OIG-22-044 Audit of Air Carrirt Worker Support Certifications - One Sky Flight, LLC

Summary

Treasury Office of Inspector General Audit Report OIG-24-044, Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC, dated September 26, 2024, with a transmittal memorandum to Jessica Milano from Assistant Inspector General for Audit Deborah L. Harker. Saggar & Rosenberg, P.C. audited the sworn data One Sky Flight used to certify wages and benefits for the Air Carrier Payroll Support Program (PSP1), covering April 1, 2019 through September 30, 2019. It found a $1,742,487 overstatement from unallowable officer compensation, employee-paid benefit contributions and data errors, offset by a $4,845,182 understatement from using estimated COBRA healthcare costs. Overall One Sky Flight understated its PSP1 request by $3,102,695 and owes Treasury nothing more despite partial non-compliance.

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Audit Report
OIG-24-044
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - One Sky Flight, LLC
September 26, 2024
Office of Inspector General
Department of the Treasury

This Page Intentionally Left Blank

September 26, 2024
MEMORANDUM FOR JESSICA MILANO
CHIEF PROGRAM OFFICER
FROM:
Deborah L. Harker /s/
Assistant Inspector General for Audit
SUBJECT:
Audit of Air Carrier Worker Support Certifications – One Sky
Flight, LLC
Attached is our audit report for the Audit of Air Carrier Worker Support Certification –
One Sky Flight, LLC (One Sky Flight) (OIG-24-044; dated September 26, 2024).1
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 One Sky Flight’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). This audit was
mandated by Title IV, Subtitle B, Air Carrier Worker Support, of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act).2 The scope of this audit covered the
period from April 1, 2019 through September 30, 2019, and included the certified
PSP1 Application, sworn financial statement, tax returns, and other documentation
submitted to Treasury.
In its audit report, S&R found One Sky Flight incorrectly compiled data used for the
Awardable Amounts section of the PSP1 Application, resulting in a $1,742,487
overstatement. Specifically, the inclusion of:
• Unallowable corporate officer compensation, resulted in a
overstatement;
• Employee-paid contributions to benefits, resulted in a
overstatement; and
• Data errors resulted in a
 overstatement.
1 One Sky Flight, LLC changed its legal name to OneSky Flight, LLC on December 14, 2021.
2 P.L. 116–136 (March 27, 2020).

However, the overstatements were offset by:
• One Sky Flight’s use of estimated employee healthcare costs that would be
provided under The Consolidated Omnibus Budget Reconciliation Act3 (COBRA)
elections, rather than actual paid amounts, that resulted in a $4,845,182
understatement.
Overall, One Sky Flight understated its requested PSP1 amount by $3,102,695 and
does not owe additional money to Treasury despite partial non-compliance with
application requirements.
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 One Sky Flight’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:
Gregory Till, Chief Operating Officer, Office of Capital Access, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital Access,
Department of the Treasury
Jason Morrow, Senior Counsel, Department of the Treasury
Jeff Davis, Partner, Saggar & Rosenberg, P.C.
P.L. 99-272 (April 7, 1986).
3

Contents
Audit Report
Results in Brief ...................................................................................................2
Background........................................................................................................3
Treasury Disbursement Processes ....................................................5
PSP1 Interim Audit Report...............................................................6
One Sky Flight, LLC........................................................................7
Audit Results......................................................................................................9
Finding 1 One Sky Flight Did Not Over-Request PSP1 Financial Assistance Despite
Partial Non-Compliance with Application Requirements .......................9
Appendices
Appendix 1: Objective, Scope, and Methodology ..................................................13
Appendix 2: One Sky Flight Management Response ..............................................17
Appendix 3: Treasury Management Response ......................................................18
Appendix 4: Report Distribution..........................................................................21
Abbreviations
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
COBRA
The 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
One Sky Flight
One Sky Flight, LLC
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
S&R
Saggar & Rosenberg, P.C.
