Human Resources: Additional Actions Needed to Improve Controls on Incentive Awards

The Passenger Rail Investment and Improvement Act (PRIIA) of 2008 encouraged Amtrak’s (the company) Board of Directors to develop an incentive pay program for management employees. In response, the Board implemented Short Term Incentive (STI) program for all management employees and Long Term Incentive (LTI) program for the executives based on the company’s achievement of certain corporate financial and customer service goals. Our audit objectives were to assess the accuracy of (1) the company’s reported achievements in attaining its STI and LTI goals for FY 2016, and (2) the company’s payments awarded in 2016 under the two plans.

We concluded the company accurately reported that it achieved key financial and customer service goals and generally made accurate STI and LTI payments (combined) totaling $28.9 million to 3,013 employees. However, continuing weaknesses in both the processes and controls the company used for these actions posed vulnerabilities. Specifically, we identified some weaknesses in the company’s processes and controls used for compiling data on goal achievement and long-standing weaknesses in the company’s processes and controls for calculating the payments and approving exceptions. We identified similar weaknesses in a March 2015 report on the FY 2014 STI payments and recommended that the company address them.  While the company agreed, the recommendations were not fully implemented.

Therefore, we are again recommending that the company document the processes used for determining whether the company met its customer service goals and take immediate steps to ensure that controls are in place to ensure that the payments are accurate and justified.