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Metrolink executive quits after report cites accounting problems

The chief financial officer of Metrolink resigns after a special committee assigned to look into the railroad's business practices revealed its findings.

February 12, 2013|By Dan Weikel, Los Angeles Times

A high-ranking Metrolink executive resigned over the weekend following a scathing report that revealed accounting irregularities, poor management and record-keeping that made it difficult for board members to understand the railroad's financial situation.

Metrolink officials said Monday that Nancy Weiford, the regional commuter line's chief financial officer, stepped down after a special committee assigned to look into the railroad's business practices revealed its findings at Friday's board meeting. They declined to comment further on Weiford's departure, saying that personnel matters are confidential.

In a statement, railroad officials said: "Metrolink takes very seriously the recent findings of Metrolink's Ad Hoc Finance Committee regarding the agency's financial management. As one of the nation's largest commuter rail systems, Metrolink has been, and continues to be, committed to sound financial practices."

Reached by The Times, Weiford declined to comment.

Describing the accounting system as a "morass," the internal report found that Metrolink has inadequate cash reserves to meet its current obligations and that another cash account was underfunded by an estimated $66 million. Certain funds were improperly commingled and poor record-keeping made it hard to track the railroad's cash flows, according to the committee findings.

Because of a lack of sound business practices, the report stated that board members were unable to make informed decisions or accurately understand the financial situation of Metrolink, which serves more than 40,000 riders a day from six Southern California counties.

"These are very significant issues. The committee shows deficiencies in the fundamental operating systems for our financial management," said Mike Hennessey, vice chairman of the Metrolink board and a board member for the Orange County Transportation Authority, one of Metrolink's member agencies.

Metrolink formed the finance committee in early 2012 at the request of Richard Katz, who serves on the boards of Metrolink and the Los Angeles County Metropolitan Transportation Authority.

Some of the accounting problems, Katz said, date back to the tenure of former Metrolink Chief Executive David Solow, who resigned after the deadly 2008 Metrolink crash in Chatsworth. Solow's replacement, John Fenton, identified some of the problems before he stepped down in May.

"The past couple of years, we've been focused on developing our safety culture," Katz said. "But we also have to be careful stewards of the taxpayers' and our customers' money. What has been going on has been unacceptable and it will be fixed."

The report recommended a variety of solutions: adopting basic accounting practices, maintaining adequate cash reserves, improvements in record-keeping, hiring financial consultants and working with the five county transportation agencies that help fund Metrolink.

Committee members concluded that if their findings and recommendations are not addressed, they could not recommend that Metrolink's member agencies provide the railroad additional funding.

Their report requested that Metrolink's new chief executive, Michael DePallo, who started in October, provide the board accurate financial statements going back two years, an assessment of the railroad's financial condition and a response to the committee findings within 30 days.

"A lot of work has to be done at Metrolink," said Carolyn Cavecche, a Metrolink board member from Orange County who served on the committee. "Changes need to be made on how we do business internally."

dan.weikel@latimes.com

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