MBTA Audit: Fare Box Money Not Accurately Counted or Adequately Protected
BOSTON, MA — State Auditor Suzanne Bump today announced an audit of the Massachusetts Bay Transportation Authority’s (MBTA) automated fare collection (AFC) system that highlighted lapses in the protection of fare money. Among the inadequacies identified were revenue variances of more than $100 million between the system’s records and the actual money collected, missing keys to fare boxes, and incomplete tracking of fare box cash.
Functioning properly, the AFC system should accurately record the fares collected on buses and trolleys. The MBTA could then use this record to compare to the actual cash received to ensure proper accounting of revenues collected. However, since its inception in 2005, the AFC system has not been able to properly record the intake of cash or communicate electronically with the MBTA central accounting system. Accordingly, fare box collections have been manually counted and cannot be reconciled with any of the system’s revenue reports.
Specifically, for the five-year period from July 1, 2006 through June 30, 2011, actual fare box cash receipts deposited were $123.8 million whereas the AFC system recorded over $225.5 million in fare box cash receipts. This variance of more than $101.7 million demonstrates significant reliability problems in the MBTA’s collection and control of cash revenue. Without such controls, there is inadequate assurance that all funds collected within the system are being properly safeguarded against loss, theft, or misuse.
“While we found no evidence of lost money or theft in our audit, without a properly functioning fare collection system, the MBTA does not have complete assurance that theft is not occurring. The MBTA cannot properly safeguard revenue it may not know it has,” said Auditor Bump.
The contract for the $94 million AFC system specified that it must integrate with existing systems, but a state audit conducted in 2005 of the creation of the AFC system revealed that the MBTA had reduced the amount of testing required to ensure that all machines were fully functional and that the interests and assets of the MBTA are protected.
In addition, the audit found inadequate control over keys to fare box cash. Until 2007, the MBTA did not have formal policy and procedures in place for managing keys used in the AFC system. Properly safeguarding access to, accounting for, and documenting the chain of custody for these keys is critical to ensuring the integrity of the MBTA’s fare cash receipts. At the time of the audit, 12 keys that provide access to fare box cash were missing and 1,313 keys that were unnumbered and cannot be tracked.
The audit also found that cash boxes were not properly tracked during removal, deposit, and reinsertion. As a result, MBTA management is not provided with reliable tracking information regarding the removal and deposit of fare box cash. Coupled with the aforementioned weaknesses in the control of revenue keys and the inability to properly reconcile fare box cash receipts, fare box cash is exposed to potential loss, theft, or misuse.
“Especially at a time when the MBTA is facing a major fiscal crisis and increasing fares, it needs to do all it can to assure its riders and taxpayers that it is protecting and maximizing public funds and holding its contractors accountable,” Bump said.
Auditor Bump has called on the MBTA and its AFC vendor, Scheid & Bachman USA Inc., to immediately implement corrective actions to address software and hardware deficiencies and has recommended that all revenue locking systems be replaced.
The MBTA, which was established in 1964, provides bus, bus rapid transit (BRT), light rail, heavy rail, commuter rail, ferry, and demand-responsive public transportation services to 175 cities and towns in the Massachusetts Bay region, including the City of Boston. The population of the MBTA’s service area is approximately 4.5 million. In FY2011 the MBTA’s ridership was 380,694,311 and transportation revenue was $448,814,000.
The Office of the State Auditor Suzanne Bump (OSA) conducts financial, performance, and technical assessments of state government’s programs, departments, agencies, authorities, contracts, and vendors. With its reports, the OSA issues recommendations to improve accountability, efficiency, and transparency.