Audit of Air Carrier Worker Support Certifications - Xojet Aviation, LLC (OIG-22-041) (2022-09-28, 3)

Summary

Audit Report OIG-22-041, Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC, dated September 28, 2022, issued by the Department of the Treasury Office of Inspector General in a memorandum for Jacob Leibenluft, Chief Recovery Officer, from Deborah L. Harker, Assistant Inspector General for Audit. The audit was performed by Saggar & Rosenberg, P.C., which found that XOJET incorrectly compiled data used for the Awardable Amounts section of its PSP1 Application, resulting in a $220,228 overstatement. Because Treasury's awards to passenger air carriers included a 78.2 percent pro rata distribution, XOJET received a $172,218 overpayment from Treasury. The report recommends that the Chief Recovery Officer seek reimbursement, and states that Treasury management concurred with the recommendations.

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Audit Report

OIG-22-041
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - XOJET Aviation, LLC
September 28, 2022
Office of Inspector General
Department of the Treasury

This Page Intentionally Left Blank

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 - XOJET
Aviation, LLC
Attached is our audit report for the Audit of Air Carrier Worker Support
Certifications - XOJET Aviation, LLC (XOJET) (OIG-22-041; 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 XOJET’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 XOJET incorrectly compiled data used for the
Awardable Amounts section of the PSP1 Application, resulting in a $220,228
overstatement. Specifically, the:
• Inclusion of unallowable corporate officer compensation in its PSP1
requested awardable amount, resulted in a
 overstatement; and
• Differences between accrual-based general ledger compensation used to
prepare the PSP1 Application and the actual compensation paid, resulted in a
 understatement.
Treasury’s awards to passenger air carriers under PSP1 included a 78.2 percent pro
rata distribution of application amounts. Applying this formula, XOJET received a
$172,218 overpayment from Treasury.

Accordingly, S&R recommends that Treasury’s Chief Recovery Officer:
• Seek reimbursement of the $172,218 overpayment of PSP1 financial
assistance; and
• Review XOJET’s requested amount for unallowable expenses, under the
Payroll Support Program Extension (PSP2)1 authorized by the Consolidated
Appropriations Act, 2021 and the Payroll Support Program 3 (PSP3)2
authorized by the American Rescue Plan Act of 2021, and seek
reimbursement for the overpayment, if applicable.
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 XOJET’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.

1  The Consolidated Appropriations Act, 2021 (P.L. 116-260), enacted on December 27, 2020,
created the Airline Worker Support Extension for passenger air carriers and certain contractors.
Treasury referred to this as Payroll Support Program Extension (PSP2).
2  The American Rescue Plan of 2021 (P.L. 117-2), enacted on March 11, 2021, created the Air
Transportation Payroll Support Program Extension authorizing Treasury to provide additional
assistance to passenger air carriers and contractors that received financial assistance under
PSP2. Treasury referred to this as Payroll Support Program 3 (PSP3).

i

Contents
Audit Report
Results in Brief ................................................................................................... 2
Background ........................................................................................................ 4
Audit Results ...................................................................................................... 8
Finding 1 Inaccurate Compilation of the PSP1 Application Awardable Amount ..... 9
Accrual-Based Application Understated the Awardable Amount ......... 11
Recommendations ........................................................................ 13
Appendices
Appendix 1: Objective, Scope, and Methodology .................................................. 14
Appendix 2: Schedule of Monetary Benefits ......................................................... 18
Appendix 3: XOJET Management Response ......................................................... 19
Appendix 4: Treasury Management Response ...................................................... 20
Appendix 5: Report Distribution .......................................................................... 23

Abbreviations
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
COVID-19
Coronavirus Disease 2019
DOT
Department of Transportation
GAO
Government Accountability Office
GMJ
GMJ Air Shuttle Management, LLC
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
PSP2
Payroll Support Program Extension, Consolidated Appropriations
Act, 2021
PSP3
Payroll Support Program 3, American Rescue Plan Act of 2021
SOC 1
System and Organizational Controls
S&R
Saggar & Rosenberg, P.C.

