Full text
Audit Report
OIG-22-042
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - Alpine Aviation, Inc.
September 28, 2022
Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
OFFICE OF
INSPECTOR GENERAL
DEPARTM ENT OF THE TREASURY
WASHINGTON, D.C. 20220
September 28, 2022
MEMORANDUM FOR JACOB LEIBENLUFT
CHIEF RECOVERY OFFICER
FROM:
Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT:
Audit of Air Carrier Worker Support Certifications – Alpine
Aviation, Inc.
Attached is our audit report for the Audit of Air Carrier Worker Support Certifications –
Alpine Aviation, Inc. (Alpine) (OIG-22-042; dated September 28, 2022). Under a
contract monitored by our office, Saggar & Rosenberg, P.C. (S&R), a certified
independent public accounting firm, performed the audit. The objective of this audit
was to assess the accuracy, completeness, and sufficiency of Alpine’s sworn financial
statement or other data used to certify the wages, salaries, benefits, and other
compensation amounts submitted and approved by the Department of the Treasury
(Treasury) for the Air Carrier Payroll Support Program (PSP1). The scope of this audit
covered the time period from April 1, 2019 through September 30, 2019 and included
the certified PSP1 Application, sworn financial statements, tax returns, and other
documentation submitted to Treasury.
In its audit report, S&R found Alpine incorrectly reported information in the Awardable
Amounts section of the PSP1 Application, resulting in a $165,586 overstatement.
Specifically, the:
• Differences between accrual-based general ledger accounting data used to
prepare the PSP1 Application and the actual compensation paid, resulted in a
overstatement; and
• Inclusion of unallowable corporate officer compensation in its PSP1 requested
awardable amount, resulted in an
overstatement.
As a result, Alpine received a $165,586 overpayment from Treasury.
Accordingly, S&R recommends that Treasury’s Chief Recovery Officer:
• Seek reimbursement of the $165,586 overpayment of PSP1 financial
assistance.
Our contract required that the audit be performed in accordance with generally
accepted government auditing standards. In connection with the contract, we
reviewed S&R’s report and related documentation and inquired of its representatives.
Our review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to express an
opinion on Alpine’s compliance with Treasury’s PSP1 policies and procedures. S&R is
responsible for the attached auditor’s report and the conclusions expressed therein.
Our review found no instances in which S&R did not comply, in all material respects,
with generally accepted government auditing standards.
We appreciate the courtesies and cooperation provided to S&R and our staff during
the audit. If you have any questions or require further information, please contact me
at (202) 486-1420, or a member of your staff may contact Lisa DeAngelis, Deputy
Assistant Inspector General for Audit, at (202) 487-8371.
Attachment
cc:
Jason Morrow, Attorney Advisor, Department of the Treasury
Jeff Davis, Partner, Saggar & Rosenberg, P.C.
Contents
Audit Report
Results in Brief .................................................................................................. 2
Background ...................................................................................................... 4
Audit Results .................................................................................................... 7
Finding 1 Incorrect Compilation of the PSP1 Application Awardable Amount ....... 8
Accrual-Based Application .............................................................. 8
Corporate Officer Compensation ..................................................... 9
Recommendation ........................................................................ 11
Appendices
Appendix 1: Objective, Scope, and Methodology ................................................. 12
Appendix 2: Schedule of Monetary Benefits ........................................................ 16
Appendix 3: Alpine Management Response ......................................................... 17
Appendix 4: Treasury Management Response ..................................................... 18
Appendix 5: Report Distribution......................................................................... 21
Abbreviations
Alpine
Alpine Aviation, Inc.
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
COVID-19
Coronavirus Disease 2019
DOT
Department of Transportation
GAO
Government Accountability Office
Guidelines
Guidelines and Application Procedures for Payroll Support to Air
Carriers and Contractors
IRS
Internal Revenue Service
JAMES
Joint Audit Management Enterprise System
OIG
Treasury Office of Inspector General
PSP1
Payroll Support Program, CARES Act
S&R
Saggar & Rosenberg, P.C.
