Audit Report (2023-06-13)

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Audit Report

OIG-23-029
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - Bird Acquisition, LLC
June 13, 2023
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

June 13, 2023

MEMORANDUM FOR  JESSICA MILANO

ACTING CHIEF RECOVERY OFFICER
FROM:

Deborah L. Harker /s/

Assistant Inspector General for Audit
SUBJECT:

Audit of Air Carrier Worker Support Certifications – Bird
Acquisition, LLC
Attached is our audit report for the Audit of Air Carrier Worker Support Certifications –
Bird Acquisition, LLC (Bird Acquisition) (OIG-23-029; dated June 13, 2023). 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 Bird Acquisition’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 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 Bird Acquisition incorrectly compiled data used for the
Awardable Amounts section of the PSP1 Application, resulting in a $128,473
overstatement. Specifically, the:
• Inclusion of unallowable corporate officer compensation, resulted in a $

overstatement;
• Inclusion of member-paid Consolidated Omnibus Budget Reconciliation Act1
(COBRA) benefits, resulted in a $
 overstatement;
• Reporting incorrect data for benefits, resulted in a $
 understatement; and

1  P.L. 99-272 (April 7, 1986).

• Excluding eligible gross pay from the awardable amount resulted in a $

understatement.
Treasury’s awards to contractors under PSP1 included a 90 percent pro rata
distribution of application amounts. Applying this formula, Bird Acquisition received an
$115,626 overpayment from Treasury.
Accordingly, S&R recommends that Treasury’s Chief Recovery Officer:
• Seek reimbursement of the $115,626 overpayment for PSP1 financial
assistance; and
• Review Bird Acquisition’s requested amount for unallowable expenses, under
the Payroll Support Program Extension (PSP2)2 authorized by the Consolidated
Appropriations Act, 2021 and the Payroll Support Program 3 (PSP3)3 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 Bird Acquisition’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.

2  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).
3  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).

Attachment

cc:
Victoria Collin, Chief Compliance and Finance Officer, Office of Recovery
    Programs, Department of the Treasury

Jason Morrow, Attorney Advisor, Department of the Treasury
Jeff Davis, Partner, Saggar & Rosenberg, P.C.

i

Contents
Audit Report
Results in Brief ................................................................................................... 2
Background ........................................................................................................ 4
Treasury Disbursement Processes .................................................... 6
PSP1 Interim Audit Report ............................................................... 7
Bird Acquisition, LLC ...................................................................... 8
Audit Results ...................................................................................................... 9
Finding 1 Inaccurate Compilation of the PSP1 Application Awardable Amount ... 10
Corporate Officer Compensation .................................................... 10
COBRA Benefits ........................................................................... 11
Data Errors for Benefit Compensation ............................................. 13
Voluntary Deductions to Gross Pay for Salaries and Wages ............... 14
Recommendations ........................................................................ 17
Appendix 1: Objective, Scope, and Methodology .................................................. 18
Appendix 2: Schedule of Monetary Benefits ......................................................... 22
Appendix 3: Bird Acquisition Management Response ............................................. 23
Appendix 4: Treasury Management Response ...................................................... 26
Appendix 5: Report Distribution .......................................................................... 29

Abbreviations
Bird Acquisition
Bird Acquisition, LLC
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
COBRA
Consolidated Omnibus Budget Reconciliation 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
OIG
Treasury Office of Inspector General
PSP1
Payroll Support Program, CARES Act

ii
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

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Audit of Air Carrier Worker Support Certifications - Bird Acquisition, LLC
(OIG-23-029)
1

June 13, 2023
Jessica Milano
Acting Chief Recovery Officer
Department of the Treasury
This report presents the results of our audit of Bird Acquisition,
LLC’s (Bird Acquisition) 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).4 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).5 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)6 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 Bird Acquisition’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
period from April 1, 2019 through September 30, 2019 and
included the certified PSP1 Application, sworn financial

