Audit 309029

Finding 2023-001: Equipment and Real Property Management Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0023-21 FR-AMT-0028-22 69A36523504100AMTDC Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)).  Section II – Federal Awards Findings and Questioned Costs (continued) 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). 7. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition We subjected 60 equipment assets to testing; these assets had a value of approximately $94.8 million. Of the $94.8 million, approximately $8.0 million were equipment assets purchased in previous years and were subject to our inventory observation testing and the remaining $86.8 million were equipment assets subject to both our purchases and inventory observation testing. Total acquisition cost of equipment assets within scope purchased during the year approximated $279.6 million. Net book value of all equipment purchased to date under grants within scope as of September 30, 2023 approximated $558.0 million. The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For three of the equipment samples reviewed (approximately $0.3 million), it was observed that the assets did not have a unique asset identifier in the originally provided equipment population or did not have an asset identifier on the equipment. 2. For five of the equipment samples reviewed (approximately $0.5 million), it was observed that the condition data or location field in the asset records was blank. 3. During our procedures performed for two assets (approximately $1.1 million), we identified that no inventory had occurred for the assets, even though they had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. One of the equipment samples selected could not be located (approximately $0.05 million), as such we could not verify existence of the asset. 5. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs This finding resulted in a total of $0.05 million of likely questioned costs for Assistance Listing 20.315 – National Railroad Passenger Corporation Grant: FR-AMT-0028-22 This amount represents the amount per the purchase order for the asset in sub bullet #4 above that could not be located. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. See condition section above for equipment amounts in both sample size and population. Effect Amtrak is not in compliance with the 2 CFR 200.313. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. This may also put assets at greater risk of being lost, stolen, or not properly maintained. Cause The nature of much of Amtrak’s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak’s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. Section II – Federal Awards Findings and Questioned Costs (continued) In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates “On a monthly basis, Capital Accounting will identify all equipment that has not been observed within 2 years and communicate to the Asset Management Team for action to be taken.” This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not exist on the asset or match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding is a repeat finding of 2022-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak’s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and are consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Additionally, management should consider requiring the serial number and model number to be documented in the system of record at set up in addition to the asset tag number. This will help ensure that the equipment has a unique ID number that can help it be identified and matched to the system record should an asset number not get added timely. Finally, as it relates to condition #4 above, management should investigate the root cause of the asset that could not be located and determine if additional control changes or modifications need to be made in order to prevent reoccurrence. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Since being created in 2022, Amtrak’s Enterprise Asset Management and Disposition team (EAMDT) has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. Early in FY2024, Amtrak completed Phase 2 of this engagement to execute and implement a sub-set of these corrective action plans. Through this effort, EAMDT has prepared an updated Equipment Control Policy, developed standard operating procedures for equipment management, and developed a one-hour eLearning course that provides an overview of the importance for good equipment management practices and highlights the necessity for adhering to Single Audit compliance requirements of 2 CFR Part 200. The deliverables of this effort are to help ensure that assets are not capitalized without a complete record, which would include a unique asset identifier, as well as the condition and location of the assets. Additionally, EAMDT has developed reporting and analytics that enable both EAMDT and field personnel to be more proactive in managing the soon-to-be and out of compliance assets to both bring assets back into compliance, as well as to ensure an inventory is done and recorded within the two-year period. Lastly, EAMDT is working closely with Amtrak’s Digital Technology Department on the installation of location tracking technology on yard equipment and Engineering Maintenance of Way equipment, as well as developing an application that can be used on employee’s mobile devices to help ensure timely equipment assessments are completed.