SOC 1
System and Organizational Controls
Treasury
Department of the Treasury
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Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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September 28, 2022
Jacob Leibenluft
Chief Recovery Officer
Department of the Treasury
This report presents the results of our audit of Alpine Aviation,
Inc.’s (Alpine) certifications made to the Department of the
Treasury (Treasury) as part of its participation in the Air Carrier
Payroll Support Program (PSP1). This audit was mandated by Title
IV, Subtitle B, Air Carrier Worker Support, of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act).1 Under the CARES
Act, Treasury was to provide $32 billion in financial assistance to
passenger air carriers, cargo air carriers, and certain contractors to
be exclusively used for the continuation of payment of employee
wages, salaries, and benefits, in response to the economic impact
of the Coronavirus Disease 2019 (COVID-19).2 Furthermore, the
Treasury Office of Inspector General (OIG) is required to audit
certifications made by passenger and cargo air carriers that do not
report salaries and benefits to the Department of Transportation
(DOT) (referred to as non-241 air carriers)3 and contractors.
Under a contract with OIG, Saggar & Rosenberg, P.C. (S&R)
conducted this audit. Our audit objective was to assess the
accuracy, completeness, and sufficiency of Alpine’s sworn
financial statement or other data used to certify the wages,
salaries, benefits, and other compensation amounts submitted and
approved by Treasury for PSP1. The scope of our audit covered the
time period from April 1, 2019 through September 30, 2019 and
included the certified PSP1 Application, sworn financial
1 P.L. 116-136 (March 27, 2020).
2 The financial assistance provided under the CARES Act was split between Passenger Air Carriers
($25 billion), Cargo Air Carriers ($4 billion), and Contractors ($3 billion).
3 Passenger and cargo air carriers that are not required to report salaries and wages to DOT under 14
CFR, Part 241, “Uniform System of Accounts and Reports for Large Certificated Air Carriers”.
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statements, tax returns, and other documentation submitted to
Treasury on May 4, 2020.4
To accomplish the objective, we reviewed applicable laws and
regulations; and Treasury’s policies and procedures, including but
not limited to, the Title IV, Subtitle B, Air Carrier Worker Support of
the CARES Act, Guidelines and Application Procedures for Payroll
Support to Air Carriers and Contractors (Guidelines), PSP1
Agreement, and Frequently Asked Questions: Application
Procedures for Payroll Support to Air Carriers and Contractors. We
interviewed key personnel from Alpine, Treasury, and contracted
consultants5 engaged by Treasury to evaluate certified company
applications. We conducted our fieldwork from October 2021
through February 2022. Appendix 1 contains a more detailed
description of our objective, scope, and methodology.
Results in Brief
In brief, S&R found that Alpine, a cargo air carrier, reported correct
information for three of the four sections reviewed on their PSP1
Application.6 These sections are: (1) Applicant Information, (2)
Applicant Type, and (3) Certification. We also found that Alpine
incorrectly reported information in the Awardable Amounts section,
resulting in a $165,586 overstatement of the awarded amount.
Specifically, we found (1) differences between accrual-based
general ledger accounting data used to prepare the PSP1
Application and the actual compensation paid, and (2) inclusion of
corporate officer compensation. As a result, we question costs
totaling $165,586 comprised of:
•
of excess compensation requested using accrual-
based general ledger accounting data; and
•
of compensation paid to corporate officers.
4 Alpine submitted the PSP1 Application and related supporting documentation on May 4, 2020.
5 Summit Consulting, LLC.
6 The PSP1 Application is comprised of eight sections. Four sections - Financial Institution Information,
Employment Levels, Taxpayer Protection, and Additional Information, were not subject to audit
procedures. Details regarding the sections not reviewed can be found in appendix 1.
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Accordingly, we recommend that the Chief Recovery Officer seek
reimbursement of the $165,586 overpayment to Alpine.
Appendix 2 contains more details on questioned costs.
As part of our reporting process, we provided Alpine management
an opportunity to comment on a draft of this report. In a written
response, Alpine management challenged the audit finding related
to the inclusion of unallowable corporate officer compensation in
its PSP1 requested amount. Management stated that the
application instructions did not indicate that corporate officers
needed to be excluded from the Awardable Amounts calculation.
Alpine management also noted that the application instructions did
not define the term “corporate officers”, and that a corporate
officer could be defined as an individual who is not employed by an
air carrier, such as a board member or other investor, based on a
reasonable interpretation of the definition of “Employee” in the
application instructions. In addition, Alpine management stated that
Section 4004 of the CARES Act places executive compensation
limits for any officer or employee who received “total
compensation” more than $425,000 in 2019.
