Audit Report OIG-24-043 — Air Carrier Worker Support Certifications, Prospect Airport Services, Inc.
- Issuer
- Office of Inspector General
- Document type
- Memorandum
- Date
- 2024-09-26
Summary
Audit Report OIG-24-043, issued September 26, 2024 by the Office of Inspector General of the Department of the Treasury, with a transmittal memorandum from the Assistant Inspector General for Audit to Treasury's Chief Program Officer. The audit, performed under contract by Saggar & Rosenberg, P.C., assesses the data Prospect Airport Services, Inc. used to certify compensation amounts in its Air Carrier Payroll Support Program (PSP1) application under the CARES Act, for the period April 1, 2019 through September 30, 2019. The report states that Prospect overstated the Awardable Amounts section by $310,004, which was offset by a $4,860,352 understatement, so Prospect understated its requested amount by $4,550,348 and did not over-request PSP1 assistance. Appendices include Prospect and Treasury management responses and a report distribution list.
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Full text
Audit Report
OIG-24-043
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - Prospect Airport Services, Inc.
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 – Prospect
Airport Services, Inc.
Attached is our audit report for the Audit of Air Carrier Worker Support Certification –
Prospect Airport Services, Inc. (Prospect) (OIG-24-043; dated September 26, 2024).
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 Prospect’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). 1 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 Prospect incorrectly compiled data used for the
Awardable Amounts section of the PSP1 Application, resulting in a $310,004
overstatement. Specifically, the:
• Inclusion of unallowable corporate officer compensation, resulted in a
overstatement;
• Differences between the accrual-based financial information used for benefits
and the actual amounts paid, resulted in an overstatement of ; and
1
P.L. 116–136 (March 27, 2020).
• Inclusion of benefit compensation for ineligible affiliate employees, resulted in a
overstatement.
However, the overstatements were entirely offset by a $4,860,352 understatement
due to:
• Data errors resulted in an understatement of ; and
• Eligible tip compensation paid to company employees that Prospect voluntarily
withheld from the PSP1 Application, resulted in an understatement of
.
Overall, Prospect understated its requested PSP1 amount by $4,550,348 and did not
over-request PSP1 financial assistance 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 Prospect’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.
Contents
Audit Report
Results in Brief ...................................................................................................2
Background ........................................................................................................3
Treasury Disbursement Processes ....................................................5
PSP1 Interim Audit Report ...............................................................6
Prospect Airport Services, Inc. .........................................................7
Audit Results......................................................................................................8
Finding 1 Prospect 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: Prospect Management Response ......................................................17
Appendix 3: Treasury Management Response ......................................................18
Appendix 4: Report Distribution ..........................................................................21
Abbreviations
CARES Act Coronavirus Aid, Relief, and Economic Security Act
COVID-19 Coronavirus Disease 2019
DOT Department of Transportation
GAO Government Accountability Office
Guidelines Guidelines and Application Procedures for Payroll Support to Air
Carriers and Contractors
IRS Internal Revenue Service
OIG Treasury Office of Inspector General
Prospect Prospect Airport Services, Inc.
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
This Page Intentionally Left Blank
September 26, 2024
Jessica Milano
Chief Program Officer
Department of the Treasury
This report presents the results of our audit of Prospect Airport
Services, Inc.’s (Prospect) certifications made to the Department of
the Treasury (Treasury) as part of its participation in the Air Carrier
Payroll Support Program (PSP1). This audit was mandated by
Title IV, Subtitle B, Air Carrier Worker Support, of the Coronavirus
Aid, Relief, and Economic Security Act (CARES Act). 1 Under the
CARES Act, Treasury was to provide $32 billion in financial
assistance to passenger air carriers, cargo air carriers, and certain
contractors to be exclusively used for the continuation of payment
of employee wages, salaries, and benefits, in response to the
economic impact of the Coronavirus Disease 2019 (COVID-19). 2
Furthermore, the Treasury Office of Inspector General (OIG) is
required to audit certifications made by passenger and cargo air
carriers that do not report salaries and benefits to the Department
of Transportation (DOT) (hereinafter referred to as non-241 air
carriers) 3 and contractors.
Under a contract with OIG, Saggar & Rosenberg, P.C. (S&R)
conducted this audit. Our audit objective was to assess the
accuracy, completeness, and sufficiency of Prospect’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
P.L. 116–136 (March 27, 2020).
