PROACTIVE USE OF DATA ANALYTICS

AMTRAK OFFICE OF INSPECTOR GENERAL

WHO Background and IntroductionWHAT Data Analytics work at Amtrak

OIGHOW Data Analytics strategy at

Amtrak OIGExamples

Reasons to use Data AnalyticsChallenges of Data Analytics WorkHow to leverage Data Analytics for your

work

Agenda

AmtrakOIG: - 50 Auditors, 30 Investigators,

17 Support Staff - Data Analytics Team - 8 (5

employees, 3 contractors)DA Team: - Performs own audits

- Provides support to other audits

- Supports Investigations group

Background and Introduction

Data Analytics work at Amtrak OIG Access to 15+ systems (80% of Amtrak’s

financial data) Audit in 10 different business areas including-

Accounts Payable Procurement Payroll Human Capital Health care Operations

150+ tests 18 Reports

Opportunities to reduce cost

Opportunities to increase revenue

Opportunities to improve control effectiveness or increase program efficiency

Recalculations/Compliance testing

Identify potential fraud

Data Analytics for different Audit Objectives

Support – OIG and Amtrak leadership Strategy – Shared services model Sourcing – Hired technical expertise Environment – Centralized Value – Pilot quick win Tools – Limit to ACL and Excel Security – Encrypt all data

Data Analytics program at Amtrak OIG

E X A M P L E S

From October 2005 - June 2013, $14.1 billion paid to vendors Data Analysis identified potential duplicate invoices paid of

about $7.5 million Finance staff recovered about $3.5 million Four major causes:

Clerks processed known duplicate payments despite system warnings

Duplicate vendors not detected by the automated controls Clerks did not ensure correct invoice numbers are entered Same Invoices received by different departments were paid

Background: Duplicate Payments

Duplicate PaymentsVendor Name Keyed

Invoice NoInvoice Date

Invoice Amount

ERICO PRODUCTS INC 130587 06/07/11 8,062.32

VOSSLOH TRACK MATERIAL INC 0000130587 06/07/11 8,062.32

ADT SECURITY SERVICES INC 75277679 07/07/12 5,224.02

DO NOT USE 75277679 07/07/12 5,224.02

W FRANKLIN LP 51017 10/21/11 3,600.00

Lorraine K Koc 51017A 10/21/11 3,600.00

FEDEX 790264830 05/28/12 1,901.04

FEDEX EXPRESS 790264830 05/28/12 1,901.04

Background: Material Price Variance Company buys materials form different vendors for

different plants across the country Analyzed $35 million worth of material POs If lowest price vendor was selected for all materials

bought in CY 2013, company could have saved $3.4 million

Causes: Weaknesses in material requirement forecasting Limited number of approved vendors

Material Price Variance

Material NumberVendor Name

Nbr Of POs PO Amount PO Qty

Avg Unit Price

% Variance

000000003710500004 EXXONMOBIL 6 $29,921 5,376 $6 16.52

000000003710500004 VALDES ENTERPRISES INC 1 $14,953 2,304 $6 16.52

000000000299900382 GE TRANSPORTATION SYSTEMS 11 $36,895 235 $157 12.74

000000000299900382 GE TRANSPORTATION SYSTEMS 1 $885 5 $177 12.74

000000000104500004 KOPPERS INDUSTRIES 11 $723,013 364 $1,986 11.34

000000000104500004 LB FOSTER 17 $705,459 319 $2,211 11.34

Material Number PO Amount PO QuantityLowest Avg

Unit PriceAmt At

Lowest PriceVariance To

Lowest

000000000104500004 $1,428,472 683.00 $1,986 $1,356,643 $71,829

000000003628500557 $161,299 4,940.28 $21 $104,092 $57,208

000000003733300001 $2,480,196 371,450.80 $7 $2,425,574 $54,622

000000000256404084 $66,486 60.00 $952 $57,120 $9,366

Background: Profile of Timesheet Data Amtrak’s major expenses is labor – $1.2

billion paid to union employees in CY 2014

Amtrak has 14 unions and 23 bargaining agreements representing different crafts

6 timekeeping systems Data revealed trends and patterns that

raise questions about whether overtime and regular time is appropriately reported