Both the CARES Act and Treasury’s Application instructions
(referred to as “Guidelines” throughout this report) define
“employee” as “an individual, other than a corporate officer, who is
employed by an air carrier or contractor.” The employee definition
is relevant and clearly excludes corporate officers. While the PSP1
Application instructions did not explicitly define corporate officers,
the PSP1 Agreement between Treasury and Alpine, effective
August 17, 2020, provided additional information regarding the
treatment of corporate officers, which is detailed further in the
Audit Results section of this report. In this case, the corporate
officers included were the Chief Executive Officer and the Chief
Financial Officer, which are typically defined as corporate officers
in most every business. We do not agree with Alpine
management’s statement that a corporate officer could be
reasonably defined as an individual who is not employed by an air
carrier, such as a board member or other investor. Additionally,
Section 4004 of the CARES Act referenced in Alpine
management’s response refers to a separate financial assistance
program administered under the CARES Act. Specifically, this
section relates to legislation authorizing Treasury to make loans,
Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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loan guarantees, and other investments in support of eligible
businesses, States, and municipalities under Title IV, Subtitle A,
Coronavirus Economic Stabilization Act of 2020, not Title IV,
Subtitle B, Air Carrier Worker Support of the CARES Act which
was the scope of our audit. Alpine management’s response, in its
entirety, is included as appendix 3 of this report.
In a written response, Treasury management concurred with our
recommendation and agreed that any overpayments of PSP funds
should be recouped. Treasury stated it will conduct a review of the
findings, consider any response from the recipient, and seek
recoupment of any amounts that Treasury determines have been
overpaid. Also, Treasury will review awardable amounts requested
under PSP2 and PSP3 and seek recoupment where appropriate.
Treasury management will need to record an estimated completion
date for these actions in the Joint Audit Management Enterprise
System (JAMES). Management’s planned corrective actions meet
the intent of our recommendation. Treasury management’s
response, in its entirety, is included as appendix 4 of this report.
Background
Title IV, Subtitle B, of the CARES Act, Air Carrier Worker Support,
requires Treasury to provide financial assistance to air carriers and
contractors that must exclusively be used for the continuation of
payments of employees’ wages, salaries, and benefits. Financial
assistance is to be provided to:
(1) passenger air carriers, in an aggregate amount up to
$25 billion;
(2) cargo air carriers, in an aggregate amount up to $4 billion;
and
(3) contractors, in an aggregate amount up to $3 billion.
According to the CARES Act, Treasury is required to provide
financial assistance to air carriers that report salaries and benefits
Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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to the DOT (referred to as 241 carriers),7 in an amount equal to the
salaries and benefits reported to DOT for the period April 1, 2019
through September 30, 2019. For air carriers that do not report
such data to DOT (referred to as non-241 carriers), and
contractors, financial assistance is required to be in an amount that
the air carrier or contractor certifies using sworn financial
statements or other appropriate data as the amount of wages,
salaries, benefits, and other compensation paid to employees
during the period of April 1, 2019 through September 30, 2019.
The amounts submitted on the application to Treasury were
considered sworn financial statements. To be eligible for payments,
air carriers and contractors must enter into agreements with
Treasury certifying that they meet certain required assurances,
terms, and conditions.
On March 30, 2020, Treasury posted on its website the
Guidelines, which included the PSP1 Application. The PSP1
Application is comprised of eight sections:
1. Application Information ─ (1) applicant name; (2) taxpayer
identification number and address; and (3) contact person’s
name, title, phone number, and email address.
2. Applicant Type ─ selection of applicant type whether its
passenger air carrier, cargo air carrier, or contractor.
Additionally, if the applicant is a contractor, this section would
identify the contractor’s service functions and the name of the
air carrier or airport to which services are provided. Finally, this
section includes affiliate and parent company information.
3. Financial Institution Information ─ (1) the applicant’s banking
account number and routing number; and (2) the financial
institution’s name, address, and telephone number.