Finding 2023-001: Equipment and Real Property Management Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0023-21 FR-AMT-0028-22 69A36523504100AMTDC Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)).  Section II – Federal Awards Findings and Questioned Costs (continued) 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). 7. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition We subjected 60 equipment assets to testing; these assets had a value of approximately $94.8 million. Of the $94.8 million, approximately $8.0 million were equipment assets purchased in previous years and were subject to our inventory observation testing and the remaining $86.8 million were equipment assets subject to both our purchases and inventory observation testing. Total acquisition cost of equipment assets within scope purchased during the year approximated $279.6 million. Net book value of all equipment purchased to date under grants within scope as of September 30, 2023 approximated $558.0 million. The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For three of the equipment samples reviewed (approximately $0.3 million), it was observed that the assets did not have a unique asset identifier in the originally provided equipment population or did not have an asset identifier on the equipment. 2. For five of the equipment samples reviewed (approximately $0.5 million), it was observed that the condition data or location field in the asset records was blank. 3. During our procedures performed for two assets (approximately $1.1 million), we identified that no inventory had occurred for the assets, even though they had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. One of the equipment samples selected could not be located (approximately $0.05 million), as such we could not verify existence of the asset. 5. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs This finding resulted in a total of $0.05 million of likely questioned costs for Assistance Listing 20.315 – National Railroad Passenger Corporation Grant: FR-AMT-0028-22 This amount represents the amount per the purchase order for the asset in sub bullet #4 above that could not be located. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. See condition section above for equipment amounts in both sample size and population. Effect Amtrak is not in compliance with the 2 CFR 200.313. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. This may also put assets at greater risk of being lost, stolen, or not properly maintained. Cause The nature of much of Amtrak’s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak’s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. Section II – Federal Awards Findings and Questioned Costs (continued) In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates “On a monthly basis, Capital Accounting will identify all equipment that has not been observed within 2 years and communicate to the Asset Management Team for action to be taken.” This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not exist on the asset or match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding is a repeat finding of 2022-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak’s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and are consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Additionally, management should consider requiring the serial number and model number to be documented in the system of record at set up in addition to the asset tag number. This will help ensure that the equipment has a unique ID number that can help it be identified and matched to the system record should an asset number not get added timely. Finally, as it relates to condition #4 above, management should investigate the root cause of the asset that could not be located and determine if additional control changes or modifications need to be made in order to prevent reoccurrence. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Since being created in 2022, Amtrak’s Enterprise Asset Management and Disposition team (EAMDT) has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. Early in FY2024, Amtrak completed Phase 2 of this engagement to execute and implement a sub-set of these corrective action plans. Through this effort, EAMDT has prepared an updated Equipment Control Policy, developed standard operating procedures for equipment management, and developed a one-hour eLearning course that provides an overview of the importance for good equipment management practices and highlights the necessity for adhering to Single Audit compliance requirements of 2 CFR Part 200. The deliverables of this effort are to help ensure that assets are not capitalized without a complete record, which would include a unique asset identifier, as well as the condition and location of the assets. Additionally, EAMDT has developed reporting and analytics that enable both EAMDT and field personnel to be more proactive in managing the soon-to-be and out of compliance assets to both bring assets back into compliance, as well as to ensure an inventory is done and recorded within the two-year period. Lastly, EAMDT is working closely with Amtrak’s Digital Technology Department on the installation of location tracking technology on yard equipment and Engineering Maintenance of Way equipment, as well as developing an application that can be used on employee’s mobile devices to help ensure timely equipment assessments are completed.

Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. The code of federal regulations – 2 CFR 200.313 Equipment requires that: - Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification.  Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.

Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. The code of federal regulations – 2 CFR 200.313 Equipment requires that: - Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification.  Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.

Finding 2023-001: Equipment and Real Property Management Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0023-21 FR-AMT-0028-22 69A36523504100AMTDC Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)).  Section II – Federal Awards Findings and Questioned Costs (continued) 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). 7. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition We subjected 60 equipment assets to testing; these assets had a value of approximately $94.8 million. Of the $94.8 million, approximately $8.0 million were equipment assets purchased in previous years and were subject to our inventory observation testing and the remaining $86.8 million were equipment assets subject to both our purchases and inventory observation testing. Total acquisition cost of equipment assets within scope purchased during the year approximated $279.6 million. Net book value of all equipment purchased to date under grants within scope as of September 30, 2023 approximated $558.0 million. The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For three of the equipment samples reviewed (approximately $0.3 million), it was observed that the assets did not have a unique asset identifier in the originally provided equipment population or did not have an asset identifier on the equipment. 