 Grant and Legislative Request, GAO noted that Amtrak did provide an explanation of the changes in methodology used in preparing the schedules in the body of the request. Although GAO's recommendation was for the explanations of the changes in methodology to be made on the face of the schedules, due to space limitations on the face of the schedules this would not have been feasible. Therefore, GAO has concluded that providing the explanations of the changes in methodology in the body of the request is sufficient.

    Recommendation: To improve the clarity and usefulness of the route profitability schedules provided to congressional staff and others, the President and CEO of Amtrak should clearly explain any changes in the method for producing the profitability schedules on the face of the schedules.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

  3. Status: Closed - Implemented

    Comments: Amtrak implemented GAO's recommendation in their fiscal year (FY) 2004 Grant and Legislative Request submitted to Congress dated February 15, 2003. Upon reviewing the route profitability schedules, which were submitted as part of Amtrak's FY 2004 Grant and Legislative Request, GAO noted that Amtrak did exclude the allocation of non-core profits over the route profitability schedules on the face of the schedules.

    Recommendation: To improve the clarity and usefulness of the route profitability schedules provided to congressional staff and others, the President and CEO of Amtrak should discontinue the allocation of non-core profits to the route profitability schedules.

    Agency Affected: National Railroad Passenger Corporation (AMTRAK)

 

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