Washington Metropolitan Area Transit Authority:

Steps Taken to Address Financial Management and Safety Recommendations, but Financial Management Internal Controls Need Strengthening

GAO-15-640R: Published: Jul 15, 2015. Publicly Released: Jul 15, 2015.

Additional Materials:

Contact:

Mark L. Goldstein
(202) 512-2834
goldsteinM@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

The Federal Transit Administration’s (FTA) June 2014 financial management oversight review of the Washington Metropolitan Area Transit Authority (WMATA) identified material weaknesses and significant deficiencies in internal control, concluded that WMATA did not maintain effective internal control over its compliance with FTA’s financial management system requirements, and included 38 recommendations that FTA requires WMATA to address. According to FTA’s assessment, WMATA has taken positive steps toward addressing these recommendations and is on track to address all 38 recommendations by June 30, 2015. However, FTA does not plan to close its recommendations to WMATA until it can verify that WMATA’s corrective actions have been implemented and are functioning—a process FTA officials estimate will start in 2016.

Since 2008, the National Transportation Safety Board (NTSB) has issued 29 safety recommendations to WMATA and, as of June 2015, eight of these recommendations are currently open. The open safety recommendations—which stem from four accidents, three involving WMATA, were issued to WMATA from January 2008 through June 2015—require, among other things, that WMATA replace its original, 1000-series railcars; install onboard event recorders in the lead car of each train-set; and install technology that will automatically alert wayside workers of approaching trains. NTSB officials told GAO that WMATA has been generally timely in implementing its recommendations. WMATA officials told us they are taking steps toward addressing the remaining recommendations but likely will not close the remaining recommendations until 2018 because the recommendations require significant resources to address. For example, according to WMATA officials, replacing the 1000-series railcars will cost the agency almost $700 million over 9 years.

While FTA stated WMATA has taken positive steps toward addressing FTA’s recommendations, strengthening WMATA’s risk assessment and monitoring components of internal control could better position WMATA toward having effective internal control over its financial management objectives. Internal control guidance from the Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a generally accepted framework for internal control and specifies that an entity should assess the risk of an event occurring that would prevent it from achieving its objectives. COSO also specifies that an entity’s monitoring activities can better achieve maximum results when these activities evaluate all components of internal control. GAO found that WMATA (1) has not established a policy and related procedures for conducting periodic assessments of its financial management-related risks, and (2) does not currently monitor the achievement of its financial management internal control objectives in a manner to achieve maximum results. Strengthening WMATA’s risk assessment and monitoring components of internal control could better position WMATA toward having a more effective internal control system. Left unaddressed, WMATA increases the risk that the deficiencies identified in FTA’s June 2014 oversight report will continue to exist or resurface in the future and that a material misstatement of WMATA’s internal and external reporting will not be prevented, or detected and corrected, on a timely basis.

Why GAO Did This Study

WMATA’s public rail transit and bus systems are vital to meeting the transportation needs of the national capital region. Over the last decade, WMATA has also faced financial challenges maintaining the system’s infrastructure, and several fatal accidents have occurred on WMATA’s rail transit system. In June 2014, FTA provided WMATA with the results of its review of WMATA’s compliance with federal financial management system requirements. Furthermore, in recent years NTSB has made a number of recommendations to WMATA aimed at improving the safety of its rail transit system.

The House committee report accompanying the Departments of Transportation, Housing and Urban Development, and Related Agencies Appropriations Bill for fiscal year 2015 included a provision for GAO to review WMATA’s progress responding to FTA’s and NTSB’s recommendations. This report discusses (1) WMATA’s progress responding to FTA’s June 2014 financial management recommendations, (2) WMATA’s progress responding to NTSB’s recent safety recommendations, and (3) to what extent WMATA’s financial management controls incorporate the risk assessment and monitoring components of internal control.

GAO reviewed the recommendations FTA and NTSB made to WMATA and related documentation, such as WMATA’s status reports and correspondence with FTA and NTSB regarding these recommendations. GAO evaluated the nature of the internal control deficiencies FTA identified using the internal control framework published by COSO. GAO also interviewed WMATA, FTA, and NTSB officials.

What GAO Recommends

GAO recommends WMATA develop and implement policies and related procedures for assessing its financial management-related risks and monitoring the design and operating effectiveness of all components of internal control related to financial management. WMATA concurred with the recommendations and intends to take action to address them.

For more information, contact Mark Goldstein at 202-512-2834 or goldsteinm@gao.gov

Recommendations for Executive Action

  1. Status: Open

    Comments: In July and August 2016, WMATA officials described to GAO the steps they have taken to address this recommendation. However, WMATA did not provide sufficient supporting documentation for GAO to verify that the recommendation was implemented. GAO continues to work with WMATA to understand the steps it has taken to address this recommendation.

    Recommendation: To strengthen the Washington Metropolitan Area Transit Authority's (WMATA) risk assessment and monitoring components of internal control, WMATA's board of directors, working with the General Manager and Chief Executive Officer of WMATA, should direct the appropriate WMATA officials to develop and implement a policy and related procedures for assessing WMATA's financial management-related risks.

    Agency Affected: Washington Metropolitan Area Transit Authority

  2. Status: Open

    Comments: In July and August 2016, WMATA officials described to GAO the steps they have taken to address this recommendation. However, WMATA did not provide sufficient supporting documentation for GAO to verify that the recommendation was implemented. GAO continues to work with WMATA to understand the steps it has taken to address this recommendation.

    Recommendation: To strengthen the WMATA's risk assessment and monitoring components of internal control, WMATA's board of directors, working with the General Manager and Chief Executive Officer of WMATA, should direct the appropriate WMATA officials to develop and implement a policy and related written procedures for the Office of Internal Compliance to monitor the design and operating effectiveness of the five components of internal control related to financial management.

    Agency Affected: Washington Metropolitan Area Transit Authority

 

Explore the full database of GAO's Open Recommendations »

Oct 5, 2017

Sep 20, 2017

Sep 7, 2017

Aug 28, 2017

Aug 3, 2017

Jul 27, 2017

Jul 26, 2017

Jul 20, 2017

May 31, 2017

Looking for more? Browse all our products here