7 14 CFR, Part 241 “Uniform System of Accounts and Reports for Large Certificated Air Carriers”
defines “Air carrier, large certificated” as an air carrier holding a certificate issued under 49 U.S.C
41102, as amended, that: (1) operates aircraft designed to have a maximum passenger capacity of
more than 18,000 pounds; or (2) conducts operations where one or both terminals of a flight stage
are outside the 50 states of the United States, the District of Columbia, the Commonwealth of
Puerto Rico, and the U.S. Virgin Islands. These air carriers are required to report financial information
to DOT. Alpine is not a Large, Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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4. Employment Levels ─ applicant’s average number of employees
for 2019 and involuntary reductions after March 1, 2020.
5. Awardable Amounts ─ applicant’s sworn financial statement
consisting of salaries, wages, benefits, and other compensation
for the period April 1, 2019 through September 30, 2019.
6. Taxpayer Protection ─ a table that outlines in detail the
proposed financial instrument to be issued to the Treasury.
7. Additional Information ─ applicant’s verification of submitting its
Internal Revenue Service (IRS) Form 941 – Employer’s Quarterly
Federal Tax Return8 covering the period April 1, 2019 through
September 30, 2019 along with the PSP1 Application submitted
to Treasury.
8. Certification ─ names, titles, and signatures of two certifying
officials9 and the applicant name and application submission
date.
On April 18, 2020, Treasury published a sample PSP1 Agreement
on its website, which provided definitions, terms, and conditions
for participation in PSP1, and required applicants to submit
completed applications by April 27, 2020. After Treasury reviewed
and approved an application, both parties were required to sign the
PSP1 Agreement.
PSP1 Interim Audit Report
In a prior audit report,10 OIG identified two recurring issues
affecting the payment amounts administered to all PSP1 recipients
for non-241 air carriers and contractors. Specifically, the inclusion
of employer-side payroll taxes and corporate officer compensation
in the awardable amounts for some recipients. Treasury
management acknowledged that the recipients audited included
unallowable employer-side payroll taxes or corporate officer
compensation in their calculation of the “awardable amount” on
8 IRS Form 941 is a tax form that businesses file quarterly to report income taxes, Social Security
taxes, and Medicare taxes they withheld from employee paychecks.
9 The certifying officials attested under penalty of perjury that the information and certifications
provided in the application and its attachments are true and correct.
10 OIG-21-025, Interim Audit Update – Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), March 31, 2021.
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their PSP1 applications and agreed to (1) review payments issued
under PSP1 to ensure awarded amounts are allowable per the
CARES Act and Treasury guidance; and (2) remedy the incorrect
amounts awarded under PSP1.
Alpine Aviation, Inc.
Located in Provo, Utah, Alpine holds multiple contracts with the
United States Postal Service and with United Parcel Service
servicing the western United States. Alpine transports mail
packages and other time-sensitive cargo as one of the largest
regional air-cargo providers in the United States.
Alpine, a cargo air carrier, submitted its PSP1 Application totaling
on May 4, 2020. Treasury disbursed $4,460,112 to
Alpine as follows:
• August 19, 2020 - $2,230,056
• September 1, 2020 - $2,230,056
Audit Results
Alpine reported correct information for three of the four sections
reviewed on their PSP1 Application. These sections are:
(1) Applicant Information, (2) Applicant Type, and (3) Certification.
We compared information provided in each section of the PSP1
Application to supporting documentation including bank
statements, air carrier certificates, tax forms, and executive-level
business charts, among other items.
We also found that Alpine reported incorrect information in the
Awardable Amounts section, resulting in a $165,586
overstatement of the awarded amount. Specifically, there were
differences between Alpine’s accrual-based general ledger
accounting data used to prepare the PSP1 Application and the
actual amount of compensation paid to its employees
totaling
; and the inclusion of unallowable corporate
officer compensation of
in calculating the awardable
amount. Table 1 illustrates a monthly breakdown of Alpine’s
overstated amounts.
Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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Table 1: Aggregate Overstatement by Month
Month
PSP1
Application
Awardable Amount
Re-Calculated by S&R
Variance
April 2019
May 2019
June 2019
July 2019
August 2019
September 2019
TOTAL
$(165,586)
Source: S&R Calculation of Awardable Amount
Finding 1
Incorrect Compilation of the PSP1 Application Awardable
Amount
Accrual-Based Application
Alpine prepared the PSP1 Application using data from its accrual-
based financial accounting system, Sage. Creating the
PSP1 Application using accrual-based general ledger accounting
data was not a prohibited compilation method under Treasury’s
PSP1 Application guidelines, however, the actual amount of
wages, salaries, benefits, and other compensation paid to company
employees was less than the amounts requested in the
PSP1 Application. As a result, Alpine’s election to prepare the
PSP1 Application using accrual-based general ledger accounting
data, as opposed to actual compensation paid to its employees,
overstated the awardable amount by
, as illustrated in
Table 2.
