oversight

Human Resources: Background Checks Process Has Improved, but Some Inefficiencies and Gaps Persist

Published by the Amtrak Office of the Inspector General on 2018-11-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Human Resources:
Background Checks Process Has Improved, but Some
Inefficiencies and Gaps Persist




                             OIG-A-2019-001 | November 1, 2018
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Memorandum
To:             DJ Stadtler
                Executive Vice President/Chief Administration Officer

From:           Stephen Lord
                Assistant Inspector General, Audits

Date:           November 1, 2018

Subject:        Human Resources: Background Checks Process Has Improved, but Some
                Inefficiencies and Gaps Persist (OIG-A-2019-001)

The goal of Amtrak’s (the company) background checks process is to ensure that
prospective employees and contractor employees working in the company are qualified
and do not pose safety or security risks to company operations. These checks include
reviewing employees’ criminal, education, and employment histories to ensure that
they do not indicate potential problems. In fiscal year (FY) 2017, the company vendor—
Accurate Background, Inc. (Accurate)—conducted background checks on
1,882 prospective employees and the company hired 1,293 employees from those
checked. 1 In addition, the company relies on contractors to conduct background checks
on their employees supporting company operations. This is an important step given
that the company relies heavily on a contractor workforce of over 3,000 staff to support
critical functions such as information technology (IT) and engineering services. 2

In July 2012, we reported on significant management control weaknesses in the
company’s background checks process for the employees it hires, which the company
took actions to address. 3 The purpose of this review is to provide an update on the
company’s background checks process. Our objective is to assess the efficiency and
effectiveness of this process for company employees and contractor employees working
in the company.




1 The company does not hire all prospective employees subject to its background check process. It rejects
some of these prospective employees because of the results of their background checks or drug tests,
among other reasons.
2 The company is in the process of developing a more accurate headcount of contractor employees.

3 Human Capital Management: Weaknesses in Hiring Practices Result in Waste and Operational Risk

(OIG-A-2012-014), July 19, 2012.
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                            Amtrak Office of Inspector General
    Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                   and Gaps Persist
                           OIG-A-2019-001, November 1, 2018

As part of this review, we assessed employees hired during FY 2017 to determine the
extent to which the company completed their background checks before they started
working. We interviewed company officials responsible for overseeing the process. In
addition, we selected random samples of checks that Accurate did not complete and
sent back to the company to resolve in FY 2017 and assessed the reasons Accurate
returned the checks. Because we used a random sample, we could extrapolate our
results and estimate how frequently the reasons we identified may have occurred
within the total number of returned checks. For contractor employees working in the
company, we selected the five contractors with the most employees in the company and
assessed the contractors’ efforts to ensure that their employees were subject to
background checks in accordance with company policy. 4 For further details on our
methodology, see Appendix A.

SUMMARY OF RESULTS
Since our last review, the company has strengthened the efficiency and effectiveness of
its background checks process but has opportunities to further enhance the process by
taking the following actions:

       •   holding the vendor that conducts the company’s background checks accountable
           for complying with established guidance
       •   clarifying which department is responsible for ensuring that contractors have
           completed the required background checks on employees they provide to the
           company, and ensuring that these checks meet company standards, and that the
           contractors use approved vendors for the checks

Specifically, our analysis of the background checks process shows:
      •    Background checks are generally completed before new employees start work.
           In response to our 2012 review, the company centralized oversight of the process
           and provided training to better ensure that background checks are completed
           before new employees start work. As a result, only 7 of the 1,293 new employees
           the company hired in FY 2017 started working before their background checks
           were completed, and the 7 were completed within several days after the
           employees started work. In six of these cases, the checks showed no issues of
           concern; in one case, the company found that the employee had a criminal


4   The five contractors are IBM, Aramark, VIA Rail Canada, Deloitte, and Alstom.
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                            Amtrak Office of Inspector General
    Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                   and Gaps Persist
                           OIG-A-2019-001, November 1, 2018

          conviction for driving under the influence of alcohol. However, the company did
          not consider this to be a disqualifying offense because the employee’s position as
          coach cleaner did not require operating a vehicle or equipment. These results
          compare favorably to our 2012 review of background checks for 50 employees,
          which found that most—46 checks—were incomplete or were not returned to the
          company before the employees started work.

