Introduction

Rail Co is a public sector rail company responsible for delivering passenger rail services within Beeland.

Rail Co is governed by a supreme governing committee known as the Rail Co Trust Board. This board is responsible to theMinistry of Transport for ensuring that the Rail Co board of directors make the best use of public money and maintaineffective and efficient services to the public. Figure 1 below shows the governance structure of Rail Co.

The National Audit Authority (NAA) of Beeland is a national government audit authority with responsibility for evaluatingand reporting to the government of Beeland on public spending, suggesting improvements to and benchmarking againstthe performance of a wide range of publicly funded organisations. The NAA also has a responsibility to advise on the valuefor money (VFM) obtained from publicly owned enterprises and on the performance of the boards of such organisations,including the senior executives of these boards.

Rail Co has in the recent past received negative publicity in the media and from a variety of other sources relating to itspoor services and performance. This has prompted the Minister for Transport of Beeland, to commission the NAA toundertake an urgent investigation of the issues facing Rail Co.

The following exhibits (1–6) provide information relevant to Rail Co.
– Exhibit 1: Website page for Rail Co leadership and governance.
– Exhibit 2: Transport report published in the Beeland Herald newspaper.
– Exhibit 3: Passenger survey results and performance analysis spreadsheet for Rail Co and its competitors (three years data).
– Exhibit 4: Rail Co board meeting minutes.
– Exhibit 5: Outline person specification and summary CVs for two candidates for the new chief executive position
– Exhibit 6: Ticket sales, passenger usage data and fraud analysis at stations in towns within Region 1 – Beeland network – prepared by the financial controller of Rail Co.

Question 4a:

It is now three months later. A new chief executive has been appointed and is working closely with the board of directors and the Rail Co Trust Board to improve performance.

You are an internal auditor working for the audit and risk committee of Rail Co.

The new chief executive asked the financial controller of Rail Co to produce a spreadsheet which analyses the ticket sales and rail usage by station within the Beeland rail network and which also analyses the estimated levels of fraud occurring across the Rail Co network.

Required:
You have been asked by the chair of the audit and risk committee to review the findings of the financial controller and present a report which requires you to do the following:

(a) Analyse the information presented in the spreadsheet produced by the financial controller, questioning any assumptions he may have made, and explain the implications of the findings for Rail Co. (8 marks)

Professional skills marks are available for demonstrating scepticism skills in considering the information presented in the spreadsheet and reflecting on the impact on Rail Co’s revenues. (2 marks)