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Table 2: PSP1 Accrual-Based Application Compared to Actual
Supported Costs
Source: S&R Calculation of Awardable Amount
Treasury’s Guidelines define Awardable Amount as “an amount
that such carrier certifies, using sworn financial statements or
other appropriate data, as the amount of wages, salaries, benefits,
and other compensation paid by such carrier during the time
period”.
Alpine management stated that the PSP1 Application was prepared
using accrual-based general ledger accounting data from its
financial accounting system because the information was readily
available and served as a rational basis for its financial assistance
request.
Corporate Officer Compensation
Alpine included non-allowable compensation of
paid to
two corporate officers in the awardable amount table of the PSP1
Application for “Salaries and Wages”, “Benefits”, and “Other
Compensation”. Specifically, compensation paid to the Chief
Executive Officer and Chief Financial Officer was included in the
awardable amount table on the PSP1 Application. Table 3
illustrates a monthly breakdown of Alpine’s overstated amounts for
corporate officer compensation.
Category
PSP1
Application
Actual Supported
Compensation
Variance
Salaries/Wages
Benefits
Other Compensation
TOTAL
OVERSTATEMENT
Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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Table 3. Corporate Officer Inclusion
Month
Non-allowable Corporate
Officer Compensation in the
PSP1 Application
April 2019
May 2019
June 2019
July 2019
August 2019
September 2019
TOTAL OVERSTATEMENT
Source: S&R Calculation of Awardable Amount
Both the CARES Act and Treasury’s Guidelines define “employee”
as “an individual, other than a corporate officer, who is employed
by an air carrier or contractor.” The PSP1 Agreement subsequently
defines a corporate officer as, with respect to the Recipient, “its
president; any vice president in charge of a principal business unit,
division, or function (such as sales, administration or finance); any
other officer who performs a policy-making function; or any other
person who performs similar policy making functions for the
Recipient. Executive officers of subsidiaries or parents of the
Recipient may be deemed Corporate Officers of the Recipient if
they perform such policy-making functions for the Recipient.”
Alpine management stated that it believed that the criteria for
corporate officer consideration was compensation that exceeded
$425,000 annually. Since no employees exceeded that
compensation threshold, no amounts were withheld from the PSP1
Application. However, this amount is the threshold expressed in
Audit of Air Carrier Worker Support Certifications - Alpine Aviation, Inc.
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the “Limitations on Certain Compensation”11 section of the PSP1
Agreement, not guidelines or criteria for the PSP1 Application.
Recommendation
S&R recommends that the Chief Recovery Officer seek
reimbursement of the $165,586 overpayment of PSP1 financial
assistance.
Management Response
Treasury management concurred with our recommendation and
agreed that any overpayments of PSP funds should be recouped.
Treasury stated it will conduct a review of the findings, consider
any response from the recipient, and seek recoupment of any
amounts that Treasury determines have been overpaid. Also,
Treasury will review awardable amounts requested under PSP2 and
PSP3 and seek recoupment where appropriate.
S&R Comment
Management’s planned corrective actions meet the intent of our
recommendation. Treasury management will need to record an
estimated completion date for these actions in JAMES.
* * * * * *
We appreciate the courtesies and cooperation provided to our staff
during the audit. A distribution list for this report is provided as
appendix 5.
Saggar & Rosenberg, P.C. /s/
11 The “Limitations on Certain Compensation” section states “Beginning March 24, 2020, and ending
March 24, 2022, the Recipient and its Affiliates shall not pay any of the Recipient's Corporate
Officers or Employees whose Total Compensation exceeded $425,000 in calendar year 2019 (other
than an Employee whose compensation is determined through an existing collective bargaining
agreement entered into before March 27, 2020): (a) total Compensation which exceeds, during any
12 consecutive months of such two-year period, the Total Compensation the Corporate Officer or
Employee received in calendar year 2019; or (b) severance Pay or Other Benefits in connection with
a termination of employment with the Recipient which exceed twice the maximum Total
Compensation received by such Corporate Officer or Employee in calendar year 2019.”