      •   Criminal history reviews have been strengthened. The company has also
          improved its process for resolving questions about the criminal histories of
          prospective employees—another weakness we identified in our 2012 report.
          The company centralized responsibility for resolving these questions in the
          Human Resources department (HR) and developed criteria to guide these
          decisions, such as the nature of the offense. When there is still uncertainty,
          the company now uses one review panel instead of two to make a final
          determination of employment suitability, which provides more consistency.
          In FY 2017, Accurate sent 186 of the 1,882 checks it conducted back to the
          company to complete because of unresolved questions about criminal histories.
          After conducting additional reviews, the company rescinded offers to 19
          prospective employees in this group.

      •   Education and employment history reviews are inefficient. In FY 2017,
          Accurate did not complete a significant number of background checks and
          instead returned them to the company to resolve because of (1) limitations in its
          contract with the company and (2) weaknesses in the company’s oversight of
          Accurate. As a result, the company spent resources resolving questions the
          vendor could have readily resolved. In FY 2017, Accurate referred 478 of the
          1,882 checks it conducted back to the company to complete because of
          discrepancies in education histories and referred 543 for discrepancies in
          employment histories. 5 This generally occurred for two reasons. First, the
          company’s contract with Accurate limited the amount of education and number
          of employers that Accurate could check. Company managers said they plan to
          revise these provisions in the new contract the company plans to let for a
          background checks vendor. Second, company managers did not take steps to
          ensure that Accurate complies with company guidance on how to resolve


5Accurate could have returned a check to the company for multiple reasons, including discrepancies in
the education and employment information provided by a potential employee.
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                            Amtrak Office of Inspector General
    Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                   and Gaps Persist
                           OIG-A-2019-001, November 1, 2018

          relatively minor discrepancies. As a result, the company continues to spend
          unnecessary resources on its background checks process.

      •   The company does not ensure that contractors conduct background checks. The
          company did not comply with its policies for ensuring that contractors conduct
          the required background checks on their employees working in the company.
          These policies require contractors to certify in writing that they have completed
          background checks on the employees they provide to the company. Further, the
          policies require the company to conduct independent audits to verify that
          contractors conduct these checks, and that contractors use a company-approved
          vendor to ensure that checks meet company standards. At the completion of our
          audit work, the company had not complied with these policies because, despite
          initial efforts, it has not identified which departments are responsible for
          completing each of these steps. In addition, company officials said they were
          considering revising the policy on using an approved vendor list but had not
          reached an internal consensus on the path forward. 6 As a result, the company
          lacks assurances that contractor employees working in the company do not pose
          a risk to company operations; many employees provided by contractors have
          access to mission-critical or sensitive information and assets.

We recommend that the company strengthen its oversight of the background checks
process by ensuring that its vendor follows company guidance for resolving questions
about the education and employment histories of prospective employees. In addition,
we recommend that the company address background check vulnerabilities in its
contractor workforce by clarifying which department is responsible for the following
activities, and ensuring that the departments are initiating implementation:

      •   ensuring that contractors self-certify that they completed checks of their
          employees working in the company
      •   auditing contractors’ compliance with the requirement to conduct checks
Finally, we recommend that the company clarify its policy requiring the company to
develop a list of approved vendors that contractors can use to conduct checks and
initiate implementation.


6We have identified long-standing challenges in the company’s management and oversight of contracts,
see Amtrak: Top Management and Performance Challenges—Fiscal Years 2017 and 2018 (OIG-SP-2017-009),
March 29, 2017.
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                            Amtrak Office of Inspector General
    Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                   and Gaps Persist
                           OIG-A-2019-001, November 1, 2018

In commenting on a draft of this report, the Executive Vice President/Chief
Administration Officer agreed with our recommendations and described actions the
company is taking, or plans to take, to address them. The company identified steps it
plans to take to hold the vendor more accountable in resolving questions about the
education and employment histories of prospective employees and completing checks.
The company also identified the departments responsible for obtaining contractor
certifications of completed checks, clarified the processes it will use to do so, and
outlined how it will audit contractor compliance with company requirements for
background checks. The company also stated that it will not require contractors to use
vendors from a pre-approved list and will delete this requirement from its policy.
The company expects to complete these actions by November 2019. For management’s
complete response, see Appendix B.

