The federal government right to audit California bullet train project

Last week, the federal government announced that it would audit California’s high-speed rail project. This is welcome news for those who have believed from the very inception of the project that it was doomed to failure.

Bullet train cheerleaders and their allies in the California Legislature have worked hard to conceal the true status of the project as well as its viability. Only recently, after years of rising costs and blown deadlines, has the legislature finally agreed to conduct its own audit.

Whether the state audit will be meaningful remains to be seen, given the enormous political pressure to paint Gov. Jerry Brown’s pet project in the most favorable light. Certainly the federal government is more likely than the state to conduct a serious and impartial audit.

The audit will be conducted by United States Office of Inspector General for the U.S. Department of Transportation. Like other OIGs — there are 73 such offices in the federal government — the inspector general will employ both forensic auditors and a variety of other specialists. Their mission includes the detection and prevention of fraud, waste, abuse and mismanagement of government programs and operations.

The scope of the audit is key. This will be far more than an “internal controls” financial audit to see if the flow of funds into and out of a government agency is supported by the proper paperwork. Financial audits typically do not assess whether a program or government operation is achieving its goals. For that, a performance audit is needed.

A performance audit is an independent examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources — in other words, whether money is being wasted.

In announcing the audit, the OIG stated that the Federal Railroad Administration has disbursed $8.6 billion for high-speed passenger rail, nearly 39 percent of that funding dedicated to the California high-speed rail project. At Congress’ request, the OIG will “assess FRA’s (1) risk analysis, assessment, and mitigation efforts—particularly regarding the availability of non-Federal matching funds, business plans, and financial reporting — and (2) procedures for determining whether Federal funds expended complied with applicable Federal laws and regulations.”

By specifically referencing high-speed rail’s “business plan,” the OIG may be signaling its intention to assess the viability of the entire project, and perhaps to recommend whether federal involvement should be terminated entirely. For taxpayers, it would also be beneficial if the OIG investigated the extent to which those with a financial interest in the bullet train exerted influence on policy makers with campaign contributions or by any other means.

Billions of dollars — from both federal and California taxpayers — have already been expended on the high-speed rail project. There may be those who will argue that an audit now is akin to closing the barn door after the horse is out. But much more spending is planned, and for decades. A comprehensive performance audit conducted by a competent, aggressive and impartial entity is absolutely necessary. There should be real accountability for this out-of-control boondoggle, and maybe that will help to avoid similar fiscal train wrecks in the future.

Once the OIG audit is completed, Californians may demand the ultimate in accountability: an opportunity to vote on the high-speed rail project once again.