2
The financial assistance provided under the CARES Act was split between Passenger Air Carriers
($25 billion), Cargo Air Carriers ($4 billion), and Contractors ($3 billion).
3
Passenger and cargo air carriers that are not required to report salaries and wages to DOT under
14 CFR, Part 241, “Uniform System of Accounts and Reports for Large Certificated Air Carriers”.
Audit of Air Carrier Worker Support Certifications – Prospect Airport
Services, Inc. (OIG-24-043) 1
tax returns, and other documentation submitted to Treasury on
April 10, 2020.4
To accomplish the objective, we reviewed applicable laws and
regulations and Treasury’s policies and procedures, including but
not limited to, the Title IV, Subtitle B, Air Carrier Worker Support of
the CARES Act; Guidelines and Application Procedures for Payroll
Support to Air Carriers and Contractors (Guidelines); PSP1
Agreement; and Frequently Asked Questions: Application
Procedures for Payroll Support to Air Carriers and Contractors. We
interviewed key personnel from Prospect, 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 Prospect, a contractor, reported correct
information for three of the four sections reviewed on its PSP1
Application. 5 These sections are: (1) Applicant Information,
(2) Applicant Type, and (3) Certification. We also found that
Prospect reported incorrect information in the Awardable Amounts
section. The company included of unallowable corporate
officer compensation, of differences between actual
amounts paid and accrual-based financial information used for
benefits, and of ineligible affiliate employees’ benefit
compensation. However, the overstatement was entirely offset by
due to data errors; and of allowable tip
compensation paid to company employees that was voluntarily
withheld from the application. Overall, Prospect understated its
requested amount by $4,550,348 and did not over-request PSP1
financial assistance despite partial non-compliance with application
requirements.
As part of our reporting process, we provided Prospect
management with an opportunity to comment on a draft of this
4
Prospect submitted the PSP1 Application and related supporting documentation on April 10, 2020.
5
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.
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 2
report. In a written response, Prospect management stated they
agree with the audit findings and noted that the inclusion of
benefits for ineligible affiliate employees occurred due to Prospect’s
inability to update the original application to remove benefits for
one affiliate that Treasury deemed ineligible for PSP1. Prospect
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 amount 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 Prospect’s
management and reviewing a wide range of the company’s
financial records and corporate documents. In relation to Prospect,
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
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 - Prospect Airport
Services, Inc. (OIG-24-043) 3
to DOT (referred to as 241 air carriers), 6 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.
6
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. Prospect and its affiliates are not Large Certificated Air Carriers
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 4
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, 7 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
officials 8 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 contractor applicants as quickly as
possible and prior to the application deadline of 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
7
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.
8
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 - Prospect Airport
Services, Inc. (OIG-24-043) 5
amount; as such, the final awardable amount for those 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.
PSP1 Interim Audit Report
In a prior audit report, 9 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
9
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 - Prospect Airport
Services, Inc. (OIG-24-043) 6
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.
Prospect Airport Services, Inc.
Headquartered in Des Plaines, Illinois, Prospect is a contractor that
delivers a broad range of services to airlines in 30 cities and
31 airports around the country that include ticket and gate agents,
passenger services, ramp/cabin services, cargo services, janitorial,
and security services.
The Prospect PSP1 Application 10 was comprised of four United
States-based affiliate companies. The three other companies are
(1) Prospect International Airport Services, (2) Prospect of Orlando,
and (3) Prospect of Tampa, all of which are managed and operated
by the same management group. Initially, each affiliate submitted
separate PSP1 applications to Treasury; however, those
applications were merged during Treasury’s application review
process. A breakdown of the initial applications that were approved
by Treasury is detailed below in Table 1.
Table 1. PSP1 Initial Application Requests
Initial PSP1
Company Application
Prospect Airport Services
Prospect International Airport Services
Prospect of Orlando
Prospect of Tampa
TOTAL – Merged Application
Source: Initial PSP1 Applications
After Prospect’s application was merged with its three affiliates,
Prospect accepted the contractor top-off for a total award amount
10
The PSP1 Application was merged; however, only the Awardable Amounts section included
consolidated data for all four affiliates. Hereafter, Prospect refers to all four affiliates.