BACKGROUND

When the company makes an employment offer, the prospective employee must
successfully pass a background check. The Employee Service Center in the Human
Resources (HR) department is responsible for overseeing this process. After the
company makes a conditional offer of employment, prospective employees who accept
it must provide certain information, such as their education history, employment
history, and any criminal violations.

Company policies 7 for performing background checks include verifying the prospective
employees’ education and employment histories. The policies also include searching
various law enforcement databases to obtain information about prospective employees’
criminal histories, which the company must assess when determining their suitability
for employment. In addition, for certain positions, company policy may call for a
review of the prospective employee’s consumer credit report.

Amtrak contracts with Accurate to verify the education and employment information
and to check criminal history databases. Amtrak also provides guidance 8 to Accurate on
how to conduct these checks. For example, Accurate is to contact schools, colleges, and
prior employers and to review relevant databases—such as county criminal databases
and sex offender registries. The April 2016 guidance also directs Accurate how to


7 Amtrak Policies 7.40.3, Employee and Independent Contractor Background Checks, and 7.7.5,
Employment, Promotion and Reassignment.
8 Amtrak Human Capital Management April 2016 - Risk Reduction Technology Adjudication Matrix.
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    Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                   and Gaps Persist
                           OIG-A-2019-001, November 1, 2018

resolve common discrepancies between this information and what Accurate is able to
verify, and to report its results back to the company. If Accurate is unable to verify any
of the information the prospective employee provides, it is to send the check back to the
company, which then takes responsibility for reviewing and verifying the information
and makes the final employment suitability determination.

Contractors who have employees working for the company are responsible for
completing background checks on these employees. Checks must include a verification
of an employee’s immigration status and that the person has no disqualifying criminal
history. Company policy 9 requires contractors to certify in writing that they have
completed the required check on each employee they provide to the company, 10
conduct random audits of contractors to ensure that they are complying with these
requirements, and use company-approved vendors to conduct the checks.

BACKGROUND CHECKS PROCESS FOR COMPANY EMPLOYEES
HAS IMPROVED BUT IS STILL INEFFICIENT FOR VERIFYING
EDUCATION AND EMPLOYMENT HISTORIES
Since our 2012 report, the company improved its background checks process to better
ensure these checks are completed before new employees begin working for the
company and that reviews of criminal histories are more consistent. However, we
identified several inefficiencies in the company’s process for verifying education and
employment histories, which cost the company resources and poses risks.

Background Checks Are Completed Before New Employees Start
Work
The company has improved its controls to address the weaknesses we identified in our
2012 report cited above. In response to that report, HR appointed a lead person to
monitor compliance with the policy that checks must be completed before new
employees start work, provided training for staff involved in the hiring process, and
stipulated that all of its staff use the same vendor for conducting checks. And in early
2017, HR consolidated oversight of the hiring process and transferred all monitoring
responsibilities to the Employee Service Center, including oversight of compliance with
this policy, to provide more consistency.


9   Amtrak Policy 7.39.2 Contractor Background Check.
10  Amtrak Background Check Verification Form NRPC 3409.
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 Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                and Gaps Persist
                        OIG-A-2019-001, November 1, 2018

As a result, the company better ensures that background checks are completed before
new employees start work, reducing the risk to company operations. Our analysis
showed that only 7 of the 1,293 employees the company hired in FY 2017 began work
before their background checks were completed, and all 7 were completed within
several days after the employees started work. Furthermore, for 6 of the 7 employees,
the checks indicated no issues of concern. For the remaining employee, the check
identified a conviction for driving under the influence of alcohol. Because the new
employee’s position as a coach cleaner did not require operating a vehicle or
equipment, the company determined that the conviction was not serious enough to
justify rescinding the employment offer.

These results represent a significant improvement since our 2012 report when we
reviewed background checks for 50 employees and found that 46 were incomplete or
were not returned to the company before the employees started work. This posed the
risk that employees with criminal histories or other issues in their background could
work in positions that are sensitive or critical to company operations. 11

Process for Resolving Criminal History Checks Strengthened
The company also has improved its process for resolving questions about the criminal
histories of prospective employees—a weakness we identified in our 2012 report. In that
report, we found 5 cases in our sample of 50 in which company recruiters hired
prospective employees even though the vendor's background check report raised
questions about their criminal histories.