4  P.L. 116-136 (March 27, 2020).
5  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).
6  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, 2020.7
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 Bird Acquisition, Treasury, and
contracted consultants 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 Bird Acquisition, a contractor, reported
correct information for three of the four sections reviewed on its
PSP1 Application.8 These sections are: (1) Applicant Information,
(2) Applicant Type, and (3) Certification. We also found that Bird
Acquisition incorrectly compiled data used for the Awardable
Amounts section, resulting in a $128,473 overstatement.
Specifically, we found (1) the inclusion of unallowable corporate
officer compensation, resulting in a $
 overstatement,
(2) inclusion of member-paid Consolidated Omnibus Budget
Reconciliation Act (COBRA)9 benefits, resulting in a $

overstatement, (3) reporting incorrect data for benefits, resulting in
a $
 understatement, and (4) excluding eligible gross pay from
the awardable amount, resulting in a $
understatement.
Treasury’s awards to contractors under PSP1 included
a 90 percent pro rata distribution of application amounts. Applying

7  Bird Acquisition submitted the PSP1 Application and related supporting documentation on
April 3, 2020. However, the Awardable Amounts section of the PSP1 Application was revised on
June 2, 2020.
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.
9  P.L. 99-272 (April 7, 1986).

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this formula, we found that Bird Acquisition received an $115,626
overpayment from Treasury. As a result, we question the costs
totaling $115,626 and recommend that the Treasury Chief
Recovery Officer seek reimbursement of the $115,626
overpayment to Bird Acquisition for PSP1. Additionally, we
recommend that Treasury review Bird Acquisition’s requested
amount for unallowable expenses, under the Payroll Support
Program Extension (PSP2)10 authorized by the Consolidated
Appropriations Act, 2021 and the Payroll Support Program 3
(PSP3)11 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 Bird Acquisition
management an opportunity to comment on a draft of this report.
Bird Acquisition management contested that the report
(1) inconsistently applies the definition of a corporate officer
regarding the Chief Instructor/Vice President of Domestic Flight
Program and (2) fails to consider the actual duties and
responsibilities of the Vice President of International Business
Development12 in determining whether that position was an
“officer.”
Bird Acquisition management stated that the Chief Instructor/Vice
President of Domestic Flight Program did not have a policy making
function and only worked with approximately 30 percent of the
students during the audit scope period, while the curriculum
oversight of the remaining students was performed by another
employee. Also, the Vice President of International Business
Development did not supervise any employees, was not the only
employee charged with sales responsibilities, was compensated
based on the employee’s own sales performance, and had no

10  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).
11  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).
12  Bird Acquisition management refers to this position as Vice President of International Sales, although
the official position title documented in the employee offer letter is Vice President of International
Development.

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responsibility over areas that Bird Acquisition considered its largest
sales markets.
We disagree with Bird Acquisition management’s statement that
the definition of corporate officer was applied in a manner
inconsistent with the full definition as defined by the PSP1
Agreement. The PSP1 Agreement 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.” The PSP1 Agreement
did not provide a threshold for the percentage of operations that
corporate officers needed to oversee, did not require them to
supervise employees, and did not specify how they should be
compensated. Bird Acquisition 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 would review the findings,
consider any response from the recipient, and seek recoupment of
any amounts that Treasury determines have been overpaid. In
addition, 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;

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(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),13 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 air 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. Applicant 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 it is
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

13  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. Bird Acquisition is not a Large Certificated Air Carrier.

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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 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 ─ 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 Return14 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
officials15 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 contractor applicants as
quickly as possible and prior to the application deadline of

14  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.
15  The certifying officials attested under penalty of perjury that the information and certifications provided
in the application and it attachments are true and correct.

