RAILINC I ACACSO 2014 AAR Car Hire Audit

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ AAR Car Hire Audit Process Jim Pinson ACACSO November 10 – 12, 2014 +++++++++++++++++++++++++++++

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Agenda • • Overview of Car Hire Audit Process Components of Carrier Audits Components of Systems Audits Review of Specific Audits – Purpose, Sample, Audit, Result • Audit Reports +++++++++++++++++++++++++++++ 2

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Overview of the Car Hire Audit Process +++++++++++++++++++++++++++++ 3

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Car Hire Audit Process Overview Authority: Car Hire Rule 6 Auditors: Railinc on the behalf of the AAR Timing: Class I alternating years Class II & III carriers every three to five years Result: Report indicating compliance with car hire rules +++++++++++++++++++++++++++++ 4

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Components of Carrier Audits +++++++++++++++++++++++++++++ 5

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Components of Carrier Audits • Mileage – Accuracy of mileage masters – Reporting of all movements – Payment for reported movements • Use of LCS • Claim handling +++++++++++++++++++++++++++++ 6

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Components of Carrier Audits • Timeliness of payments • Rule 22 reclaims • Rule 5 transfers of liability +++++++++++++++++++++++++++++ 7

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Components of Systems Audits +++++++++++++++++++++++++++++ 8

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Components of Systems Audits • Rule 4 transfers of liability • Damaged & Defective Car Tracking (DDCT) – Rule 7 – Rule 8 +++++++++++++++++++++++++++++ 9

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Review of Specific Audits +++++++++++++++++++++++++++++ 10

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Gap Analysis • Purpose: Ensure mileage is paid for reported movements • Sample: Statistically significant sample from CHDX • Audit: Internal movement records reviewed for continuity • Result: Discrepancies exceeding 10 miles are noted +++++++++++++++++++++++++++++ 11

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Mileage Master Audit • Purpose: Assess mileage master accuracy • Sample: Gap analysis data selected for maximum coverage • Audit: Compare reported mileage with timetables, system maps and other sources • Result: Differences of 1. 5 miles or greater are noted +++++++++++++++++++++++++++++ 12

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ LCS Audit • Purpose: Tests use of LCS in calculations • Sample: Sample data from gap analysis • Audit: Sample compared to LCS to confirm payment based on LCS • Result: Payments not based on LCS noted +++++++++++++++++++++++++++++ 13

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Payable Claims Audit • Purpose: Assess payable claim handling • Sample: Completed claims – allowed and rejected • Audit: Compare decision with car hire rules; decision should be timely and based on LCS +++++++++++++++++++++++++++++ 14

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Payable Claims Audit • Result: Responses not in conformance with car hire rules noted +++++++++++++++++++++++++++++ 15

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Receivable Claims Audit • Purpose: Assess receivable claim handling • Sample: Sample of issued claims • Audit: Claims compared to LCS records; additional car hire must be due; must be issued within time limits; proper format confirmed • Result: Non-conforming handling noted +++++++++++++++++++++++++++++ 16

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Percent Payment Audit • Purpose: Confirm most car hire is paid in current and voluntary periods • Sample: CHDX data assembled monthly • Audit: 98% for Class I carriers 95% for non Class I carriers • Result: Non-conformance noted +++++++++++++++++++++++++++++ 17

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Percent Payment Audit • Note: Data can be used to determine future audit schedules +++++++++++++++++++++++++++++ 18

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 22 Audit • Purpose: Assess conformance of Rule 22 reclaims to car hire rules • Sample: Statistically significant random sample drawn from CHDX • Audit: Reclaim compared to car movement records to confirm compliance with Rule 22 • Car Must be Empty • Cannot be Under Revenue Billing • Car Must be Assigned +++++++++++++++++++++++++++++ 19

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 22 Audit • Result: Conforming and non-conforming reclaims noted +++++++++++++++++++++++++++++ 20

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 5 TOL Audit • Purpose: Assess Rule 5 TOL compliance with car hire rules • Sample: Statistically significant random sample from Car Hire Liability File (CHLF) • Audit: Sample data is reviewed for conformance with Car Hire Rule 5 and matched to SSDX +++++++++++++++++++++++++++++ 21

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 5 TOL Audit • Result: Conforming and non-conforming TOL noted +++++++++++++++++++++++++++++ 22

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 4 TOL Systems Audit • Purpose: Confirm system is properly creating TOL for Rule 4 • Sample: Statistically significant random sample of Rule 4 TOL • Audit: Sample and EDI 417 data compared to movement events • Result: Confirmation that Rule 4 process is working as designed +++++++++++++++++++++++++++++ 23

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 7 and Rule 8 Audit • Purpose: Confirm car hire is moved properly as a result of DDCT transactions • Sample: Statistically significant random sample of DDCT incidents opened in the last year +++++++++++++++++++++++++++++ 24

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Rule 7 and Rule 8 Audit • Audit: Sample data is compared to car movement events to confirm car hire was moved correctly • Result: Confirmation that Rule 7 and Rule 8 processes are working as intended +++++++++++++++++++++++++++++ 25

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Audit Reports +++++++++++++++++++++++++++++ 26

RAILINC I ACACSO 2014 +++++++++++++++++++++++++++++ Audit Reports • Provided to the industry for review and reference • Stored in a Railinc Share. Point site – Sign on to www. railinc. com – Select CHA (committee site) – Select “Carrier Audits” +++++++++++++++++++++++++++++ 27