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GOVERNANCE: Quality Control Review of Amtrak’s Single Audit for Fiscal Year 2016

August 18, 2017  |  Audit Reports

Amtrak (the company) contracted with the independent certified public accounting firm of Ernst & Young LLP to audit its consolidated financial statements as of September 30, 2016, and for the year then ended, and to provide a report on internal control over financial reporting and compliance with laws and regulations and other matters. The contract also required Ernst & Young to perform a Single Audit of the company’s federal grants for the year ended September 30, 2016, in accordance with the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the company receives federal funding, it must obtain an audit performed in accordance with generally accepted government auditing standards. The objective of the Single Audit was to test internal control over compliance with major federal program award requirements and determine whether the company complied with the laws, regulations, and provisions of contracts or grant agreements that may have a direct and material effect on its major federal programs.

Major federal grant programs are those with the larger and highest risk grant fund expenditures, as determined using the Uniform Guidance. In fiscal year 2016, the company had four such grant programs: the Department of Transportation (DOT) National Railroad Passenger Corporation Grants, DOT ARRA-High-Speed Rail Corridors and Intercity Passenger Rail Service – Capital Assistance Grants, DOT Fiscal Year 2013 Hurricane Sandy Disaster Relief Grants to the National Railroad Passenger Corporation, and Department of Homeland Security Rail and Transit Security Grant Program.

As authorized by the Inspector General Act of 1978, we monitored the audit activities of Ernst & Young to help ensure audit quality and compliance with auditing standards. Our review disclosed no instances in which Ernst & Young did not comply, in all material respects, with generally accepted government auditing standards and Uniform Guidance requirements. The key aspects of Ernst & Young’s report are discussed below.

Ernst & Young issued an unmodified compliance opinion on each major federal grant program it reviewed. However, Ernst & Young identified a significant deficiency in internal control over compliance relating to Equipment and Real Property Management for the DOT National Railroad Passenger Corporation Grant. Ernst & Young made several recommendations to correct the significant deficiency. The company agreed with the recommendations and provided a detailed corrective action plan to address them.

We monitored Ernst & Young’s audit activities by reviewing its reports, audit plans, detailed audit testing results, summary workpapers, audit quality controls, and auditor independence and qualifications forms. We observed Ernst & Young’s equipment testing at selected field locations and attended key meetings.

Our monitoring activities, as differentiated from an audit in accordance with generally accepted government auditing standards, were not intended to enable us to express an audit opinion. Therefore, we do not express an opinion on compliance for the major program, conclusions about the effectiveness of internal control over compliance, or whether the Schedule of Expenditures of Federal Awards is fairly stated. Ernst & Young is responsible for its report dated August 1, 2017, and the conclusions expressed in the report.

Tracking Number
OIG-A-2017-015