Currently, if Accurate finds an indication of criminal history, the company’s guidance
directs Accurate to return the case to the Employee Service Center, which determines
the person’s suitability for employment. To make these determinations, the Employee
Service Center uses an established process with criteria, such as the type of position
being filled and the nature of the offense. If the Employee Service Center cannot make a
determination, it uses a panel to do so. HR chairs the panel and provides several
members, as does the Law department. The panel also uses a process and a set of
criteria to guide its decisions. In prior years, the company had been using two panels—


11For example, we identified several instances in which an employee with an older criminal conviction,
including a murder in one case, had not disclosed this during the background check, and the company
later identified the convictions and ensured that employment was terminated.
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 Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                                and Gaps Persist
                        OIG-A-2019-001, November 1, 2018

one for prospective agreement employees and one for prospective non-agreement
employees 12—which led to inconsistent decisions and other problems. To help resolve
this, the company consolidated criminal history adjudication into one panel in
January 2016.

In FY 2017, Accurate sent 186 of the 1,882 checks it conducted back to the company to
complete because of unresolved criminal histories. After conducting additional review,
the company rescinded offers of employment to 19 potential employees with these
checks. The Employee Service Center rescinded 10 offers, and the panel rescinded
9 offers.

Process for Verifying Education and Employment Histories is
Inefficient
During FY 2017, Accurate did not complete a significant number of background checks
because of questions or discrepancies about the education and employment histories of
potential employees and returned these checks to the company to resolve. In examining
these cases, we found that the company structured provisions in Accurate’s contract
limit its ability to thoroughly verify these histories. In other cases, the company did not
effectively oversee Accurate to ensure that it consistently completed these checks.
Consequently, Accurate relied on the company to resolve minor discrepancies it should
have been able to resolve. Thus, the company used resources to complete background
checks it paid Accurate to complete.

Contract Limitations in Verifying Education and Employment Histories

We identified two key contract provisions that hindered Accurate’s ability to verify
prospective employees’ education and employment histories:

     •   Contract terms limit the extent to which Accurate can verify education history.
         In FY 2017, Accurate did not complete 478 background checks and returned them
         to the company because of discrepancies in prospective employees’ education
         histories. We estimate that Accurate returned about 157 of these checks 13 because


12 Agreement employees are covered by collective bargaining agreements. Non-agreement employees are
considered part of management and are not covered by separate agreements.
13 Based on our projection of the results we obtained from our random sample, we are 95 percent

confident that Accurate did not complete and returned to the company between 86 and 220 of the
478 checks because of this contract limitation.
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Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

       of a contract provision that limited the extent to which Accurate could check
       these histories. This provision stipulates that the company will pay for Accurate
       to verify only one degree for each prospective employee and that Accurate
       should verify the highest degree earned. In response, Accurate structured its
       automated questionnaire to solicit information from prospective employees to
       align to this provision. Some prospective employees, however, report completing
       a number of college courses but not earning a college degree, and Accurate’s
       questionnaire does not allow a prospective employee to list a second degree,
       such as a high school diploma. In these cases, Accurate is unable to complete the
       education verification and returns the check to the company to resolve.

   • Contract terms limit the extent to which Accurate can verify employment
       history. The contract also provides that Accurate verify a prospective employee’s
       last two employers. However, if the prospective employee changed jobs
       frequently, this might cover only a few months of employment history,
       according to the HR manager. Our review of leading practices found that
       companies typically want to assess a longer period of employment history to
       check for any potential issues and limit risks.

The HR manager told us the company structured the two contract provisions to control
contract costs. However, as a result, the company must use its resources to complete
checks that Accurate could have completed if it could have conducted more extensive
checks. While we did not analyze the extent of these costs, the HR manager said that the
company plans to revise the contract provisions to address these limitations as it lets a
new contract for background checks in response to its upcoming request for proposals
from potential vendors.

Limited Oversight of Accurate’s Education and Employment History Checks

We identified the following gaps in the company’s oversight of Accurate’s efforts to
verify education and employment histories that resulted in inefficiencies:

   •   Weaknesses in verifying dates of education. In FY 2017, Accurate returned
       478 checks to the company because of discrepancies in the education histories of
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                                and Gaps Persist
                        OIG-A-2019-001, November 1, 2018

         prospective employees. We estimate that Accurate returned about 81 14 for
         relatively minor discrepancies that Accurate could have readily resolved if it
         complied with the company’s April 2016 guidance to accept any discrepancies in
         the dates provided by prospective employees about their education history as
         long as Accurate confirms that the individual attended the schools listed.
         However, our analysis showed that the company did not always ensure that
         Accurate adhered to this guidance; as a result, the company had to complete
         these checks.

