GOVERNANCE: Opportunities Exist to Strengthen Controls to Ensure that Utility Accounts Are Deactivated After Real Estate Transactions
Amtrak (the company) owns about $12 billion in real property assets across the nation, including 96 stations and 623 miles of right-of-way track. The company maintains more than 3,100 utility accounts and spent more than $39 million in fiscal year (FY) 2016 for utilities, such as electricity and water, to service these assets. From July 2005 through January 2017, the company sold at least 42 properties for about $39 million, including land holdings and structures near its track, primarily along the Northeast Corridor.
In August 1997, the company sold a property in North Haven, Connecticut, but did not deactivate an electricity account associated with it. Thus, the company continued to make payments on the account for nearly 17 years after the property had been sold. Our office investigated and determined that the company made nearly $57,000 in improper payments on this account from November 2000 to April 2014. In December 2015, the buyer pled guilty to one count of larceny and one count of failure to appear, and he was ordered to pay $28,000 in restitution. The buyer also received a five-year suspended sentence and five years of probation.
In light of the improper payments made for the facility on the North Haven property, the Amtrak Office of Inspector General (OIG) initiated an audit. Our audit objective was to assess the effectiveness of the company’s management controls for ensuring that utility accounts are deactivated when properties are sold. We compared the company’s real estate and utilities processes to the requirements established in its utilities policy, as well as to leading practices for management controls.