Engagement Memo—Controls Over Reimbursable Ancillary Services

We are initiating an audit of the company’s processes for providing reimbursable ancillary services, such as the maintenance, engineering, and capital improvement services provided to freight and commuter operators on a reimbursable cost basis. Our objective will be to assess the extent to which the company is effectively and efficiently managing these services, including the process and controls related to identifying the full cost of and billing for these services. Our scope will include reviewing the services provided in fiscal years 2016, 2017, and 2018. We may expand our scope or modify our objective during the audit.

During the audit, we plan to analyze documents and data related to the coding, processing and tracking of reimbursable services. We will request documents as our work progresses. We also will work to minimize the impact of the audit by coordinating interviews of company officials and other work with staff in advance.