Treasury
Department of the Treasury
XOJET
XOJET Aviation, LLC

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Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
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1

September 28, 2022
Jacob Leibenluft
Chief Recovery Officer
Department of the Treasury
This report presents the results of our audit of XOJET Aviation,
LLC (XOJET) 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).3 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).4 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) (hereinafter referred to as non-241 air carriers)5 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 XOJET’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

3  P.L. 116-136 (March 27, 2020).
4  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).
5  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 April 3, 2020.6
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 XOJET, Treasury, and contracted
consultants7 engaged by Treasury to evaluate certified company
applications. We conducted our fieldwork from September 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 XOJET, a passenger air carrier, reported
correct information for three of the four sections reviewed on their
PSP1 Application.8 These sections are: (1) Applicant Information,
(2) Applicant Type, and (3) Certification. We also found that
XOJET incorrectly compiled data used for the Awardable Amounts
section, resulting in a $220,228 overstatement. Specifically, we
found (1) inclusion of corporate officer compensation, resulting in a
 overstatement, and (2) differences between accrual-
based general ledger compensation used to prepare the PSP1
Application and the actual compensation paid, resulting in a
 understatement. Treasury’s awards to passenger air
carriers under PSP1 included a 78.2 percent pro rata distribution of
application amounts. Applying this formula, we found that XOJET
received a $172,218 overpayment from Treasury. As a result, we
question the costs totaling $172,218 and recommend that the
Chief Recovery Officer seek reimbursement of the $172,218

6  XOJET submitted the PSP1 Application and related supporting documentation on April 3, 2020.
7  Summit Consulting, LLC.
8  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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overpayment to XOJET for PSP1. Additionally, we recommend that
Treasury review XOJET’s requested amount for unallowable
expenses, under the Payroll Support Program Extension (PSP2)9
authorized by the Consolidated Appropriations Act, 2021 and the
Payroll Support Program 3 (PSP3)10 authorized by the American
Rescue Plan Act of 2021 and seek reimbursement for
overpayment, if applicable.
Appendix 2 contains more details on questioned costs.
As part of our reporting process, we provided XOJET management
an opportunity to comment on a draft of this report. In a written
response, XOJET management stated that it agreed there was an
unintentional overstatement of $220,228 in the requested amount.
Also, XOJET management noted that the company made the
conservative and intentional decision to exclude
 in
compensation paid to employees from one of its subsidiaries,
which it believed were eligible expenses per Treasury’s Guidelines.
XOJET management noted while the eligible expenses were
excluded from the application, the company submits that these
expenses should be netted with the overstatement identified in the
audit findings, which would remove the Treasury overpayment of
$172,218 to XOJET.
The XOJET subsidiary discussed in XOJET’s management response
is compensation that was not within our audit scope because the
subsidiary was not part of XOJET’s PSP1 Application that was
submitted and approved by Treasury. Additional details regarding
the excluded subsidiary is included in the background section of
this report. XOJET management’s response, in its entirety, is
included as appendix 3 of this report.
In a written response, Treasury management concurred with our
recommendations and agreed that any overpayments of PSP funds
should be recouped. Treasury stated it will conduct a review of the

9  The Consolidated Appropriations Act, 2021 (P.L. 116-260), enacted on December 27, 2020, created
the Airline Worker Support Extension for passenger air carriers and certain contractors. Treasury
referred to this as Payroll Support Program Extension (PSP2).
10  The American Rescue Plan of 2021 (P.L. 117-2), enacted on March 11, 2021, created the Air
Transportation Payroll Support Program Extension authorizing Treasury to provide additional
assistance to passenger air carriers and contractors that received financial assistance under PSP2.
Treasury referred to this as Payroll Support Program 3 (PSP3).

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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 recommendations. 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
to the DOT (referred to as 241 carriers),11 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

11  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. XOJET is not a Large Certificated Air Carrier.

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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 had to 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.
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 Treasury.
7. Additional Information – applicant’s verification of submitting its
Internal Revenue Service (IRS) Form 941 – Employer’s Quarterly
Federal Tax Return12 covering the period April 1, 2019 through

12  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.

