Railroad Retirement Board Has $359M of Questioned Costs
An investigation into the U.S. Railroad Retirement Board found its lien process didn’t have sufficient controls to identify, monitor, and collect liens, leading to $359 million in questioned costs, according to an Inspector General report.
According to federal law, railroad employees must reimburse the board for sickness benefits, what the board refers to as a 12(o) lien. An audit of this program from the accounting firm RMA Associates found a host of problems with this process that made tracking and enforcing this reimbursement impossible.
First, RMA found that the board’s process to track these liens was not in compliance with federal standards. Not only did they not meet federal standards, but RMA found the board’s standards were not sufficient to give reasonable oversight to these liens. Even if it was sufficient, the RRB often did not enter this information into its systems in a timely manner to track. RMA concluded that the board did not ensure all liens were collected.
Because of these insufficient controls, the board couldn’t determine the value of reimbursable sick benefits, but RMA estimated they could have cost up to $359 million. Nobody knows how much of this sum has been reimbursed to the government per federal law, and the board’s shoddy record keeping makes discovering this virtually impossible.
This is not the first time the board has had issues with its record keeping. In 2012, the U.S. Railroad Retirement Board Inspector General audited this same program and came to similar findings, recommending at the time that the board “implement a comprehensive tracking system” for these liens.
It’s egregious that a problem identified over 10 years ago was never resolved. Taxpayers could now be out up to $359 million because of the board’s refusal to maintain basic records.
The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com
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