2. For five of the equipment samples reviewed (approximately $0.5 million), it was observed that the condition data or location field in the asset records was blank. 3. During our procedures performed for two assets (approximately $1.1 million), we identified that no inventory had occurred for the assets, even though they had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. One of the equipment samples selected could not be located (approximately $0.05 million), as such we could not verify existence of the asset. 5. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs This finding resulted in a total of $0.05 million of likely questioned costs for Assistance Listing 20.315 – National Railroad Passenger Corporation Grant: FR-AMT-0028-22 This amount represents the amount per the purchase order for the asset in sub bullet #4 above that could not be located. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. See condition section above for equipment amounts in both sample size and population. Effect Amtrak is not in compliance with the 2 CFR 200.313. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. This may also put assets at greater risk of being lost, stolen, or not properly maintained. Cause The nature of much of Amtrak’s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak’s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. Section II – Federal Awards Findings and Questioned Costs (continued) In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates “On a monthly basis, Capital Accounting will identify all equipment that has not been observed within 2 years and communicate to the Asset Management Team for action to be taken.” This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not exist on the asset or match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding is a repeat finding of 2022-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak’s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and are consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Additionally, management should consider requiring the serial number and model number to be documented in the system of record at set up in addition to the asset tag number. This will help ensure that the equipment has a unique ID number that can help it be identified and matched to the system record should an asset number not get added timely. Finally, as it relates to condition #4 above, management should investigate the root cause of the asset that could not be located and determine if additional control changes or modifications need to be made in order to prevent reoccurrence. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Since being created in 2022, Amtrak’s Enterprise Asset Management and Disposition team (EAMDT) has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. Early in FY2024, Amtrak completed Phase 2 of this engagement to execute and implement a sub-set of these corrective action plans. Through this effort, EAMDT has prepared an updated Equipment Control Policy, developed standard operating procedures for equipment management, and developed a one-hour eLearning course that provides an overview of the importance for good equipment management practices and highlights the necessity for adhering to Single Audit compliance requirements of 2 CFR Part 200. The deliverables of this effort are to help ensure that assets are not capitalized without a complete record, which would include a unique asset identifier, as well as the condition and location of the assets. Additionally, EAMDT has developed reporting and analytics that enable both EAMDT and field personnel to be more proactive in managing the soon-to-be and out of compliance assets to both bring assets back into compliance, as well as to ensure an inventory is done and recorded within the two-year period. Lastly, EAMDT is working closely with Amtrak’s Digital Technology Department on the installation of location tracking technology on yard equipment and Engineering Maintenance of Way equipment, as well as developing an application that can be used on employee’s mobile devices to help ensure timely equipment assessments are completed.

Finding 2023-001: Equipment and Real Property Management Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0023-21 FR-AMT-0028-22 69A36523504100AMTDC Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.313 Equipment requires that: 1. Equipment must be used in the program or project for which it was acquired as long as needed, whether the project or program continues to be supported by the federal award or, when appropriate, under other Federal awards; however, the non Federal entity must not encumber the equipment without prior approval of the federal awarding agency (2 CFR 200.313(c) and (e)). 2. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). 3. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR 200.313(d)(2)). 4. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated (2 CFR 200.313(d)(3)).  Section II – Federal Awards Findings and Questioned Costs (continued) 5. Adequate maintenance procedures must be developed to keep the property in good condition (2 CFR 200.313(d)(4)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: 6. Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings (2 CFR 200.303(d)). 7. Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition We subjected 60 equipment assets to testing; these assets had a value of approximately $94.8 million. Of the $94.8 million, approximately $8.0 million were equipment assets purchased in previous years and were subject to our inventory observation testing and the remaining $86.8 million were equipment assets subject to both our purchases and inventory observation testing. Total acquisition cost of equipment assets within scope purchased during the year approximated $279.6 million. Net book value of all equipment purchased to date under grants within scope as of September 30, 2023 approximated $558.0 million. The following exceptions to the criteria were observed during the performance of the audit procedures: 1. For three of the equipment samples reviewed (approximately $0.3 million), it was observed that the assets did not have a unique asset identifier in the originally provided equipment population or did not have an asset identifier on the equipment. 2. For five of the equipment samples reviewed (approximately $0.5 million), it was observed that the condition data or location field in the asset records was blank. 3. During our procedures performed for two assets (approximately $1.1 million), we identified that no inventory had occurred for the assets, even though they had been placed in service over two years prior and would have required an inventory prior to our observation. As this came to our attention after the inventory was required and during our observation procedures, we investigated further and could not obtain alternative evidence to support that an inventory had occurred within the two-year period. 