SOC 1
System and Organizational Controls
Treasury
Department of the Treasury
i

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September 26, 2024
Jessica Milano
Chief Program Officer
Department of the Treasury
This report presents the results of our audit of One Sky Flight,
LLC’s (One Sky Flight)1 certification 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).2 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).3
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)4 and contractors.
Under a contract with the OIG, Saggar & Rosenberg, P.C. (S&R)
conducted this audit. Our audit objective was to assess the
accuracy, completeness, and sufficiency of One Sky Flight’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 statement,
1
One Sky Flight, LLC changed its legal name to OneSky Flight, LLC on December 14, 2021.
2 P.L. 116–136 (March 27, 2020).
3 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).
4 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”.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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tax returns, and other documentation submitted to Treasury on
April 3, 2020.5
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 One Sky Flight, Treasury, and
contracted consultants engaged by Treasury to evaluate certified
company applications. We conducted our fieldwork from
August 2023 through June 2024. Appendix 1 contains a more
detailed description of our objective, scope, and methodology.
Results in Brief
In brief, S&R found that One Sky Flight, a passenger air carrier,
reported correct information for three of the four sections reviewed
on its PSP1 Application.6 These sections are: (1) Applicant
Information, (2) Applicant Type, and (3) Certification. We also
found that One Sky Flight reported incorrect information in the
Awardable Amounts section of the PSP1 Application.
One Sky Flight overstated the awardable amount by $1,742,487
due to the inclusion of (1)
in unallowable corporate officer
compensation, (2)
in employee-paid benefit
contributions, and (3)
in data compilation errors.
However, the overstatement was offset by the company’s use of
estimated employee healthcare costs that would be provided under
The Consolidated Omnibus Budget Reconciliation Act7 (COBRA)
elections, rather than actual paid amounts, resulting in a
$4,845,182 understatement. Overall, One Sky Flight understated
its requested PSP1 amount by $3,102,695 and does not owe
5 One Sky Flight submitted the PSP1 Application and related supporting documentation on
April 3, 2020.
6   The PSP1 Application is comprised of eight sections. Four sections - Financial Institution Information,
Employment Levels, Taxpayer Protection, and Additional Information, were not subject to audit
procedures. Details regarding the sections not reviewed can be found in appendix 1.
7 P.L. 99–272 (April 7, 1986).
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additional money to Treasury despite partial non-compliance with
application requirements.
As part of our reporting process, we provided One Sky Flight
management with an opportunity to comment on a draft of this
report. In a written response, One Sky Flight management stated
they do not contest the conclusions set forth in this report. One
Sky Flight management’s response, in its entirety, is included as
appendix 2 of this report.
In a written response, Treasury management stated the draft report
describes work performed by OIG’s contractor to determine
whether the recipient’s requested awardable amounts complied
with Treasury’s program requirements. The draft report notes the
extensive fieldwork conducted for this review between
August 2023 and June 2024, including interviewing One Sky
Flight’s management and reviewing a wide range of the company’s
financial records and corporate documents. In relation to One Sky
Flight, Treasury management noted that OIG’s contractor found no
amounts were overpaid. Treasury management appreciates the
OIG’s work on this engagement and looks forward to working with
the OIG to protect the integrity of the PSP and other recovery
programs. Treasury management’s response, in its entirety, is
included as appendix 3 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
respective contractors that must exclusively be used for the
continuation of payments of employees’ wages, salaries, and
benefits. Financial assistance is to be provided to:
(1) passenger air carriers, in an aggregate amount up to
$25 billion;
(2) cargo air carriers, in an aggregate amount up to $4 billion;
and
(3) contractors, in an aggregate amount up to $3 billion.
According to the CARES Act, Treasury is required to provide
financial assistance to air carriers that report salaries and benefits
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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to DOT (referred to as 241 air carriers),8 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
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.
8 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. One Sky Flight is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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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 Return,9 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
officials10 and the applicant’s 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
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 low, Treasury calculated an
9
IRS Form 941 is a tax form that businesses file quarterly to report income taxes, Social Security
taxes, and Medicare taxes they withheld from employees’ paychecks.
