Amtrak to be audited for cost-sharing on state-supported routes, Inspector General says

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rickycourtney

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Amtrak's Office of Inspector General announced Thursday that it is beginning an audit into Amtrak’s processes for managing cost-sharing on state-supported routes.

The OIG says it's objective is to "evaluate the company’s actions to address longstanding concerns with the PRIIA 209 cost-sharing methodology and the company’s billing process with its State partners."

If you're an Amtrak fan, this isn't particularly great news.

If you're a passenger rail advocate, this is fantastic news.

Quoting my friends at All Aboard Washington, "Many states have complained that Amtrak's accounting for such costs is opaque, leaving local officials with inadequate knowledge of how Amtrak costs are calculated. The Amtrak Inspector General announced today that it would audit cost-sharing on state-supported routes. This is good news for taxpayers."
 
I don't know of any "fans" of Amtrak's accounting practices even among Amtrak fans. Outside of Amtrak's executive suite, that is.

This is good news. Anything that sheds light on Amtrak's opaque books, simmering away, is good news.

Especially for me as a Washington tax payer, I want our rather extensive (until COVID) state funded trains treated properly and not as an unintended Amtrak profit center.
 
Oh, there are plenty of Amtrak Fans (particularly on Facebook) that are quick to make apologies for anything Amtrak does.

As a California taxpayer, this audit is also welcome news. The Executive Director of the San Joaquin Joint Powers Authority testified to Congress last year about the problem with Amtrak's accounting processes. So I'm glad to see something is being done about it.
 
I’m a die-hard Amtrak fan (just go look at some of my posts in the “Amtrak’s Future” section), and I’m thrilled about this. Step 1 to solving Amtrak’s problems is to fix their accounting treatments. They may say it’s GAAP but I’m not totally convinced.
 
I’m a die-hard Amtrak fan (just go look at some of my posts in the “Amtrak’s Future” section), and I’m thrilled about this. Step 1 to solving Amtrak’s problems is to fix their accounting treatments. They may say it’s GAAP but I’m not totally convinced.
It's only GAAP if you are open about it. Like you and so many others, I'm from Missouri.
 
About Amtrak accounting. It is a puzzle that a company ostentionally a government corporation should have any classified material. What could even be classified ? Maybe congress should intervene.? Traffic information ?
 
I’m a die-hard Amtrak fan (just go look at some of my posts in the “Amtrak’s Future” section), and I’m thrilled about this. Step 1 to solving Amtrak’s problems is to fix their accounting treatments. They may say it’s GAAP but I’m not totally convinced.

Cost accounting and GAAP are two different things.

GAAP doesn’t care about how you allocate the executive’s salary to an individual item produced. GAAP is primarily focused on the accuracy of the income statement, balance sheet, and cash flow statement.
 
Cost accounting and GAAP are two different things.

GAAP doesn’t care about how you allocate the executive’s salary to an individual item produced. GAAP is primarily focused on the accuracy of the income statement, balance sheet, and cash flow statement.

Obviously I’m not an accounting expert. But wouldn’t the CF statement be affected by the cost accounting that Amtrak is screwing with?
 
Obviously I’m not an accounting expert. But wouldn’t the CF statement be affected by the cost accounting that Amtrak is screwing with?

No, it wouldn’t.

A cash flow statement reconciles the income statement with the net change in cash position at the beginning vs. end of a reporting period. It is a simple comparison of cash in vs. cash out.

Similar with the balance sheet and income statement.

https://www.amtrak.com/content/dam/...-Consolidated-Financial-Statements-FY2019.pdf
Take a look at pages 3-8 of that link (5-10 of the PDF). Those are the GAAP financial statements. Nowhere in those pages (nor in the supporting notes in the rest of the document) are there cost or revenue allocations by route. That’s not relevant to GAAP. That’s all the realm of cost accounting/managerial accounting. In the private sector, those kinds of things are often considered proprietary information (if you knew your competitor’s detailed costs/revenues on a certain segment of their operation, you might change your approach in how you challenge them in the market).

Amtrak, as a “public” agency, has some of that information published publicly (and a lot of it would probably be FOIA-able anyway).

Granted, there are plenty of reasons to be suspect of the way in which some costs are allocated at Amtrak. But there’s this false meme out there that Amtrak doesn’t comply with GAAP, which really means folks don’t understand what GAAP is (and what it is not). GAAP won’t tell you if the Empire Builder or the Empire Service makes a profit or not. It will just tell you if the company as a whole makes a profit or not.
 
No, it wouldn’t.

A cash flow statement reconciles the income statement with the net change in cash position at the beginning vs. end of a reporting period. It is a simple comparison of cash in vs. cash out.

Similar with the balance sheet and income statement.

https://www.amtrak.com/content/dam/...-Consolidated-Financial-Statements-FY2019.pdf
Take a look at pages 3-8 of that link (5-10 of the PDF). Those are the GAAP financial statements. Nowhere in those pages (nor in the supporting notes in the rest of the document) are there cost or revenue allocations by route. That’s not relevant to GAAP. That’s all the realm of cost accounting/managerial accounting. In the private sector, those kinds of things are often considered proprietary information (if you knew your competitor’s detailed costs/revenues on a certain segment of their operation, you might change your approach in how you challenge them in the market).

Amtrak, as a “public” agency, has some of that information published publicly (and a lot of it would probably be FOIA-able anyway).

Granted, there are plenty of reasons to be suspect of the way in which some costs are allocated at Amtrak. But there’s this false meme out there that Amtrak doesn’t comply with GAAP, which really means folks don’t understand what GAAP is (and what it is not). GAAP won’t tell you if the Empire Builder or the Empire Service makes a profit or not. It will just tell you if the company as a whole makes a profit or not.

Thanks for the refresher! It’s been a few years since I’ve taken an accounting class and it wasn’t my strong suit. :D
 
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