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April 27, 2020, Treasury applied an initial estimated pro rata rate
of 69.7 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
contractors was approximately $4.1 billion, which exceeded the
$3 billion available financial assistance. Because its initial estimated
pro rata rate was low, Treasury calculated an additional
20.3 percent, the top-off amount, for contractors making the final
pro rata rate 90 percent. Treasury explained that 17 contractors
did not accept the top-off amount; as such, the final awardable
amount for these contractors was 69.7 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
contractors 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
contractors in February 2021. Treasury officials told us that if
recoupment was necessary for an applicant’s inclusion of
unallowable expenses such as corporate officer compensation and
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,16 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

16  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 calculation of the “awardable amount” 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.
Bird Acquisition, LLC
Headquartered in Phoenix, Arizona, Bird Acquisition17 is a
contractor that offers pilot training programs that can be catered to
individuals of many different backgrounds and experience levels.
Among other things, Bird Acquisition offers a partnership with a
commercial passenger airline, where individuals can become cadets
upon the completion of the training curriculum.
Bird Acquisition submitted its PSP1 Application totaling
$
18 on April 3, 2020, and revised the awardable amount
to $
 on June 2, 2020.19 Bird Acquisition received the
contractor top-off for a total award of $5,939,385, or 90 percent
of the company’s requested amount. Treasury’s disbursements to
Bird Acquisition were as follows:
• May 28, 2020 – $1,721,817.92
• June 4, 2020 – $860,908.96
• July 7, 2020 – $672,332.16
• August 6, 2020 – $672,332.16
• September 4, 2020 – $672,332.16
• February 16, 2021 – $1,339,661.18
In addition to PSP1, Treasury awarded Bird Acquisition
$2,006,192 under PSP2 and $2,006,192 under PSP3. PSP2 and
PSP3 were not the subject of this audit.

17  Bird Acquisition conducts business using its registered Trademark name, Aeroguard Flight Training
Center, which is registration number 5444685 with the United Stated Patent and Trademark Office.
18  Compensation related to a Bird Acquisition affiliate was not included in the PSP1 Application.
19  Bird Acquisition revised the initial PSP1 Application based on discussions with Treasury.

Audit of Air Carrier Worker Support Certifications - Bird Acquisition, LLC
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Audit Results
We found that Bird Acquisition 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 Bird
Acquisition’s partnership contract with the commercial passenger
airline, general ledger data, company sworn financial statements,
IRS Form 941, executive-level business charts, payroll registers,
and third-party benefit invoices.
We also found that Bird Acquisition reported incorrect information
in the Awardable Amounts section. The company included
(1) unallowable corporate officer compensation, resulting in an
overstatement of $
; and (2) member-paid COBRA benefits,
resulting in an overstatement of $
. However, the
overstatement was partially offset by data errors and the
company’s exclusion of PSP1 eligible gross pay from the awardable
amount totaling $
, resulting in a net overstatement of
$128,473. Table 1 illustrates a monthly breakdown of Bird
Acquisition’s overstated amounts.
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
$

$

$(128,473)
Source: S&R Calculation of Awardable Amount

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Since Treasury disbursed PSP1 funds pro rata for contractors at
90 percent of the requested awardable amount, Bird Acquisition
received an overpayment of $115,626.
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 May 26, 2020, 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.”
We identified eight Bird Acquisition executives through discussions
with management and review of the company’s 2019
organizational chart. Six of those executives met the definition of a
corporate officer per the PSP1 Agreement. Bird Acquisition
included unallowable corporate officer compensation paid to three
of its six corporate officers, resulting in an overstatement of
$
. The three executives were the Chief Marketing Officer,
Vice President of Domestic Flight Program, and Vice President of
International Business Development. However, Bird Acquisition
properly excluded compensation paid to its Chief Executive Officer,
Vice President of Supply Chain and Maintenance, and Chief
Financial Officer. Table 2 illustrates a monthly breakdown of Bird
Acquisition’s overstated awardable amounts for corporate officer
compensation.