4. One of the equipment samples selected could not be located (approximately $0.05 million), as such we could not verify existence of the asset. 5. This is a repeat finding that has occurred over the last several audit periods. As such, Amtrak has not taken sufficient actions when instances of noncompliance are identified through audit findings to make necessary updates to their internal controls. Questioned Costs This finding resulted in a total of $0.05 million of likely questioned costs for Assistance Listing 20.315 – National Railroad Passenger Corporation Grant: FR-AMT-0028-22 This amount represents the amount per the purchase order for the asset in sub bullet #4 above that could not be located. Context We selected 60 equipment items for internal control and compliance testing of the above attributes. See condition section above for equipment amounts in both sample size and population. Effect Amtrak is not in compliance with the 2 CFR 200.313. Additionally, when assets are not accurately identified, it could lead to logistical inefficiencies as well as the difficulty in locating and identifying equipment timely. This may also put assets at greater risk of being lost, stolen, or not properly maintained. Cause The nature of much of Amtrak’s equipment is composed of moving assets that are on the tracks and operating up and down the corridors or around the yards or moving from location to location in a geographical region to achieve daily operational objectives. Furthermore, Amtrak resources are deployed such that managers and supervisors oversee geographical regions and equipment that are located throughout various routes that often connect through multiple states with many unmanned and less traveled stations. Asset locations, including changes on short notice for where the asset will be used, and frequent inspections occur in order to keep the equipment operating safely; however, the system of record is not always updated or updated in a timely manner to reflect the location and condition of the asset in the records upon a change in asset custody. Amtrak’s equipment policy, which is inconsistent with Uniform Guidance, currently requires that the condition field be confirmed and updated as part of the two-year inventory observation requirement. Section II – Federal Awards Findings and Questioned Costs (continued) In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that an inventory occurs no less than once every two years. There is an identified control that stipulates “On a monthly basis, Capital Accounting will identify all equipment that has not been observed within 2 years and communicate to the Asset Management Team for action to be taken.” This control as designed is not preventive and may not identify the non-compliance risk until after non-compliance occurs. For the instances where the unique identifier did not exist on the asset or match the asset records, this was caused by a clerical/human error in recording the asset details in the system in addition to a lack of review control to verify the accuracy of the data recording. Identification as a Repeat Finding This finding is a repeat finding of 2022-001. Recommendation We recommend that Amtrak continue to work toward a full integration or reconciliation between Amtrak’s fixed asset system of record and the different equipment-tracking systems. We recommend that management consider redesigning one of its key controls to help ensure that the monitoring of the observations is occurring on a preventive basis to help identify any exposure to non-compliance before it occurs. For example, Amtrak should consider an automated system report that would flag an asset proactively when a 2-year inventory deadline is approaching. During the observation process, management should ensure there is a review control within the process to validate that the asset is accurately tagged and such identifying information matches the equipment-tracking system. Additionally, this review control should also be performed when the asset is first logged into the equipment-tracking system. In the interim, until such processes are fully implemented, Amtrak should enhance the current control procedures surrounding the asset documentation and ensure that field personnel are aware of and are consistently and carefully updating the asset records such that clerical/human errors are minimized and that the asset records contain the necessary asset details in order to properly track equipment by federal requirements. This would include enhancing the asset chain of custody recordkeeping so that such changes are identified and reported timely. Additionally, management should consider requiring the serial number and model number to be documented in the system of record at set up in addition to the asset tag number. This will help ensure that the equipment has a unique ID number that can help it be identified and matched to the system record should an asset number not get added timely. Finally, as it relates to condition #4 above, management should investigate the root cause of the asset that could not be located and determine if additional control changes or modifications need to be made in order to prevent reoccurrence. Views of Responsible Officials Amtrak agrees with the recommendation to redesign key controls to help ensure that the monitoring of the observations happens on a preventive basis to help identify any exposure to non-compliance before it occurs. Since being created in 2022, Amtrak’s Enterprise Asset Management and Disposition team (EAMDT) has completed, with support from an outside consulting firm, a baseline assessment, as well as corrective action plans to specifically address noncompliance identified in the audit finding. Early in FY2024, Amtrak completed Phase 2 of this engagement to execute and implement a sub-set of these corrective action plans. Through this effort, EAMDT has prepared an updated Equipment Control Policy, developed standard operating procedures for equipment management, and developed a one-hour eLearning course that provides an overview of the importance for good equipment management practices and highlights the necessity for adhering to Single Audit compliance requirements of 2 CFR Part 200. The deliverables of this effort are to help ensure that assets are not capitalized without a complete record, which would include a unique asset identifier, as well as the condition and location of the assets. Additionally, EAMDT has developed reporting and analytics that enable both EAMDT and field personnel to be more proactive in managing the soon-to-be and out of compliance assets to both bring assets back into compliance, as well as to ensure an inventory is done and recorded within the two-year period. Lastly, EAMDT is working closely with Amtrak’s Digital Technology Department on the installation of location tracking technology on yard equipment and Engineering Maintenance of Way equipment, as well as developing an application that can be used on employee’s mobile devices to help ensure timely equipment assessments are completed.

Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. The code of federal regulations – 2 CFR 200.313 Equipment requires that: - Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification.  Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.

Finding 2023-002: Preparation and Maintenance of Equipment Population Program Name: National Railroad Passenger Corporation Grants COVID-19 National Railroad Passenger Corporation Grants Assistance Listing No. 20.315 Federal Award No.: FR-AMT-0020-20 FR-AMT-0022-21 FR-AMT-0026-22 FR-AMT-0028-22 Federal Agency: U.S. Department of Transportation Criteria The code of federal regulations – 2 CFR 200.1 provides the following definition of Equipment: - Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. The code of federal regulations – 2 CFR 200.313 Equipment requires that: - Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data, including the date of disposal and sales price of the property (2 CFR 200.313(d)(1)). The code of federal regulations – 2 CFR 200.303 – Internal Controls requires that non-Federal entities must: - Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The following exceptions to the criteria were observed during the performance of the audit procedures as it relates to completeness and accuracy of equipment population: 1. In reviewing the equipment population provided to EY as part of the audit for FY23, we noted the Company mapped FY23 equipment activity relating to FR-AMT-0020-20, FR-AMT-0022-21 and FR-AMT-0026-22 grants to older funding sources. Per inquiry of management, FY23 Overhauled equipment activity was originally mapped incorrectly to prior year grant awards and fund source years. 2. Population contained an asset that could not be observed as the nature of the purchased equipment was a combination of tools with each individually costing less than $5,000. 3. Population contained an asset that had been replaced in 2021, and as such should not have been included in the equipment listing. Questioned Costs None. Context Population of single audit equipment records is manually prepared each period where funding sources are assigned to each asset based on the unique asset identifier. The data source used by the Capital Accounting team did not take into consideration overhaul activity during the FY23 period that was undertaken over equipment assets acquired in 2014-2016 fiscal years. (Condition 1) One of the 60 selections made for testing could not be observed, as the underlying equipment maintenance systems did not have a record of this item due to the fact that items purchased consisted of tools that were individually less than $5,000 and as such did not meet the definition of Equipment as defined by 2 CFR 200.1. The population provided to EY incorrectly included an exception as described in the Condition section above, indicating that following internal control was not functioning as designed: “Monthly, Lead Accountant, Capital Accounting exports equipment data from PP into an Excel spreadsheet (the Equipment Spreadsheet) and manually determines the eligibility of the equipment. The determination is subsequently reviewed by the Senior Manager, Capital Accounting.” (Condition 2) In the initial population provided, we noted that one of the assets had been retired and replaced in 2021 and should have not been included within the population. This was an error that was not corrected during timely updates of the maintenance records. (Condition 3) Effect Amtrak’s control procedures in place as it relates to the preparation of equipment population were not designed in such a manner that would timely identify the conditions noted. Cause The exception from the criteria noted is attributed to the following cause: 1. Highly manual process required to reconcile data between multiple systems in order to maintain a complete and accurate record for each equipment asset. 2. Internal control procedures as designed are not detailed enough to review equipment purchases to be able to determine eligibility of the asset to be classified as equipment under 2 CFR equipment valuation thresholds. Identification as a Repeat Finding Not a repeat finding. Recommendation To address the Condition identified above, we recommend Amtrak to continue integration of the systems in such a way that appropriate funding source would be tagged to each asset automatically and that required property records would automatically be consolidated into one system of record and updated in that system. Ensure that adequate IT interface and business process application controls over the completeness, accuracy, validity, confidentiality, and availability of transactions and data during application processing (input, processing, output, etc.) are in place. Additionally, management should consider breaking out large purchase orders containing multiple items of equipment and tools under one purchase request, by creating separate level 2 WBSE codes in order to distinguish between different types of items being acquired, in order to be able to provide more appropriate classification.  Views of Responsible Officials Amtrak agrees with the finding related to the equipment population and believes that strengthening procedures around the preparation and review of the population is needed to prevent errors in future populations. Amtrak recognizes that remediation of this finding will require enhancing documentation around the preparation of the population and documenting a set of procedures to follow for reviewing the population. Some of these efforts have already been enacted while others will be developed and implemented prior to September 30, 2024.