     •   Weaknesses in verifying dates of employment. In FY 2017, Accurate returned
         543 checks because of discrepancies in the employment histories of prospective
         employees. We estimate that Accurate returned about 310 15 for relatively minor
         discrepancies that it could have resolved if it complied with company guidance
         to accept discrepancies of up to 12 months in the dates of employment
         prospective employees report. For example, Accurate sent an employment
         verification check back to the company to resolve because the end date for a
         former job that the prospective employee listed and the former employer
         reported differed by only one month.

Because of these gaps in oversight, the company had to spend additional funds on work
that it paid Accurate to perform. HR managers told us they were aware of the high
number of background checks Accurate sent back to the company to resolve, but they
did not assess why Accurate was not complying with the company’s guidance or
identify steps the company could take to address these issues.

COMPANY NOT IMPLEMENTING CONTROLS TO ENSURE
CONTRACTORS COMPLETE REQUIRED CHECKS ON THEIR
EMPLOYEES
The company did not comply with its policies for ensuring that all supporting
contractor employees have completed background checks. The company’s policy


14 Based on our projection of the results we obtained from our random sample, we are 95 percent
confident that Accurate did not complete and returned to the company between 29 and 134 of the
478 checks because of this contract limitation.
15 Based on our projection of the results we obtained from our random sample, we are 95 percent

confident that Accurate did not complete and returned to the company between 233 and 386 of the 543
checks because of these minor employment discrepancies.
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Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

requires contractors to certify in writing that they have completed background checks
on each of their employees working with the company. It also calls for the company
(1) to audit contractors’ compliance with the requirement to conduct checks, and (2) to
provide contractors a list of approved vendors the contractors could use for these
checks to ensure that they meet company standards. Because the company did not
comply with these policies, it does not have reasonable assurance that contractors have
completed background checks on their employees working in the company and that the
checks meet company standards. This exposes the company to potential risks, especially
for the many contractors working in safety or security-sensitive positions.

In September 2015, the company enacted a policy requiring contractors to submit a form
for each employee certifying that the contractor has completed a background check on
the employee before that person starts work for the company. However, as of
September 2018, the company had not implemented this control because it had not
determined which department should be responsible for informing contractors of this
requirement and ensuring that they submit their certification forms. Representatives we
interviewed from all five of the contractors in our review—IBM, Aramark, VIA Rail
Canada, Deloitte, and Alstom—stated that they check their employees’ backgrounds
prior to their commencing work for the company; however, none of them submitted the
required certification forms to company officials for verification purposes. These
representatives told us that either they were not aware of the requirement or they did
not know where to send the certification form.

During our audit, when a senior HR manager learned of this lapse, the manager said
HR would work with the Procurement department to identify which department would
be responsible for informing contractors of this requirement and holding them to it.
However, a senior Procurement manager expressed concerns that the department does
not have the resources to take on this responsibility for such a large volume of work.
Without certifications that contractors have conducted the required checks, the
company cannot ensure that supporting contractor employees do not pose safety and
security threats.

Company policy also requires Emergency Management and Corporate Security (EMCS)
to conduct random audits of contractors to ensure that they have completed
background checks on their employees they provide to the company using approved
vendors, but this office has not conducted these audits. In October 2015, EMCS
managers reported to the Controls group in the Finance department that EMCS did not
have the resources to conduct the required audits in addition to carrying out its other
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Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

assigned responsibilities. In January 2016, the company convened a cross-departmental
working group to address the concerns EMCS raised. However, as of September 2018,
the company has not resolved this issue. Furthermore, effective August 20, 2018, the
company announced that EMCS would merge with the Amtrak Police department and
report to the Chief of Police, leaving the issue of audit responsibility unresolved.
Without audits of contractors, the company cannot ensure that they conduct the
required background checks on their employees working in the company, posing risks
to company operations.

