Financial Management:

Internal Control Weaknesses in FRA's Civil Penalty Program

RCED-91-47: Published: Dec 26, 1990. Publicly Released: Dec 26, 1990.

Additional Materials:

Contact:

Kenneth M. Mead
(202) 512-2834
contact@gao.gov

 

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

GAO reviewed financial management weaknesses in the Federal Railroad Administration's (FRA) civil penalty program.

GAO found that: (1) inadequate recordkeeping made it difficult for the FRA Office of the Chief Counsel (OCC) to determine which railroads responded to notifications of safety violations and potential civil penalty assessments; (2) the FRA Office of Financial Services (OFS) did not establish accounts receivable for millions of dollars in civil penalty payments it received because OCC staff did not notify it of amounts due; (3) OCC did not process and OFS did not timely deposit some payments, resulting in a loss of interest revenue; (4) OCC did not consistently enforce provisions for charging interest and administrative costs for overdue civil penalty payments; (5) OCC failure to timely settle railroad safety violation cases or collect civil penalties resulted in increased federal government borrowing; (6) internal weaknesses in the financial management of the penalty program undermined FRA compliance with federal standards for settlement, collection, accounting, and recordkeeping; and (7) FRA did not comply with its own internal operating procedures and policies.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: FRA developed attorney staffing standards to estimate the enforcement work loads that can be handled. The standards have been used to prepare an action plan for eliminating the FRA enforcement backlog.

    Recommendation: The Secretary of Transportation should direct the Administrator, FRA, to set realistic goals for the settlement of claims against railroads based on analyses of attorney and administrative staff work loads.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: OFS now assesses interest, penalties, and administrative costs on overdue civil penalty debts in accordance with federal requirements.

    Recommendation: The Secretary of Transportation should direct the Administrator, FRA, to initiate a program to enforce adherence to internal controls by FRA personnel so that the integrity of the civil penalty program's financial management is not compromised. In particular, this program should emphasize enforcing statutory and agency provisions for charging interest, penalties, and administrative costs on overdue civil penalty debts.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: OCC revised its log for tracking penalty checks received to increase accountability, and OFS has re-emphasized to staff the need to comply with its 1-day check deposit policy.

    Recommendation: The Secretary of Transportation should direct the Administrator, FRA, to initiate a program to enforce adherence to internal controls by FRA personnel so that the integrity of the civil penalty program's financial management is not compromised. In particular, this program should emphasize forwarding receipts directly received by OCC to OFS within required time limits and ensuring that deposits are made in accordance with federal requirements.

    Agency Affected: Department of Transportation

  4. Status: Closed - Implemented

    Comments: The FRA Office of Financial Services (OFS) now establishes a memorandum general ledger account for the initial penalty demand amount when the initial penalty notification letter is sent.

    Recommendation: The Secretary of Transportation should direct the Administrator, FRA, to initiate a program to enforce adherence to internal controls by FRA personnel so that the integrity of the civil penalty program's financial management is not compromised. In particular, this program should emphasize establishing formal accounts receivable records when railroads are initially notified that violations have been cited and civil penalties assessed.

    Agency Affected: Department of Transportation

  5. Status: Closed - Implemented

    Comments: The FRA Office of Chief Counsel (OCC) now requires that all responses to penalty notification letters in hazardous materials and top priority cases be placed in the case file.

    Recommendation: The Secretary of Transportation should direct the Administrator, FRA, to initiate a program to enforce adherence to internal controls by FRA personnel so that the integrity of the civil penalty program's financial management is not compromised. In particular, this program should emphasize updating and maintaining civil penalty case records, including documenting railroads' responses to penalty notifications and negotiations in official case files.

    Agency Affected: Department of Transportation

  6. Status: Closed - Implemented

    Comments: OCC has: (1) amended letters and agreements to highlight that checks must be sent to OFS; and (2) sent letters to companies that send checks to OCC explaining the need to send checks to OFS to ensure proper accounting.

    Recommendation: The Office of the FRA Chief Counsel should begin enclosing envelopes that are preaddressed to OFS when settlement agreements are sent to railroads. This would reduce the recurrence of situations in which railroads mistakenly send civil penalty checks directly to OCC.

    Agency Affected: Department of Transportation: Federal Railroad Administration: Office of Chief Counsel

 

Explore the full database of GAO's Open Recommendations »

Sep 20, 2016

Sep 6, 2016

Aug 19, 2016

Aug 12, 2016

Jul 29, 2016

Jul 28, 2016

Jul 13, 2016

Jul 11, 2016

Jun 13, 2016

Looking for more? Browse all our products here