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September 2008
Action: Failure to audit charges for railroad provided maintenance for privately owned rail cars.
Railroad cars must be maintained to Association of American Railroads (AAR) standards, as well as meet all safety mandates. If the fleet is relatively small, this maintenance is arranged with the railroads to accomplish this at point of occurrence. The charges are specified in a guide published by the AAR and include charges for parts and labor. Because the arrangements separate carrier and owner repair cost, the billed charges are rather complicated, and errors are easily found in the actual dollar charges made to owners. These actual charges should be audited against the authorized charges for errors in submittal of invoices. Whether the repairs are
routine or extensive, and an evaluation is made as to the portion that is attributable to railroad error, and the part that is owner's responsibility. Outside qualified car repair facilities are readily available and they are also helpful in separating the owner vs. rail responsibility for any repairs performed on your cars. It is also wise to seek outside bids for repairs of this nature as generally this can result in lower overall costs and a quicker return to service of the damaged car. It requires a very extensive knowledge of the rail repair processes and an audit is usually more productive if it is done by qualified outside audit service firms.
The service charges are usually a percentage of all recoveries from the audit process. The Logistics group has the action responsibility and this would of course be the “Team Group C” total area of interest and responsibility.
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