In addition, the company’s policy requires contractors to use a company-approved
vendor to conduct background checks to help ensure that the checks meet company
standards and are as rigorous as those for company employees. However, as of
September 2018, the company had not developed a list of approved vendors and has
not assigned a department the responsibility for developing and subsequently
implementing this list. In discussing our draft report with company officials at the
completion of our audit, Managers from the HR and Procurement departments stated
that the company plans to revise its current policy but has not reached a consensus on
how to do this. Until the company resolves how to revise this policy, the company
cannot confirm the reliability and quality of vendors conducting background checks on
supporting contractor employees.

CONCLUSIONS
The company has improved its process for conducting background checks so that
almost all employees hired in FY 2017 began work after their checks were completed,
and its process for reviewing the criminal histories of job applicants was more
consistent. In addition, the company plans to improve its process for verifying
prospective employees’ education and employment histories as part of a new contract
competition. This would help the company reduce costs and risks. However, the
current process does not ensure that vendors are proactively resolving minor
discrepancies in prospective employees’ education and employment histories in
accordance with company guidance; thus, the company is using resources to resolve
issues it is paying the vendor to resolve.

Furthermore, the company will continue to be exposed to potential risks from
employees that contractors provide to the company until it establishes controls for
contractors to self-certify they have completed checks on their employees working for
the company, confirms this through random audits of these contractors, and clarifies
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its policy requiring that the company establish an approved vendor list for contractors
to use when conducting these checks.

RECOMMENDATIONS
To provide for a more effective and efficient background checks process, we
recommend that the Executive Vice President/Chief Administration Officer take the
following actions:

   1. Direct the Human Resources department to ensure that the vendor responsible
      for conducting background checks adheres to company guidance for resolving
      questions about the education and employment histories of prospective
      employees.
   2. Determine which department will be responsible for ensuring that contractors
      self-certify they have completed background checks on their employees working
      for the company, monitor that the department initiates action, and update
      company policy accordingly.
   3. Determine which department will be responsible for conducting the random
      audits of contractors to ensure that they are completing checks that meet
      company standards and monitor that the department initiates action.
   4. Clarify the policy requiring the company to develop a list of approved vendors
      that contractors can use to conduct checks and initiate implementation.

MANAGEMENT COMMENTS AND OIG ANALYSIS
In commenting on a draft of this report, the company’s Executive Vice President/Chief
Administration Officer agreed with our recommendations and identified actions the
company is taking or plans to take to address the intent of our recommendations, as
well as the planned completion dates for these actions. In addition, we updated the
draft report, where appropriate, to incorporate technical comments the company
provided.

The company’s actions to address each recommendation are summarized below.

Recommendation 1: Management agrees with our recommendation to ensure that the
vendor responsible for conducting background checks adheres to company guidance
for resolving questions about the education and employment histories of prospective
employees. Management stated that the company will implement service level
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                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

agreements with the vendor to ensure it adheres to the company’s contract for
background checks. In addition, the company will require the contracted vendor to
provide a monthly report of their unresolved prospective employee background
requests. The company will then meet monthly with the vendor to ensure the contractor
is resolving these checks. The target completion date for these actions is June 1, 2019.

Recommendation 2: Management agrees with our recommendation to determine which
department will be responsible for ensuring that contractors self‐certify they have
completed background checks on their employees working for the company, monitor
that the department initiates action, and update company policy accordingly.
Management stated that the Procurement and Law Departments would design a
Contractor Background Check Certification Form that they will issue to, and collect
from, contractors. In addition, HR will update the Contractor Background Checks
policy to reflect these steps. The target completion date for these actions is December 31,
2018.

Recommendation 3: Management agrees with our recommendation to determine which
department will be responsible for conducting the random audits of contractors to
ensure that they are completing checks that meet company standards and monitor that
the department initiates action. Management stated that HR will be responsible for
conducting these random audits of contractors. The company will review HR’s
compliance with this requirement in November 2019 and then annually.

Recommendation 4: Management agrees with our recommendation to clarify its policy
requiring the company to develop a list of approved vendors that contractors can use to
conduct checks and initiate implementation. Management stated that HR will update
the Contractor Background Checks policy to remove the requirement for an approved
vendor list and add instead the company’s minimum requirements for background
checks. The target completion date for these actions is December 31, 2018.

