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Pilot Flying J audit correctly figured money owed in settlement

In the class action settlement, Pilot Flying J paid out $68.7 million to trucking customers, which included $9.6 million in interest payments. (The Trucker file photo)

The Trucker News Services

6/26/2014

KNOXVILLE, Tenn. — Pilot Flying J’s internal auditors correctly calculated the amount the truck stop chain owned trucking companies that were victims of a rebate scandal which company CEO Jimmy Haslam says he was unaware.

Ten former Pilot employees have pleaded guilty in the criminal investigation and are cooperating with prosecutors who are conducting an on-going criminal investigation.

Based on the settlement of a class action suit filed in federal court in Little Rock, Arkansas, the accounting firm of Horne LLP, which has offices in Alabama, Louisiana, Mississippi, Tennessee and Texas, reviewed the work of Pilot’s own internal auditors and concluded Pilot had accurately identified customers that were owed money and reimbursed them, adding 6 percent interest and paying attorneys’ fees as the settlement required.

Horne said in its reported filed with the Arkansas court that it tested the defendants internal audit (DIA) calculations to obtain assurance to a 95 percent confidence level that there was a 5 percent or lower error rate in the amounts that were calculated by DIA.

The settlement agreement allowed a 5 percent precision rate and the PFJ internal audit met that criteria.

Horne said its testing work began on Aug. 20, 2013, and concluded on May 15, 2014, and said the project required approximately 8,375 team member hours to complete.

Approximately 18 team members worked over 100 hours each on the project, Horne said.

“Our team members were at Pilot Flying J's headquarters in Knoxville, Tennessee, for approximately 15 weeks, and worked remotely from Horne offices for the balance of the project,” the report said. “In our opinion, the process of DIA's calculation of customer payments and the oversight and review function performed by Horne has worked as intended.”

Horne said Pilot audited 7,853 accounts active between Jan. 1, 2005 and July 15, 2013, which was three months after the FBI and the IRS raid on Pilot offices that alerted the public to the federal government's claims of rebate fraud.

The settlement resolved some but not all of the lawsuits against Pilot. The company still faces seven lawsuits that have been consolidated in a federal court in Kentucky.

In the class settlement, Pilot paid out $68.7 million to trucking customers, which included $9.6 million in interest payments, Horne said. The settlement also had $14 million for attorney fees that went to nine different firms and administrative costs.

“We believe that Pilot has fulfilled its duty and responsibility under the agreement for the areas that we were charged with reviewing,” the Horne report said.

Horne said Pilot’s information technology department designed “recalculation software” to determine the proper pricing for all the accounts that needed to be revised.

“This was an extremely complex program because of the length of time covered, data sources used, and pricing information needed to properly compute what the customer's price should have been,” Horne said in its court filing.

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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