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Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of Alpine Aviation, Inc.’s (Alpine) sworn financial
statement or other data used to certify the wages, salaries,
benefits, and other compensation amounts submitted and approved
by the Department of the Treasury (Treasury).
The scope of our audit covered the time period from April 1, 2019
through September 30, 2019 and included the certified Payroll
Support Program (PSP1) Application, sworn financial statements,
tax returns, and other documentation submitted to Treasury on
May 4, 2020.12
To accomplish this objective, Saggar & Rosenberg, P.C. (S&R)
performed the following activities during audit fieldwork conducted
remotely, due to the Coronavirus Disease 2019 (COVID-19)
pandemic from October 2021 through February 2022:
•
Reviewed applicable Federal laws, regulations, and guidance,
including:
o Title IV, Subtitle B, Air Carrier Worker Support, of the
Coronavirus Aid, Relief, and Economic Security Act
(CARES Act);13 and
o 14 CFR, Part 241,14 Uniform System of Accounts and
Reports for Large Certificated Air Carriers, amended
August 12, 2022.
•
Reviewed Treasury’s policies, procedures, and guidance related
to PSP1:
o Guidelines and Application Procedures for Payroll Support
to Air Carriers and Contractors (Guidelines), which
included the PSP1 Application, March 30, 2020;
12 Alpine submitted the PSP1 Application and related support documentation on May 4, 2020.
13 P.L. 116-136 (March 27, 2020).
14 14 CFR, Part 241 “Uniform System of Accounts and Reports for Large Certificated Air Carriers”
defines “Air carrier, large certificated” as an air carrier holding a certificate issued under 49 U.S.C
41102, as amended, that: (1) operates aircraft designed to have a maximum passenger capacity of
more than 18,000 pounds; or (2) conducts operations where one or both terminals of a flight stage
are outside the 50 states of the United States, the District of Columbia, the Commonwealth of
Puerto Rico, and the U.S. Virgin Islands. These air carriers are required to report financial information
to DOT. Alpine is not a Large Certificated Air Carrier.
Appendix 1: Objective, Scope, and Methodology
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o PSP1 Agreement;
o Question and Answer: Payroll Support to Air Carriers and
Contractors, (April 2, 2020, April 3, 2020, and April 20,
2020 versions); and
o Frequently Asked Questions: Application Procedures for
Payroll Support to Air Carriers and Contractors,
April 3, 2020.
•
Performed 100 percent testing for four of the eight sections of
the PSP1, specifically, the Applicant Information, Applicant
Type, Awardable Amounts, and Certification sections. The other
four sections were not reviewed because the Taxpayer
Protection section generally applied to 241 air carriers, with
exceptions; the Employment Levels, Financial Institution
Information, and Additional Information sections had no impact
on Treasury’s determination of recipients’ award amounts.
•
Interviewed key Treasury personnel and contracted
consultants15 engaged by Treasury to aid in its evaluation of the
air carriers’ and the contractors’ certified applications and other
data.
•
Interviewed Alpine representatives responsible for the
completion and submission of the sworn financial statements in
the Awardable Amounts section of the PSP1 Application.
•
Reviewed sworn financial statements and documents to support
the requested payroll support amount. The documentation
included general ledger data, company pay registers, benefit
invoices, Internal Revenue Service (IRS) Form 941 – Employer’s
Quarterly Federal Tax Return,16 filings, 2019 IRS Form 851 -
Affiliation Schedule,17 and organizational hierarchy information.
•
Reviewed Government Accountability Office’s (GAO) Standards
for Internal Control in the Federal Government18 to identify the
15 Summit Consulting, LLC.
16 IRS Form 941 is a tax form that businesses file quarterly to report income taxes, Social Security
taxes, and Medicare taxes they withheld from employee paychecks.
17 IRS Form 851 is a tax form that a parent corporation of an affiliated group files with its consolidated
income tax return to (1) identify the common parent corporation and each member of the affiliated
group; (2) report the amount of overpayment credits, estimated tax payments, and tax deposits
attributable to each corporation; and (3) determine that each subsidiary corporation qualifies as a
member of the affiliated group.
