Multi-operator ticketing

More often than not, operators are selling multi-operator tickets through a number of channels: online, apps, street vending machines, travel shops and on the bus. These sales, along with usages, are then included on a declaration that is sent to the scheme administrators. But does anyone ever audit these figures?

EPM are the auditors for several schemes across the country and we frequently find errors on the returns – with understatements having run into hundreds of thousands of pounds. Typically, the understatements are due to products being missed off the returns, usually following a price rise or when a new ticket has been introduced, or the wrong dates are used when extracting ETM data.

As a direct result of these errors, the other participating operators do not receive their fair share of revenue. With an audit in place, the schemes are able to rectify the errors and put reimbursement right for all operators.

We have also seen cases where usage declarations are incorrect – which means some operators have benefited to the detriment of others. The errors range from the inclusion of incorrect product types, to usages occurring outside of the scheme area; but again highlights the high risk of error.

In recent years, we have uncovered an overstatement of usages by one operator of over 500% over the course of several years. Had a regular audit been in place from the start, the overstatements would have been identified sooner, making the recovery of funds much simpler.

Given the multitude of products on offer in multi-operator ticketing schemes, it is of course no surprise that errors occur. The audit function helps to ensure that the correct amount is available for distribution across the participating operators.

Several schemes still use the results of surveys to drive the revenue distributions between operators. In most cases, this data is not scrutinised despite the significant impact it can have on the calculations.

We have undertaken one-off reviews of survey data in the past, with some alarming results. In one scheme area, we selected 18 surveyed journeys and compared these to operators’ ETM data – we were unable to agree any of the journeys. Given the ETM contained cash payments, which were ultimately reconciled to drivers’ takings, and journeys recorded via smartcards, this suggested the survey data was inaccurate.

The scaling method utilised in several surveys can also lead to spurious results. For instance, we have seen a surveyed journey, after scaling was applied, with 999 passengers on board – it must have been cramped on that bus! We have also seen the results of just 3 interviews, on one journey, represent 2.6% of the total scheme market share.

Operators often have concerns over the accuracy of surveys. A regular audit of these records will help to identify those surveyors that are failing to capture accurate data and to establish any post-survey scaling/adjustment errors. In the longer term, the scheme stakeholders should look to use electronic data, with a supporting audit trail.

Multi-operator ticketing schemes often feature numerous products covering different passenger types, time periods, geographical areas and modes of transport such as bus, tram and rail. The complexity of the reimbursement methodology can be further compounded where the scheme incorporates survey data, deferred revenue, operator sales commission, scheme administration costs, etc.

Due to the bespoke nature of individual schemes, the calculations that underpin operator reimbursement are usually performed through a series of spreadsheets compiled by the scheme administrator, with no visibility by the operators. In our experience, due to the size and complexity of these spreadsheets, they can become difficult to maintain, particularly with the addition of new products or operators, and soon become prone to errors.

For one such scheme we were asked to audit, we identified spreadsheet errors in excess of £100k, which had led to the incorrect payments to a number of operators.

Given operators cannot see the full reimbursement picture, they need assurance that the scheme rules have been applied correctly.