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September 30, 2019 along with the PSP1 Application submitted
to Treasury.
8. Certification – names, titles, and signatures of two certifying
officials13 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.
Treasury Disbursement Processes
In an effort to disburse PSP1 payments to passenger air carrier
applicants as quickly as possible and prior to the application
deadline of April 27, 2020, Treasury applied an initial estimated pro
rata rate of 76 percent to the awardable amount because not all
applications had been submitted at the time. After the application
deadline, Treasury determined the total amount requested by all
passenger air carrier applicants was approximately $31.8 billion,
which exceeded the $25 billion available financial assistance.
Because its initial estimated pro rata rate was too low, Treasury
calculated an additional 2.2 percent, the top-off amount, for
passenger air carriers making the final pro rata rate 78.2 percent.
Treasury disbursed an initial lump sum payment of one-third of the
awardable amount, followed by four equal subsequent payments to
ensure it provided sufficient and timely financial assistance
corresponding to the applicants’ payroll schedule. In instances
where Treasury needed to perform additional follow-up with
passenger air carriers or needed additional time to approve
applications, Treasury compressed the payment schedule on a case
by case basis. Generally, Treasury disbursed the top-off amounts
for passenger air carriers in September 2020, however, XOJET
received its top-off amount in October 2020. Treasury officials told
us that if recoupment was necessary for an applicant’s inclusion of
unallowable expenses such as corporate officer compensation and

13  The certifying officials attested under penalty of perjury that the information and certifications provided
in the application and its attachments are true and correct.

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employer-side payroll taxes in the application, the recoupment
method was dependent on timing. If the need for recoupment was
known prior to the top-off distribution then the recoupment was
offset from the top-off payment. For recoupment amounts not
known until after the top-off payment, Treasury has not made a
decision how those funds will be collected and whether those
funds will be reallocated at a later date.
PSP1 Interim Audit Report
In a prior audit report,14 OIG identified two recurring issues
affecting the payment amounts administered to all PSP1 recipients
for non-241 air carriers and contractors. Specifically, employer-side
payroll taxes and corporate officer compensation were included 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 amounts” on 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.
XOJET Aviation, LLC
Headquartered in Fort Lauderdale, Florida, XOJET operates branded
charter fleets, a dedicated corporate shuttle, and offers aircraft
management solutions.
XOJET, a non-241 passenger air carrier, applied for PSP1 along
with two subsidiaries: (1) XO Crew Resources, LLC and (2) GMJ
Air Shuttle Management, LLC (GMJ) for financial assistance
of
 on April 3, 2020. However, XOJET withdrew its
request for GMJ’s financial assistance of
; revising the
requested amount to
 on September 18, 2020, as
illustrated below in Table 1.

14  OIG-21-025, Interim Audit Update – Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), March 31, 2021.

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Table 1: Application Amounts

Source: PSP1 Application data submitted to Treasury

XOJET received the passenger air carrier top-off for a total award
of $15,184,348, or 78.2 percent of the company’s requested
amount. Disbursements by Treasury to XOJET were as follows:
• June 17, 2020 – $6,573,280.85
• July 7, 2020 – $2,191,093.61
• August 6, 2020 – $2,191,093.61
• September 4, 2020 – $2,191,093.62
• September 30, 2020 – $1,610,605.31
• October 6, 2020 – $427,181.15
In addition to PSP1, Treasury awarded XOJET $10,271,765 under
PSP2 and $9,580,475 under PSP3. PSP2 and PSP3 were not the
subject of this audit.
Audit Results
We found that XOJET reported correct information for three of the
four sections reviewed on its 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 air carrier
certificates, tax forms, and executive-level business charts, among
other items.
Entity

PSP1
Application
Withdrawn
Application
Remaining
Application
XOJET Aviation

$0

XO Crew Resources

$0

GMJ Air Shuttle

$0
Total

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We also found that XOJET reported incorrect information in the
Awardable Amounts section. The company included unallowable
corporate officer compensation, resulting in an overstatement
of
. However, XOJET’s accrual-based financial
accounting data used to prepare the PSP1 Application was less
than the actual compensation paid to its employees
by
, resulting in a net overstatement of $220,228.
Table 2 illustrates a monthly breakdown of XOJET’s overstated
amounts.
Table 2: 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