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Table 2. Corporate Officer Inclusion
Month
Unallowable 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
Bird Acquisition management stated that they believe that the
definition of corporate officer was applied in a manner inconsistent
with the full definition as defined by the PSP1 Agreement.
Management further stated that it did not consider the Vice
President of Domestic Flight Program, prior to his joining the
management committee in July 2019,20 and the Vice President of
International Business Development, as corporate officers.
Management noted these individuals were not policy makers and
did not have authority over any business units.
COBRA Benefits
Treasury’s Guidelines defines wages, salaries, benefits, and other
compensation as “remuneration paid by the applicant to its
employees for personal services and includes salaries, wages,
overtime pay, cost-of-living differentials, and other similar
compensation, as distinguished from per diem allowances or
reimbursement for expenses incurred by personnel for the benefit
of the applicant.” In addition, the Guidelines define Awardable
Amounts as “an amount that such contractor certifies, using sworn

20  The Vice President of Domestic Flight Program became an equity stakeholder in Bird Acquisition on
July 1, 2019. Compensation paid to the individual from July 1, 2019 through September 30, 2019
was properly excluded from the PSP1 Application.

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financial statements or other appropriate data, as the amount of
wages, salaries, benefits, and other compensation that such
contractor paid its employees during the time period.”
Bird Acquisition included benefit premium amounts related to
continued health coverage provided under COBRA that were paid
by the insured member, not Bird Acquisition, in the awardable
amount table of the PSP1 Application for “Benefits”. These
individuals appear on company benefit invoices, but Bird
Acquisition is reimbursed for these COBRA premium costs. We
found that Bird Acquisition requested $
 for COBRA medical
coverage, and $
 for COBRA dental coverage in the awardable
amount table. Table 3 illustrates a monthly breakdown of Bird
Acquisition’s overstated awardable amounts for COBRA benefit
inclusion.
Table 3. COBRA Benefit Inclusion
Month
COBRA Benefits 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
Bird Acquisition management stated that it believed COBRA
insurance premiums had been excluded from the PSP1 Application
for benefits and that inclusion of such amounts stemmed from
unintentional oversight during the application process.

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Data Errors for Benefit Compensation
Bird Acquisition made several errors in the application process that
reduced the overall requested amount. These errors were a
combination of (1) errors calculating the awardable amount
reduction for Bird Acquisition’s affiliate; (2) unallowable bill
payment discrepancies; and (3) unidentified data compilation
errors, as detailed below in Table 4.
Table 4. Data Errors

Category
Amount
Description
Bird
Acquisition
Affiliate

(1) Bird Acquisition double counted the
necessary reduction for six affiliate employees
totaling $
, resulting in an
understatement. These employees were
included in Medical, Dental, and Vision benefit
premiums that were excluded from the
awardable amount for September 2019; and
(2) Bird Acquisition failed to exclude two
affiliate employees from the Dental portion of
the June 2019 and July 2019 benefit request.
The claimed amount of these premiums in the
awardable amount was $
, resulting in an
overstatement.
Prior
Month
Billing
$

Bird Acquisition included bill payment
discrepancies from prior month Dental benefit
premiums in the awardable amount for the
April 2019 and June 2019 benefit request,
resulting in an overstatement.
Unknown
$

Bird Acquisition was unable to identify
variances between the PSP Application and
benefit supporting documentation for Health
Insurance (May 2019 and July 2019) and Life
Insurance (July 2019, August 2019, and
September 2019), resulting in an
overstatement.
TOTAL
$
 Net Understatement
Source: S&R Calculation of Awardable Amount and Benefit Reconciliation provided by
Bird Acquisition, LLC
Bird Acquisition management stated that data compilation errors
stemmed from unintentional oversight during the application
process.

