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Metrolink accounting problems still being unraveled by consultant

October 11, 2013|By Dan Weikel
  • Incoming Metrolink passengers exit a train at Union Station in downtown Los Angeles.
Incoming Metrolink passengers exit a train at Union Station in downtown… (Al Seib / Los Angeles Times )

Officials for the six-county Metrolink commuter railroad continue to grapple with accounting and management problems that surfaced in February -- a situation complicated by the recent departures of two interim chief financial officers.

KPMG, a consulting firm recently hired to troubleshoot Metrolink's books, reported to the railroad's board on Friday that it has been reconciling various accounts since it started work three weeks ago.

The line serves more than 40,000 riders a day and has an operating budget of $196 million.

Though the KPMG team has calculated the account balances, officials said during the public meeting that it was still too early in their review to be comfortable with the figures.

The consultants made their brief presentation after meeting for more than an hour with board members in closed session, where they provided more information about the depth of the problems.

Officials declined to disclose details about the discussion.

But Carolyn Cavecche, an alternate board member who serves on a special committee that uncovered the accounting problems, said that for almost eight months the board has not been told about the severity of the situation and the actual numbers until now.

"KPMG after three weeks is still shoveling and they have not hit bottom yet to give us picture-perfect numbers," said Cavecche, a former board member at the Orange County Transportation Authority. "They've only been here three weeks. There's still a lot of work to do."

A more probing forensic audit by KPMG to determine whether wrongdoing has occurred is expected to begin soon.

In February, Nancy Weiford, the commuter line's chief financial officer, resigned after a scathing report by the special committee revealed accounting irregularities, poor business practices and record-keeping that made it difficult for board members to understand the railroad's finances.

A month later, Michael DePallo, Metrolink's new chief executive, launched plans to correct the accounting problems, which included underfunded accounts, inadequate cash reserves to pay bills and accounts that were improperly mingled.

Since then, two interim chief financial officers have come and gone. Metrolink officials said they cannot comment on the departures because personnel matters are confidential.

Jeff Lustgarten, a Metrolink spokesman, said the departures "present challenges" but that KPMG will be assuming some of the functions of the chief financial officer.

Metrolink officials also reported Friday that they hope to complete the installation of a sophisticated train guidance and collision avoidance system on its 500 miles of track by summer 2014, more than a year ahead of a federal deadline.

If Metrolink can finish the system on time, it will be the first passenger railroad in the nation to equip its complete system with positive train control.

The state-of-the art technology relies on computers, digital radio systems and global-positioning devices to guide trains and stop them automatically in an emergency.

Officials said the $211-million budget for positive train control will need to be increased by $5.5 million to $6 million because of change orders. They added that if the current partial shutdown of the federal government drags on it could delay the project. The effort depends on oversight by the Federal Railroad Administration.


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