$(220,228)
Source: S&R Calculation of Awardable Amount
Since Treasury disbursed PSP1 funds pro rata for passenger air
carriers at 78.2 percent of the requested awardable amount,
XOJET received an overpayment of $172,218.
Finding 1
Inaccurate Compilation of the PSP1 Application
Awardable Amount

Corporate Officer Compensation
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 in the United States (including its
territories and possessions).” In addition, the signed
PSP1 Agreement, effective date June 15, 2020, subsequently
defines a corporate officer as, “with respect to the Recipient, its

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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.”
We identified ten XOJET executives through discussions with
management and review of XOJET’s 2019 organizational chart.
The ten executives also operated in the same executive capacity
for the XOJET subsidiary, XO Crew Resources, LLC, which did not
have separate company executives. Five of those executives met
the definition of a corporate officer per the PSP1 Agreement and
the compensation related to those individuals should have been
excluded from the awardable amount on the PSP1 Application.
XOJET included compensation totaling
 in the
awardable amount table of the PSP1 Application for “Salaries and
Wages” and “Benefits” for the five executives. Specifically,
compensation paid to two Chief Operating Officers, one Chief
Administrative Officer, one Senior Vice President of Flight
Operations, and the Chief Human Resources Officer. Table 3
illustrates a monthly breakdown of XOJET’s overstated awardable
amount for corporate officer compensation.
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

Source: S&R Calculation of Awardable Amount

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Although the employees who prepared the PSP1 Application are no
longer with the company, current XOJET management stated that
it was not aware of restrictions placed on corporate officer
compensation. In addition, current XOJET management stated that
since the application figures for “Salaries and Wages” and
“Benefits” agreed to the company’s accrual-based general ledger
accounting data with minor differences, management did not
believe deliberate additions or exclusions were made to the data to
ensure compliance with the PSP1 Agreement requirements.
Accrual-Based Application Understated the Awardable
Amount
XOJET prepared the PSP1 Application using data from its
accrual-based financial accounting system, System Application &
Products (SAP). Although creating the PSP1 Application using
accrual-based financial information was not a prohibited
compilation method under Treasury’s PSP1 Application guidelines,
the actual amount of wages, salaries, benefits, and other
compensation paid to company employees exceeded the amounts
requested in the PSP1 Application, understating the requested
awardable amount by
, as illustrated in Table 4.
Table 4: PSP1 Accrual-Based Application Compared to Actual
Supported Costs

Source: S&R Calculation of Awardable Amount.
The employees who prepared the PSP1 Application are no longer
with the company; however, when we inquired about the reason
that the application was prepared using accrual-based financial
accounting data as opposed to actual compensation paid, current
XOJET management stated that it believed the accrual-based data
was readily available and served as a rational basis for its financial
assistance request.
Category

PSP1 Application
Using Accrual Data
Actual
Supported
Compensation

Variance
Salaries/Wages

Benefits

Total

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Although the inclusion of corporate officers in the PSP1 Application
resulted in an overstatement of
 in requested PSP1
amounts, the net impact of this overstatement was offset by
differences between actual amounts paid to employees and the
application figures compiled using accrual-based financial
accounting data. As a result, the residual net overstatement is
$220,228, as illustrated in Table 5 below.
Table 5: Aggregate Overstatement
Description
Salaries/Wages
Benefits

Total
Actual Supported
Compensation (Table 4)

Less: Corporate Officers
(Table 3)

Allowable Compensation

Accrual-based Application

Net Overstatement

$(220,228)
Sources: S&R Calculation of Awardable Amount; Table 3; and Table 4.
Since Treasury disbursed PSP1 funds pro rata for passenger
carriers at 78.2 percent of the requested awardable amount,
XOJET received an overpayment of $172,218.
To remedy the findings listed in the prior OIG audit report,15
Treasury required PSP2 applicants to re-certify their PSP1
awardable amounts. XOJET certified to Treasury under PSP2, that
its PSP1 Application did not include corporate officer
compensation. Treasury stated it relies on applicants’ certifications
that they did not include unallowable expenses (i.e. corporate
officer compensation and employer-side payroll taxes) and no
further validation checks were performed; as a result, the company
likely included corporate officer compensation in its PSP2 and PSP3
financial assistance request.