10 The certifying officials attested under penalty of perjury that the information and certifications provided
in the application and its attachments are true and correct.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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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.
PSP1 Interim Audit Report
In a prior audit report,11 OIG identified two systemic issues
affecting the payment amounts administered to all PSP1 recipients
for non-241 air carriers and contractors. Specifically, some of the
recipients audited included unallowable employer-side payroll taxes
and/or corporate officer compensation in their calculation of the
awardable amounts on their PSP1 applications. Treasury
management acknowledged these issues 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. Based on
our recommendations, in March 2022 Treasury implemented a
PSP1 recertification process whereby recipients had to certify
whether they excluded employer-side payroll taxes and corporate
officer compensation in their calculation of the awardable amounts
on their PSP1 applications. Treasury’s goal was to determine if
overpayments were made to recipients based on inaccurate
information included in PSP1 applications.
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. Any
overpayment was first offset against the approved top-off
payment. If an overpayment remained, or the overpayment was
identified after all PSP1 disbursements were made, and the
11 OIG-21-025, Interim Audit Update – Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), March 31, 2021.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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recipient was entitled to PSP2 or PSP3 funding, the overpayment
was offset against the PSP2 and/or PSP3 awards prior to issuance.
All remaining PSP1 overpayments not previously collected where
the recipient did not qualify for, or apply for, PSP2 and PSP3
funding, were required to be repaid to Treasury.
One Sky Flight, LLC
Headquartered in Cleveland, Ohio, One Sky Flight12 provides
managerial support and back-office functions for its wholly-owned
subsidiaries. The subsidiaries provide passenger air transportation
and aircraft brokerage services that connect retail consumers with
direct air carriers.
The initial One Sky Flight PSP1 Application included seven United
States-based subsidiary companies. The seven subsidiaries were
(1) Flexjet, LLC; (2) PrivateFly, LLC; (3) Sentient Jet Charter, LLC;
(4) Sentient Jet, LLC; (5) Flight Options, LLC; (6) Sojourn Aviation,
LLC; and (7) Everest Fuel Management, LLC. Treasury entered into
a PSP1 Agreement with One Sky Flight, inclusive of its seven
subsidiaries, on May 4, 2020.
Subsequent to the PSP1 Agreement between Treasury and One
Sky Flight, Treasury determined that One Sky Flight; Flight
Options, LLC; Sojourn Aviation, LLC; and Everest Fuel
Management, LLC were ineligible for PSP1.13 Treasury voided the
May 4, 2020, PSP1 Agreement with One Sky Flight and entered
into four separate agreements with One Sky Flight’s eligible
subsidiaries, Flexjet, LLC; PrivateFly, LLC; Sentient Jet Charter,
LLC; and Sentient Jet, LLC; each effective December 7, 2020.
Additionally, Treasury revised One Sky Flight’s payment schedule
to reflect the change, leaving the remaining four subsidiaries as
eligible PSP1 entities (hereafter, One Sky Flight refers to all four
eligible subsidiaries). A breakdown of the PSP1 requests by the
eligible entities that was approved by Treasury is detailed below in
Table 1.