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Voluntary Deductions to Gross Pay for Salaries and
Wages
Treasury’s Guidelines define Awardable Amounts as “an amount
that such contractor certifies, using sworn financial statements or
other appropriate data, as the amount of wages, salaries, benefits,
and other compensation that such contractor paid its employees
during the time period.” The PSP1 Agreement goes on to define
Benefits as “without duplication of any amounts counted as Salary
or Wages, pension expenses in respect of Employees, all expenses
for accident, sickness, hospital, and death benefits to Employees,
and the cost of insurance to provide such benefits…; and any other
similar expenses paid by the Recipient for the benefit of
Employees, including any other fringe benefit expense described in
lines 10 and 11 of Financial Reporting Schedule P-6, Form 41, as
published by the Department of Transportation.”
We found that Bird Acquisition reduced the PSP1 awardable
amount related to (1) employee voluntary deductions that were not
claimed under benefits on the PSP1 Application; and (2) eligible
communications expenses.
Employee Voluntary Deductions
Bird Acquisition excluded $
 on the PSP1 Application. This
amount represents voluntary deductions21 for (1) Dependent Care,
(2) Flex Savings Account, and (3) Health Savings Account, from
gross pay that were withheld from employees’ paychecks. These
amounts are eligible for PSP1 financial assistance, but not claimed
on the PSP1 Application. Table 5 illustrates a breakdown of each
type of withholding.

21  Employees may choose to have more money taken out of their paycheck to cover the cost of
various benefits. These are known as voluntary payroll deductions and they can be withheld on
a pretax basis (if allowed under Section 125 of the Internal Revenue Code) or post-tax basis.

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Table 5. Voluntary Withholdings
Deduction
Amount
Dependent Care
$

Flex Savings Account
$

Health Savings Account
$

TOTAL UNDERSTATEMENT
$

Source: Bird Acquisition Payroll Registers
Eligible Communications Expenses
Bird Acquisition excluded compensation paid to company
employees to offset the cost of monthly cellular phone expenses, a
valid fringe benefit under the PSP1 Agreement as related to DOT’s
Schedule P-6, Form 41, Line 10.22 Treasury’s Guidelines do not
prohibit the inclusion of communication expenses in the awardable
amount of the PSP1 Application. Specifically, communications
compensation of $
for PSP1 eligible employees was excluded
from the awardable amount on the PSP1 Application.
In total, Bird Acquisition understated the awardable amount on the
PSP1 Application by $
due to these categorical gross pay
deductions of eligible PSP1 compensation. Bird Acquisition
management stated that it did not request these amounts on its
PSP1 Application in order to closely align its request with the
“Wages, tips, and other compensation” amounts from the IRS
Form 941.
Although the inclusion of corporate officer compensation and
member-paid COBRA benefits resulted in an overstatement of
$
 in requested amounts, the net impact of this
overstatement was offset by an understatement of $
 due to
data errors and company’s exclusion of PSP1 eligible gross pay. As
a result, the residual net overstatement is $128,473, as illustrated
in Table 6 below.

22  Schedule P-6, Form 41 includes items such as salaries, benefits, materials purchased, services
purchased, depreciation, amortization, food, and other operating expenses. Line 10 of the form is for
personnel expenses.

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Table 6: Aggregate Overstatement
Description
Salaries/Wages
Benefits

Total
PSP1 Application
$

$
 $

Less: Corporate Officers
(Table 2)
$

$

$

Less: COBRA Benefits
(Table 3)
-
$

$

Add: Data Errors (Table 4)
-
$

$

Add: Voluntary
Withholdings (Table 5)
-
$

$

Add: Communications
Expenses
-
$

$

Allowable Compensation
$

$
 $

Net Overstatement
$

$

$(128,473)
Sources: S&R Calculation of Awardable Amount; Table 2; Table 3; Table 4; and Table 5.
Since Treasury disbursed PSP1 funds pro rata for contractors at
90 percent of the requested amount, Bird Acquisition received an
overpayment of $115,626.
To remedy the findings listed in the prior OIG audit report,23
Treasury required PSP2 applicants to re-certify their PSP1
awardable amounts. Bird Acquisition 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.

