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

RAILINC I ACACSO 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 Overview of the Car Hire Audit Process 3

RAILINC I ACACSO 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 Components of Carrier Audits 5

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

RAILINC I ACACSO Components of Systems Audits 8

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

RAILINC I ACACSO Review of Specific Audits 10

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

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

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

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

RAILINC I ACACSO 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 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 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 Audit Reports 26

RAILINC I ACACSO Audit Reports Provided to the industry for review and reference Stored in a Railinc SharePoint site –Sign on to –Select CHA (committee site) –Select “Carrier Audits” 27

RAILINC I ACACSO Questions? 28