Take Two for February 15, 2013

Metrolink explains why it hasn’t fixed its longstanding accounting problems

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A conductor steps down from the engine of a Metrolink train on Sept. 15, 2008 in Chatsworth.

A Metrolink board committee carried out a review that found that the Southland agency — which carries some 40,000 rail commuters a day — doesn’t have enough cash reserves to pay its expenses. The report indicates that at least one account was underfunded by more than $60 million.

Metrolink board member Richard Katz said it’s not a matter of money gone missing, but rather a case of funds being switched around without proper record keeping.

“It appears at least that at some point people were taking from Peter to pay Paul in terms of cash flow problems,” Katz described.

Katz said the problem – and failed efforts to fix it — has spanned the tenures of Metrolink’s last three CEO’s.  He emphasized, “it was a combination of not having the right financial safeguards in place and a very antiquated system that has been difficult to upgrade.” 

Katz revealed the accounting mess stretches back more than a decade. That’s when Metrolink bought its last financial data system. The agency never updated the software, so some records have been kept on 3x5 cards and Excel spreadsheets.

“I don’t think anybody’s been dishonest," said Paul Dyson who runs  the Rail Passenger Association of California & Nevada or RailPAC. The organization lobbies for more passenger rail service.

“As far as I can tell, I think it’s just probably a combination of incompetence and just a very bad system to begin with," he said.

Metrolink Chief Financial Officer Nancy Weiford quit last weekend after the board committee presented its findings. Agency leaders say they can’t discuss why she stepped down. Weiford’s departure came just months after the resignation of CEO John Fenton, who left for a job in Florida.

Rail passenger advocate Paul Dyson said it troubled him that the agency has lost two of its top executives in recent months.

“Perhaps each of these people has realized that with the management system the way it is," Dyson stated. "And the different people that they had to report to, the lack of direction from the board, maybe they’ve just decided that they can’t accomplish anything. Who knows exactly.” 

Metrolink board member Richard Katz wants taxpayers to know the trustees are working with new CEO Michael DePallo to turn things around.

“They’re talking about getting some independent help to assess the situation so we can get a good strong baseline to work but we’ve already started working on solutions," Katz said.

Those fixes include hiring an auditor, updating software and computerizing the information from those three by five cards and Excel spreadsheets.

Metrolink promises its accounting troubles are in no way compromising passenger safety. Officials say their plan is still on track to install a new automated brake system this year - the first of its kind.


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