12 One Sky Flight, LLC changed its legal name to OneSky Flight, LLC on December 14, 2021.
13 One Sky Flight and its seven subsidiaries were originally approved to receive $
 for PSP1
financial assistance. On July 28, 2020, after the disbursement of the first two payments, Treasury
determined One Sky Flight and three of the seven subsidiaries, were ineligible and withheld further
payments. After calculating the requested amount for the four eligible subsidiaries, Treasury
continued the remaining payments for the revised amount of $
.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Table 1: PSP1 Final Application Requests
Company
PSP1 Request
Flexjet, LLC
$
PrivateFly, LLC
$
Sentient Jet Charter, LLC
$
Sentient Jet, LLC
$
TOTAL – Merged Application
$
Source: Initial PSP1 Applications
One Sky Flight received the passenger air carrier top-off for a total
award amount of $80,671,375, or 78.2 percent of the company’s
requested amount. Treasury’s disbursements to One Sky Flight
were as follows:
• May 6, 2020: $28,120,995
• June 2, 2020: $14,060,497
• August 10, 2020: $28,120,995
• September 1, 2020: $8,099,361
• October 1, 2020: $2,269,527
In addition to PSP1, Treasury awarded One Sky Flight $54,571,812
under the Payroll Support Program Extension (PSP2)14 authorized by
the Consolidated Appropriations Act, 2021 and $50,899,130 under
the Payroll Support Program 3 (PSP3)15 authorized by the American
Rescue Plan Act of 2021. PSP2 and PSP3 were not the subject of
this audit.16
14 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).
15 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).
16 Flexjet, LLC; PrivateFly, LLC; Sentient Jet Charter, LLC; and Sentient Jet, LLC applied separately
under PSP2 and PSP3, the amounts represent a combination of their awards.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Audit Results
Finding 1
We found that One Sky Flight 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, general ledger data, company sworn financial
statement, IRS Form 941, executive-level business charts, payroll
registers, and third-party benefit invoices.
We also found that One Sky Flight reported incorrect information in
the Awardable Amounts section of the PSP1 Application. The
company overstated the awardable amount by $1,742,487 due to
the inclusion of (1)
 in unallowable corporate officer
compensation, (2)
 in employee-paid benefit
contributions, and (3)
 in data compilation errors.
However, the overstatement was offset by the company’s use of
estimated employee healthcare costs that would be provided under
COBRA elections, rather than actual paid amounts, resulting in a
$4,845,182 understatement. Overall, One Sky Flight understated
its requested PSP1 amount by $3,102,695 and does not owe
additional money to Treasury despite partial non-compliance with
application requirements.
One Sky Flight Did Not Over-Request PSP1 Financial
Assistance Despite Partial Non-Compliance with
Application Requirements
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 Agreements for the eligible One Sky
Flight subsidiaries, effective date December 7, 2020, subsequently
define 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
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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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.
Treasury’s Guidelines define 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 carrier 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.
One Sky Flight incorrectly certified the PSP1 awardable amount by
including a total of $1,742,487 in unallowable corporate officer
compensation, ineligible benefit compensation, and data errors.
Specifically, One Sky Flight included:
• Compensation for the Chief Brand Officer and Chief
Experience Officer for Flexjet, LLC, and Chief Executive
Officer for Sentient Jet, LLC, who all met the definition of
corporate officer per the PSP1 Agreement, resulting in an
overstatement of
• Employee-paid contributions towards their health, dental,
life, and disability insurance coverages, resulting in an
overstatement of
; and
• Differences between the actual amounts paid and the
application figures compiled using company payroll registers
for salaries, wages, and other compensation totaling
, as shown in Table 2.
;
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Table 2: Data Errors
Description
Amount
•
One Sky Flight included duplicate amounts in
“Salaries and Wages” and “Other Compensation” for
August and September 2019.
•
One Sky Flight overstated commission amounts paid
to one company employee for July 2019.
Net Overstatement
Source: S&R Calculation of Awardable Amount
However, the overstatements were entirely offset because One
Sky Flight used estimated employee healthcare costs that would be
provided under COBRA elections, rather than actual paid amounts.
, which exceeded the
requested amount of
, resulting in an understatement
The actual amount paid was
of $4,845,182.
The overstatement of $1,742,487 for corporate officer, ineligible
benefit compensation, and data errors; and understatement of
$4,845,182 for COBRA healthcare benefits, resulted in an
aggregate understatement of $3,102,695.
One Sky Flight management stated that the inclusion of
(1) corporate officer compensation, (2) employee-paid contributions
towards their health, dental, life, and disability insurance
coverages, and (3) data errors in its PSP1 Application was due to
unintentional oversight.
