E-470 Public Highway Authority Jason Myers, Controller Accounting ...

E-470 Public Highway Authority
Jason Myers, Controller
Accounting for Cashless Tolling -
Four Years Later…

• 47 center line miles
• 54,000,000 toll
transactions
• $117,000,000 toll
revenue
• $137,000,000 total
revenue
• $1.6 billion in
outstanding debt
Authority Overview

Authority History
• 1991 – First five miles opened, one of the first toll
roads to implement open road tolling (ExpressToll)
• 2003 – Final section was opened, completing the 47
mile semi-circle around Denver
– 5 mainline toll plazas
– 32 ramp locations
• 2009 – Discontinued cash collection in the lanes,
introduced License Plate Tolling (LPT)

Progression of E-470 Tolling
• Up to 2008 – ETC (transponder) OR cash
collections at toll booths; toll increases every 3
years
• 2009 – Implemented photo billing (LPT)
– Implemented toll accrual accounting
– Developed accounting methodologies
– Numerous operational changes
• 2010 – changed billing process for fine amounts and
payment periods

Progression of E-470 Tolling
• 2011 – Toll increase policy to annual, increased LPT
toll differential to 25% premium
• 2012 – refined billing process for fees & fines
structure, extended payment periods (again)
• 2013 – Implementing vehicle registration holds for
non-paying LPT customers, toll revenue study on
updating/increasing LPT toll differential

Toll Collection System
• Internally developed & maintained by E-470
• ExpressToll & LPT Modules
• Integration with collection firm, DMV’s,
accounting system, website
• Back office for other Colorado Tolling Agencies

• ExpressToll
Toll Revenue Streams
– ExpressToll customers are required to prepay their
accounts by cash, check, or credit card
– 72% of all 2012 toll transactions were ExpressToll
• License Plate Toll (LPT)
– Captures images of the vehicle of which the registered
owner will receive a statement of use for toll collection
– LPT customers pay a 25% premium over ExpressToll
customers

LPT Toll Revenue Breakdown
Gross Toll Revenue (all tolls incurred)
– Unbillable Tolls (Rejected) – cannot bill customer
Billable Toll Revenue
– Uncollectible Tolls (Unpaid) – customer won’t pay
Net Toll Revenue

Unbillable (Rejected) Tolls
• LPT Toll Revenue that cannot be billed
• Due to various reasons:
– Temporary License Plate
– No Visible License Plate
– No DMV Record
– Obstructed Plate
– Blurry Image/Weather
– Other

What does this all add up to?
• Most business and operational changes –
IMPACTS ACCOUNTING
• Accounting & reporting has become increasingly
complex - Toll transaction lifecycle is longer
– Accounting considerations
– Financial reporting
– Auditing considerations

Accounting Considerations
• Accrual Accounting in accordance with
accounting standards (GASB) – revenue
recognition & receivables
• Develop collection rate methodology
• Calculate and monitor collection rates

Accounting Considerations
• Tolls Receivables and Fees/Fines Receivables
• Develop Write-Off Methodology *
• Develop Allowance for Doubtful Accounts
Methodology (Uncollectible Tolls/Fees) *
* Consistent & Reasonable

General Ledger Accounting
• Toll System ledgers versus Toll System Reports
• Daily/Monthly reconciliations
• Implement proper business rules and internal
controls

Financial Reporting
Clear, concise, and consistent
• Know your audience
• Internal & external reports
• Recurring analysis
• Website (Investor Relations)
• Annual Investor Report, Annual Audit Report, EMMA, etc.

Audit Considerations
• Document:
– Processes/key internal controls
– Review/Approvals
– Consider retention policies
• Revenue recognition and accounting policies
• Test key estimates and assumptions
• Understand audit items requested and timing
• Toll System audit procedures (IT general & application
controls)
• Specific Toll System generated reports

Summary
• Cashless toll accounting and reporting is
complex – impacted by entire business
• Implement sound accounting practices
• Recurring financial reporting to all parties
• Ensure it is auditable