Summary of Weekly Overtime as Percent of Regular Time

Summary of Regular and Overtime Hours Reported in Daily Timesheets

Summary of Consecutive Days WorkedTop Occurrences – Consecutive Days Worked

SAP ID Job Title Union Start Date

End Date

Days Worke

d

MAINTAINER SD BRS-SW 12/19/2013 5/14/2014 147

AGENT TICKET CLK FC TCU-OFF 4/30/2014 9/8/2014 132

MAINTAINER SD BRS-SW 12/26/2013 5/1/2014 127

MAINTAINER SD BRS-SW 2/20/2014 6/18/2014 119

COACH CLEANER JCC 3/2/2014 6/17/2014 108

C XXXXXXXXX XXXXXX XXXXXX XXXXXX XXX

TICKET/ACCTNG CLERK TCU-OFF 6/4/2014 9/15/201

4 104

ENG WORK EQUIP SD B BMWE-NEC 6/24/2014 10/1/201

4 100

Identify risk areas with high degree of assurance in finding results

Mine through 100% of transactions Advantage over business

Read data from any system, no size limitations Bring disparate sets of data in one view – hard

for business to do Helps break down complex business processes

Reasons to use Data Analytics

Individual Level New skill to acquire – lack of commitment to learn Lack of vision and support from management Overwhelmed with the data - not knowing where to

start Unclear objectives – a fishing exercise Understanding the data and the business process Uncooperative auditee makes the process difficult

to get meaningful results

Challenges of Data Analytics work

Organization/Agency Level

Obtaining access to the data

Storing and securing sensitive data

Recruiting, training, and retaining

Building sustainable processes and infrastructure

Challenges of Data Analytics work

Build the right team Pick right projects - low hanging fruits first Identify the need for data analysis at the

beginning of your project Understand the data and the business

process Validate your results

How to Leverage DA for Audits

Sample Tests Duplicate Payments

Compare two transactions with same Invoice Number, Invoice Date, Invoice Amount

Check for duplicate entries in vendor master – same name, tax ID/SSN, bank account, address, phone number

Identify vendors who repeatedly submit duplicate invoices Procurement

Compare contract price (PO or BPO) against invoice price to verify if vendor is honoring agreed upon pricing terms

Check if vendor is honoring discount terms – compare PO vs Invoice Check if Accounts Payable is losing early discounts because of late

payments – compare discount allowed per PO/Invoice vs discount taken

Check if there is opportunity to negotiate longer payment terms with the vendors – most companies are asking for 45 to 60 days

Material Price variance (use following steps)1. Aggregate PO quantity and amount by material no and vendor no. 2. Calculate average price per material unit per vendor (Sum PO Amt /

Sum PO Qty). 3. Identify the lowest price per material unit per vendor and segregate

vendors who charged 10% more than the lowest priced vendor.4. Calculate the higher amount paid for each material by multiplying

the average lowest price paid for that material with the total quantity bought from all vendors.

Timekeeping Filter timecards with more than 24 regular and overtime hrs in a day. Identify employees who submit excessive regular hours in one day to

hide overtime (16 hrs or more). Filter employees who reported regular and overtime hrs on 30 or

more consecutive calendar days. Filter employees whose weekly overtime hrs were at least as many

or more than their regular hrs.

Sample Tests

Health Care Fraud Indicators Practitioners with high average payments Practitioners charging 3 times more than the average

amount per Procedure Code Practitioners using a Procedure code 3 times more

frequently than other practitioners with similar patient volume

Practitioners with 3 times more than average units per Procedure Code

Practitioners charging 6 times more than the average amount per Diagnosis Code

Practitioners with high number of new patients Practitioners with high transaction volume Practitioners serving patients with high medical visits Practitioners not charging copay in high number of visits

Sample Tests

QUESTIONS OR COMMENTS

Vijay Chheda202-906-4661

vijay.chheda@amtrakoig.gov