For management’s complete response, see Appendix B
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                        OIG-A-2019-001, November 1, 2018

                                         APPENDIX A

                         Objective, Scope and Methodology
This report provides the results of our audit of the company’s background checks
process for its employees and contractor employees. Our objective is to assess the
efficiency and effectiveness of this process for company employees and supporting
contractor employees. The scope of our work covered the company’s policies and
procedures in place for background checks as well as the actual checks completed in
FY 2017. 16 We performed our audit work from October 2017 through September 2018 in
Philadelphia, Pennsylvania; Wilmington, Delaware; and Washington, D.C.

To assess the efficiency and effectiveness of the company’s background checks process
governing company employees, we reviewed the company’s policies and procedures
for this process. We also interviewed senior officials and employees in the HR,
Procurement, EMCS, and Law departments to better understand the company’s
process. In addition, we reviewed the April 2016 guidance the company provides to
Accurate, the vendor that performs background checks on company employees, to
determine the extent to which the guidance is sufficient to help Accurate search
criminal histories and verify education and employment information prospective
employees submit. We also examined other companies’ guidelines for conducting
employee background checks and compared these practices to the company’s
guidelines to determine the extent the company followed common practices.

To determine the extent to which background checks were completed on
employees prior to the start of employment, we used Audit Command Language
(ACL), our data analytics tool, to compare the employees’ start dates recorded in
the company’s SAP Employee Master file to the background check completion dates
recorded in Accurate’s system.

To estimate the number of background checks that Accurate (the vendor) did not
complete and returned to the company to resolve for specific reasons, we analyzed
FY 2017 company background check data. That data showed the vendor returned 793 of
the 1,882 checks because of reasons related to the education information provided by



16We did not include employees of the Amtrak Police department because it has a different background
check process than the rest of the company.
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                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

prospective employees and 838 for reasons related to employment information (some
were returned for both reasons).

•   Education Reasons. We reviewed the reasons why the vendor returned the
    793 checks and determined that it returned 478 for discrepancies between the
    information prospective employees provided in their education history and the
    information in the source the vendor used to validate this information. (The vendor
    returned the remaining 315 checks because it could not verify the information
    provided, such as the vendor could not reach a contact at a school identified). We
    then selected a random sample of 60 checks from the 478 returned checks and
    determined that the vendor returned 41 of this sample for discrepancies in education
    history. We determined that this random sample provided a sufficient number of
    cases to allow us to project our results to the population of 478 checks and develop a
    reasonably precise estimate of the number of checks returned for specific reasons.
    The most frequent reasons for discrepancies in the 41 checks were related to the
    information provided on the highest educational degree earned and the dates of
    education completed. We then calculated the percent of the 41 checks returned for
    each of these two reasons and applied the two percentages to the population of
    478 checks to estimate the number of checks the vendor returned for each reason in
    FY 2017.

•   Employment Reasons. Similarly, we reviewed the reasons why the vendor returned
    the 838 checks and determined that it returned 543 for discrepancies in employment
    information and 295 because the vendor could not verify the information. We then
    selected a random sample of 60 checks from the 543 returned checks and determined
    that the vendor returned 46 of this sample for minor discrepancies in information
    about the dates of employment. We determined that this random sample provided a
    sufficient number of cases to allow us to project our results to the population of
    543 checks and develop a reasonably precise estimate of the number of checks the
    vendor returned for discrepancies in employment dates in FY 2017.

To account for any potential variation between our sample and the other random
samples we could potentially have selected, we calculated a lower and upper bound
number of checks for each population at the 95 percent confidence level. This means
that if we drew 100 random samples from each of the two populations, we would
expect that, for 95 of the 100 samples in each population, the actual number of checks
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Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

returned for a particular reason would fall between the lower and upper bound number
of checks we calculated.

To assess the efficiency and effectiveness of the company’s background check process
governing employees that contractors provide to the company, we reviewed the
company’s policies and procedures for this process. We also interviewed senior officials
and employees in the HR, Finance Internal Control, Procurement, EMCS and Law
departments to better understand their roles in implementing and overseeing the
company’s process and controls over the background checks for contractor employees
working in the company. We used our data analytics tool to identify the five contractors
who provided the most employees to the company during FYs 2016 and 2017—IBM,
Aramark, VIA Rail Canada, Deloitte, and Alstom. We interviewed key representatives
of these companies to determine how they certify to the company that they perform
background checks of their employees working in the company. We also interviewed
key employees in the Procurement department responsible for managing the company’s
contracts with these five contractors to assess the extent to which the company monitors
their compliance with the company’s background check policy. In addition, we
examined other companies’ guidelines for conducting background checks on contractor
employees working for the company and compared these practices to the company’s
process and controls.

