Financial Management: Quality Control Review of Amtrak’s Single Audit for Fiscal Year 2023
June 20, 2024 | Audit Reports
Amtrak (the company) contracted with the independent public accounting firm of Ernst& Young LLP to audit its consolidated financial statements as of and for the fiscal year then ended, September 30, 2023, and to provide a report on internal control over financial reporting and compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters, which they issued on December 20, 2023.1 Because the company receives federal financial assistance, it must obtain an audit performed in accordance with U.S. generally accepted government auditing standards.
The contract also required Ernst & Young to perform a Single Audit of the company’s federal financial assistance for the fiscal year ended September 30, 2023, 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). 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 programs are those with the larger and higher‐risk expenditures, as determined using the Uniform Guidance. In fiscal year 2023, the company had two such programs: the Department of Transportation’s (DOT) National Railroad Passenger Corporation Grants and Federal‐State Partnership for State of Good Repair programs.
On June 14, 2024, Ernst & Young issued an unmodified compliance opinion on the major federal programs it reviewed, concluding that “Amtrak complied, in all material respects, with the compliance requirements . . . that could have a direct and material effect on its major federal programs” for the period covered by its report.2 Ernst & Young identified, however, two significant deficiencies3 in the company’s internal control over compliance. The first was a longstanding finding in the area of Equipment and Real Property Management for the DOT National Railroad Passenger Corporation Grants, and the second was a new finding related to preparation and maintenance of the equipment population. Ernst & Young also identified other deficiencies in internal control over compliance that it determined did not rise to the level of a significant deficiency, which it communicated to the company on June 14, 2024.
As required 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 U.S. generally accepted government auditing standards and Uniform Guidance requirements.
We monitored Ernst & Young’s audit activities by attending key meetings and reviewing its reports, audit plans, detailed audit testing results, summary workpapers, audit quality controls, auditor independence, and qualifications. At selected field locations, we also observed Ernst & Young’s testing of the company’s internal controls and compliance for its management of equipment and real property.
Our monitoring activities, as differentiated from an audit in accordance with U.S. 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 June 14, 2024, and the conclusions expressed in the report.