In addition, One Sky Flight management stated that it used COBRA
healthcare benefit estimates as opposed to actual healthcare
payments made on behalf of company employees to exercise
conservatism when preparing the PSP1 Application.
To remedy the findings noted in the prior OIG audit report,17
Treasury required PSP2 applicants to recertify their PSP1
awardable amounts. One Sky Flight erroneously certified to
Treasury under PSP2, that its PSP1 Application did not include
unallowable corporate officer compensation. Although the
17 OIG-21-025, Interim Audit Update – Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), March 31, 2021.
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company’s recertification was inaccurate, the PSP1 allowable
amount exceeded the requested amount by $3,102,695, as
illustrated in Table 3 below. As such, One Sky Flight did not
receive an overpayment of PSP1 financial assistance.
Table 3: Aggregate Understatement
Description
Total
Corporate Officers
Employee-Paid Benefits
Data Errors
COBRA
$4,845,182
Understatement
$3,102,695
Source: S&R Calculation of Awardable Amount
* * * * * *
We appreciate the courtesies and cooperation provided to our staff
during the audit. A distribution list for this report is provided as
appendix 4.
Saggar & Rosenberg, P.C. /s/
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of One Sky Flight, LLC’s (One Sky Flight) 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 statement,
tax returns, and other documentation submitted to Treasury on
April 3, 2020.18
To accomplish this objective, Saggar & Rosenberg, P.C. (S&R)
performed the following activities during audit fieldwork, from
August 2023 through June 2024:
•
Reviewed applicable laws and regulations, including:
o Title IV, Subtitle B, Air Carrier Worker Support, of the
Coronavirus Aid, Relief, and Economic Security Act
(CARES Act);19 and
o 14 CFR, Part 241,20 Uniform System of Accounts and
Reports for Large Certificated Air Carriers,
December 28, 2023.
•
Reviewed Treasury’s policies and procedures 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;
o PSP1 Agreement;
18 One Sky Flight submitted the PSP1 Application and related support documentation on April 3, 2020.
19 P.L. 116–136 (March 27, 2020).
20 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 the Department of Transportation. One Sky Flight is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Appendix 1: Objective, Scope, and Methodology
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 consultant
personnel engaged by Treasury to aid in its evaluation of the air
carriers’ and the contractors’ certified applications and other
data.
•
Interviewed One Sky Flight management about the completion
and submission of the sworn financial statement in the
Awardable Amounts section of the PSP1 Application.
•
Reviewed sworn financial statement 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;21 and organizational hierarchy
information.
•
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 One Sky Flight’s payroll system,
21 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.
22 GAO-14-704G (September 2014).
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Appendix 1: Objective, Scope, and Methodology
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
One Sky Flight’s payroll system, we reviewed Data Supplier
Questionnaires,24 a System and Organizational Controls 1
(SOC 1) report,25 and interviewed One Sky Flight’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. One Sky Flight prepared the PSP1 Application using
payroll and benefit compensation from April 2019 through
September 2019, which included information developed from
One Sky Flight’s payroll and financial accounting systems. 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
Data Supplier Questionnaires for the payroll and financial
accounting systems, reviewed the SOC 1 report for the payroll
system, and interviewed One Sky Flight’s management
responsible for generating and using the data. Based on our
assessment, we determined that the data was sufficiently
23 The five components in GAO’s Standards for Internal Control in the Federal Government are Control
Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring.
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 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.
26 GAO-20-283G (December 2019).
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Appendix 1: Objective, Scope, and Methodology
reliable to support the findings and conclusions to answer the
objective of this audit.
We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and
conclusions based on our audit objective. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Audit of Air Carrier Worker Support Certifications - One Sky Flight, LLC
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Appendix 4: Report Distribution
Department of the Treasury
Deputy Secretary
Treasury Audit Liaison
Office of Strategic Planning and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group
One Sky Flight, LLC
Chief Financial Officer
Vice President of Accounting
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 Accountability
Committee on Financial Services
Committee on the Budget
Committee on Transportation and Infrastructure
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