18 GAO-14-704G (September 2014).
Appendix 1: Objective, Scope, and Methodology
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components of internal control that are significant to the audit
objective. Understanding internal control within the context of
an entity’s internal control framework can help auditors
determine whether internal control deficiencies exit. We
concluded that one of the five internal control components,
Control Activities, as related to Alpine’s payroll systems, was
significant to the audit objective.19 This component states that
control activities are the actions management establishes
through policies and procedures to achieve objectives and
respond to risks in the internal control system, which includes
the entity’s information system. To assess the controls over
Alpine’s payroll systems, we examined Alpine’s response to
Data Supplier Questionnaires,20 reviewed a System and
Organizational Controls 1 (SOC 1),21 and interviewed Alpine’s
management responsible for generating and using the data.
Additional details regarding our assessment of the reliability of
the data is reported in the section below.
•
Reviewed GAO’s Assessing Data Reliability22 guidance, which
states that a data reliability determination does not involve
attesting to the overall reliability of the data or database. For
this audit, the audit team has only determined the reliability of
the specific data sources needed to support the findings,
conclusions, or recommendations in the context of the audit
objective. Alpine prepared the PSP1 Application using
information from the accrual-based accounting system of
record, Sage. We compared payroll details generated from ADP,
LLC (ADP) payroll registers at the individual employee level, as
well as third-party vendor benefit invoices, to the amounts
presented in the Awardable Amounts section of the PSP1
Application.
To assess data reliability of these sources, we examined
Alpine’s response to Data Supplier Questionnaires for Sage and
ADP, reviewed the ADP SOC 1, and interviewed Alpine’s
19 The five components in GAO’s Standards for Internal Control in the Federal Government are Control
Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring.
20 A Data Reliability Assessment is completed to assess the reliability of data originating from a system
to determine if it is reliable for the purposes of the audit. The Data Supplier Questionnaire would be
one of the tools used during the Data Reliability Assessment.
21 SOC 1 report address a company’s internal control over financial reporting, which pertains to the
application of checks-and-limits. Essentially, it is the audit of a third-party vendor’s accounting and
financial controls.
22 GAO-20-283G (December 2019).
Appendix 1: Objective, Scope, and Methodology
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management responsible for generating and using the data.
Based on our assessment, we determined that the data were
sufficiently reliable to support the findings and conclusions to
answer the objective of this audit.
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 objective. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
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Appendix 2: Schedule of Monetary Benefits
According to the Code of Federal Regulations,23 a questioned cost
is a cost that is questioned by the auditor because of an audit
finding:
(a) which resulted from a violation or possible violation of a
statute, regulation, or the terms and conditions of a Federal
award, including for funds used to match Federal funds;
(b) where the costs, at the time of the audit, are not supported
by adequate documentation; or
(c) where the costs incurred appear unreasonable and do not
reflect the actions a prudent person would take in the
circumstances.
Questioned costs are to be recorded in the Department of the
Treasury’s (Treasury) Joint Audit Management Enterprise System
(JAMES). The amount will also be included in the Office of
Inspector General (OIG) Semiannual Report to Congress. It is
Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in
accordance with Section 5(b) of the Inspector General Act of
1978, as amended.
Recommendation
Questioned Costs
Recommendation No. 1
$165,586
The questioned cost represents amounts provided by Treasury
under the Payroll Support Program (PSP1). As discussed in
Finding 1, $165,586 is the amount Treasury overpaid Alpine
Aviation, Inc. due to the (1) differences between accrual-based
general ledger accounting data and actual compensation and
(2) inclusion of corporate officer compensation in the awardable
amount on the PSP1 Application.
23 2 CFR § 200.84 – Questioned Cost
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Appendix 3: Alpine Management Response
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Appendix 4: Treasury Management Response
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Appendix 5: Report Distribution
Department of the Treasury
Treasury Secretary
Deputy Secretary
Treasury Audit Liaison
Office of Strategic Planning and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group
Alpine Aviation, Inc.
Chief Executive Officer
Executive Vice President - Finance & Strategy
Chief Financial Officer
Office of Management and Budget
OIG Budget Examiner
United States Senate
Committee on Homeland Security and Governmental Affairs
Committee on Finance
Committee on Banking, Housing, and Urban Affairs
Committee on Commerce, Science, and Transportation
Committee on Appropriations
Committee on the Budget
United States House of Representatives
Committee on Oversight and Reform
Committee on Financial Services
Committee on the Budget
Committee on Transportation and Infrastructure
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