Improved Controls Needed Over Federal Financial Assistance to Railroads

CED-76-161: Published: Nov 15, 1976. Publicly Released: Nov 15, 1976.

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Before 1976, direct federal assistance to the nation's railroads was essentially in response to specific crises, but enactment of the Railroad Revitalization and Regulatory Reform Act changed the situation. The $1.6 billion in aid will be administered by the Federal Railroad Administration (FRA), Department of Transportation (DOT), and the United States Railway Association.

The governing agencies did not revise their review procedures for assistance applications or analysis of railroads' financial reporting systems, nor did they include comprehensive data upon which they reached decisions on financial assistance applications. Financial assistance programs which provide funds for working capital, do not lend themselves to the type of monitoring where expenditures can be readily identified with specific projects. FRA should have taken action to have financial audits made on each railroad receiving assistance at the end of the programs or when most of the federal costs had been incurred.

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