15  OIG-21-025, Interim Audit Update – Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), March 31, 2021.

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Recommendations
S&R recommends that Treasury’s Chief Recovery Officer:
1. Seek reimbursement of the $172,218 overpayment of PSP1
financial assistance.
Management Response
Treasury 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.
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.
2. Review XOJET’s requested amount for unallowable expenses
under PSP2 and PSP3, and seek reimbursement for the
overpayment, if applicable.
Management Response
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/

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
14
Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of XOJET Aviation, LLC’s (XOJET) 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
April 3, 2020.16
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 September 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);17 and
o 14 CFR, Part 241,18 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;

16  XOJET submitted the PSP1 Application and related supporting documentation on April 3, 2020.
17  P.L. 116-136 (March 27, 2020).
18  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. XOJET is not a Large Certificated Air Carrier.

Appendix 1: Objective, Scope, and Methodology
Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
15
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 Application, 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
consultants19 engaged by Treasury to aid in its evaluation of the
air carriers’ and the contractors’ certified applications and other
data.
•
Interviewed XOJET representatives responsible for the sworn
financial statement. The amounts submitted in the Awardable
Amounts section of the PSP1 Application were considered the
sworn financial statement.
•
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,20 filings, 2019 IRS Form 851 –
Affiliation Schedule,21 and organizational hierarchy information.

19  Summit Consulting, LLC.
20  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.
21  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.

Appendix 1: Objective, Scope, and Methodology
Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
16
•
Reviewed Government Accountability Office’s (GAO) Standards
for Internal Control in the Federal Government22 to identify the
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 exist. We
concluded that one of the five internal control components,
Control Activities, as related to XOJET’s payroll systems, was
significant to the audit objective.23 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
XOJET’s payroll systems, we examined XOJET’s response to
Data Supplier Questionnaires,24 reviewed a System and
Organizational Controls 1 (SOC 1),25 and interviewed XOJET’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 Reliability26 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. XOJET prepared the PSP1 Application using
information from the accrual-based accounting system of
record, System Application & Products (SAP). We compared
payroll details generated from ADP, LLC (ADP) payroll registers
at the individual employee level, as well as third-party vendor
benefit invoices, from April 1, 2019 through
September 30, 2019 to the amounts presented in the
Awardable Amounts section of the PSP1 Application.

22  GAO-14-704G (September 2014).
23  The five components of internal control are Control Environment, Risk Assessment, Control
Activities, Information and Communication, and Monitoring.
24  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.
25  SOC 1 reports 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.
26  GAO-20-283G (December 2019).

Appendix 1: Objective, Scope, and Methodology
Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
17
To assess data reliability of these sources, we examined
XOJET’s response to the Data Supplier Questionnaires for SAP
and ADP, reviewed the ADP SOC 1, and interviewed XOJET’s
management responsible for generating and using the data.
Based on our assessment, we determined that the data was
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 objectives. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
18
Appendix 2: Schedule of Monetary Benefits
According to the Code of Federal Regulations,27 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.
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

$172,218

The questioned cost represents amounts provided by Treasury
under the Payroll Support Program (PSP1). As discussed in
Finding 1, XOJET Aviation, LLC overstated its PSP1 Application
awardable amount to Treasury by $220,228 due to (1) the
inclusion of corporate officer compensation, and (2) differences
between accrual-based compensation and actual compensation.
However, since Treasury disbursed PSP1 funds pro rata for
passenger air carriers at 78.2 percent of the requested awardable
amount, the questioned cost related to the overstated PSP1
Application is $172,218.

27 2 CFR § 200.84 – Questioned Cost

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
19
Appendix 3: XOJET Management Response

(b) (4)

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
20
Appendix 4: Treasury Management Response

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
21

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
22

Audit of Air Carrier Worker Support Certifications - XOJET Aviation, LLC
(OIG-22-041).
23
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
XOJET Aviation, LLC
President and Chief Operating 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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