23  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 $115,626 overpayment of PSP1
financial assistance.
Management Response
Treasury will review 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 Bird Acquisition’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/

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Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of Bird Acquisition, LLC’s (Bird Acquisition) 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 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, 2020.24
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);25 and
o 14 CFR, Part 241,26 Uniform System of Accounts and
Reports for Large Certificated Air Carriers,
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, which included the PSP1
Application, March 30, 2020;

24  Bird Acquisition submitted the PSP1 Application and related supporting documentation on
April 3, 2020. The sworn Awardable Amounts section was later revised on June 2, 2020.
25  P.L. 116-136 (March 27, 2020).
26  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 Department of Transportation. Bird Acquisition is not a Large Certified 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 Application, specifically, the Applicant Information,
Applicant Type, Awardable Amount, 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 consultant
personnel engaged by Treasury to aid in its evaluation of the air
carriers’ and the contractors’ certified applications and other
data.
•
Interviewed Bird Acquisition 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 Return27 filings, and organizational
hierarchy.
•
Reviewed Government Accountability Office’s (GAO) Standards
for Internal Control in the Federal Government28 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

27  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.
28  GAO-14-704G (September 2014).

Appendix 1: Objective, Scope, and Methodology
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concluded that one of the five internal control components,
Control Activities, as related to Bird Acquisition’s payroll
system, was significant to the audit objective.29 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 Bird Acquisition’s payroll system, we
reviewed a System and Organizational Controls 1 (SOC 1)
report30 and interviewed Bird Acquisition’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 Reliability31 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. Bird Acquisition prepared the PSP1 Application using
gross pay, less certain non-taxable amounts that would reduce
the “Wages, tips, and other compensation” amounts from the
Employer’s Quarterly Federal Tax Return from April 2019
through September 2019, which included information developed
from Bird Acquisition’s payroll system. We compared details
generated from payroll registers at the individual employee level,
as well as third-party vendor benefit invoices from April 2019
through September 2019 to the amounts presented in the
Awardable Amounts section of the PSP1 Application.
To assess data reliability of these sources, we reviewed the
payroll system SOC 1 report and interviewed Bird Acquisition’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.

29  The five components of internal control are Control Environment, Risk Assessment, Control
Activities, Information and Communication, and Monitoring.
30  SOC 1 report addresses 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.
31  GAO-20-283G (December 2019).

Appendix 1: Objective, Scope, and Methodology
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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,32 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

$115,626
The questioned cost represents amounts provided by Treasury
under the Payroll Support Program (PSP1). As discussed in
Finding 1, Bird Acquisition, LLC overstated its PSP1 Application by
$128,473 due to (1) the inclusion of corporate officer
compensation; (2) the inclusion of member-paid Consolidated
Omnibus Budget Reconciliation Act (COBRA)33 benefits; (3) the
inclusion of incorrect data for benefits; and (4) exclusion of PSP1
eligible gross pay from the awardable amount. However, since
Treasury disbursed PSP1 funds pro rata for contractors at
90 percent of the requested amount, the questioned cost related to
the overstated PSP1 Application is $115,626.

32  2 CFR § 200.84 – Questioned Cost.
33  P.L. 99-272 (April 7, 1986).

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Appendix 3: Bird Acquisition Management Response

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Appendix 4: Treasury Management Response

Appendix 4: Treasury 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
Bird Acquisition, LLC
Chief Executive Officer
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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Access Treasury OIG reports and other information online: https://oig.treasury.gov/

RESPONSE TO REPORT OIG-23-029 PURSUANT TO THE JAMES M. INHOFE
NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2023, PUBLIC
LAW NO. 117-263, SECTION 5274
The Treasury Office of Inspector General attaches the following response received
from specifically identified non-governmental organizations or business entities as
required by the James M. Inhofe National Defense Authorization Act for Fiscal Year
2023, Public Law No. 117-263, § 5274
The Treasury Office of Inspector General offers no comment and makes no
representations, express or implied, of any nature with respect to the matters
stated in the attached responses.

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