We conducted this performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the
audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence
obtained provided a reasonable basis for our findings and conclusions based on our
audit objective.

Internal Controls
We reviewed the company’s management controls governing background checks for
company employees and supporting contractor employees. For company employees,
we focused on the company’s controls for ensuring that background checks are
completed before employees start work. We also assessed the extent to which the
company ensures Accurate’s adherence to the company’s guidance for resolving
discrepancies in prospective employees’ educational and employment histories. For the
contractor employees working in the company, we focused on the company’s controls
related to ensuring contractors comply with the company’s requirements. We limited
                                                                                      18
                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

our conclusions and recommendations to controls in those areas. We did not review the
company’s or any of the departments’ overall system of controls.

Computer-Processed Data
We received employee information for FY 2016 and FY 2017 from the HR department
based on data from the company’s Recruitment Management System and SAP
Employee Master files. We were able to validate the Recruitment Management System
data by tracing a sample to source documents. To validate the company’s SAP data, we
used ACL, a data analysis software tool, and developed a query to verify the
completeness of the company’s SAP data. Based on these analyses, we determined that
these data were reliable for our purposes of defining an employee population hired
during our review period and identifying the five contractors with the most employees
in the company.

We also received employee background check data for FY 2016 through the first quarter
of FY 2018 from Accurate—the vendor who conducts background checks on company
employees—because its data is reported to the company by calendar year. To assess the
reliability of these data, we reviewed independent auditors’ control reports about the
Accurate system control environment. Based on the information these reports, we
determined that the data in the system were reliable for our purposes.

Prior Audit Reports
In conducting our analysis, we reviewed and used information from the following
Amtrak OIG report:

Human Capital Management: Weaknesses in Hiring Practices Result in Waste and Operational
Risk (OIG-A-2012-014), July 19, 2012.
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                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

                                APPENDIX B

                         Management Comments
                                                                              20
                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018
                                                                              21
                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018
                                                                              22
                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

                                 APPENDIX C

                       Acronyms and Abbreviations


Accurate                Accurate Background, Incorporated

EMCS                    Emergency Management and Corporate Security

FY                      fiscal year

HR                      Human Resources

OIG                     Amtrak Office of Inspector General

the company             Amtrak
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                        Amtrak Office of Inspector General
Human Resources: Background Checks Process Has Improved, but Some Inefficiencies
                               and Gaps Persist
                       OIG-A-2019-001, November 1, 2018

                                    APPENDIX D

                              OIG Team Members
Eileen Larence, Deputy Assistant Inspector General

Michael Kennedy, Senior Director

Cheryl Chambers, Senior Audit Manager

John Zsamar, Senior Auditor, Lead

Ka Ryung Sabourin, Auditor

Tashan Gardner, Intern

Alison O’Neill, Communication Analyst

Ramesh Raghavan, Contractor

Barry Seltser, Contractor
      OIG MISSION AND CONTACT INFORMATION
                                Mission
The Amtrak OIG’s mission is to provide independent, objective oversight
of Amtrak’s programs and operations through audits and investigations
focused on recommending improvements to Amtrak’s economy, efficiency,
and effectiveness; preventing and detecting fraud, waste, and abuse; and
providing Congress, Amtrak management, and Amtrak’s Board of
Directors with timely information about problems and deficiencies relating
to Amtrak’s programs and operations.



           Obtaining Copies of Reports and Testimony
              Available at our website www.amtrakoig.gov



                Reporting Fraud, Waste, and Abuse
        Report suspicious or illegal activities to the OIG Hotline
                      www.amtrakoig.gov/hotline
                                    or
                              800-468-5469



                         Contact Information
                              Stephen Lord
                   Assistant Inspector General Audits
                            Mail: Amtrak OIG
                         10 G Street NE, 3W-300
                         Washington, D.C. 20002
                           Phone: 202-906-4600
                   Email: Stephen.Lord@amtrakoig.gov