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 7
of $94,580,166, or 90 percent of the company’s requested
amount. Treasury’s disbursements to Prospect were as follows:
• July 10, 2020: $36,623,542
• July 30, 2020: $18,324,275
• September 1, 2020: $18,315,938
• February 12, 2021: $21,316,411
In addition to PSP1, Treasury awarded Prospect $31,947,078
under the Payroll Support Program Extension (PSP2) 11 authorized
by the Consolidated Appropriations Act, 2021 and $31,947,078
under the Payroll Support Program 3 (PSP3) 12 authorized by the
American Rescue Plan Act of 2021. PSP2 and PSP3 were not the
subject of this audit.
Audit Results
We found that Prospect 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
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 Prospect reported incorrect information in the
Awardable Amounts section. The company included of
unallowable corporate officer compensation, of differences
between actual amounts paid and accrual-based financial
information used for benefits, and of ineligible affiliate
employees’ benefit compensation. However, the overstatement
was offset by due to data errors, and of
11
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).
12
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).
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 8
allowable tip compensation paid to company employees that was
voluntarily withheld from the application. Overall, Prospect
understated its requested PSP1 amount by $4,550,348 and did not
over-request PSP1 financial assistance despite partial
non-compliance with application requirements.
Finding 1 Prospect 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 Agreement, effective date
July 10, 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.
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 contractor certifies, using sworn
financial statements or other appropriate data, as the amount
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 9
of wages, salaries, benefits, and other compensation that
such contractor paid its employees during the time period.
Prospect incorrectly certified the PSP1 awardable amount by
including a total of $310,004 in ineligible expenses. Specifically,
Prospect:
• Included benefit compensation for the company President,
who met the definition of corporate officer per the PSP1
Agreement, resulting in an overstatement of ;
• Prepared the PSP1 Application using accrual-based financial
information, rather than the actual compensation paid for
benefits, resulting in an overstatement of .
• Included benefit compensation for two of its ineligible
affiliate companies,13 resulting in an overstatement of
, as shown in Table 2.
Table 2. Ineligible Affiliate Benefits
Benefits Amount Description
• Prospect included employer and
employee healthcare benefit
contributions of two ineligible
affiliates in the amount of
Healthcare .
• Prospect excluded employee
healthcare benefit contributions of
two ineligible affiliates in the
amount of .
Deferred • Prospect included savings plan
Compensation benefits of one ineligible affiliate.
Savings Plan
TOTAL Net Overstatement
Source: S&R Calculation of Awardable Amount
However, the overstatements were entirely offset by (1) data
errors related to typos and rounding, totaling ; and
13
One affiliate applied to PSP1 but was deemed ineligible by Treasury. The other affiliate did not apply
to PSP1 and is not a subsidiary of the approved affiliates; therefore, the company is ineligible to
receive PSP1 funds.
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 10
(2) eligible tip compensation 14 paid to company employees that
Prospect voluntarily withheld from the PSP1 Application, totaling
. As a result, Prospect understated its requested PSP1
amount by $4,550,348.
Prospect management stated that the inclusion of corporate officer
compensation in its request for benefits was due to unintentional
oversight. Prospect management also stated they were unable to
update the application to remove benefit costs for employees of
ineligible PSP1 affiliate companies once the four approved affiliate
applications were merged by Treasury. In addition, Prospect
management stated that data errors and the use of accrual-based
financial information for the benefit costs in its PSP1 Application
stemmed from unintentional oversight during the application
process. Further, Prospect management stated that they excluded
tip compensation from the application to exercise conservatism.
To remedy the findings noted in the prior OIG audit report, 15
Treasury required PSP2 applicants to recertify their PSP1
awardable amounts. Prospect erroneously certified to Treasury
under PSP2, that its PSP1 Application did not include unallowable
corporate officer compensation. However, Prospect’s PSP1
allowable amount exceeded its requested amount by $4,550,348,
as illustrated in Table 3 below. Therefore, Prospect did not over-
request PSP1 financial assistance.
14
Tips compensation paid to Prospect employees and its affiliates was recorded on its bi-weekly pay
registers and reported on IRS Form 941.
15
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 - Prospect Airport
Services, Inc. (OIG-24-043) 11
Table 3. Aggregate Understatement
Description Total
Corporate Officers
Accrual-Based
Benefit Data
Ineligible Affiliates
Data Errors
Tips Excluded
From Application
Understatement $4,550,348
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 - Prospect Airport
Services, Inc. (OIG-24-043) 12
Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of Prospect Airport Services, Inc.’s (Prospect) 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 10, 2020.16
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);17 and
o 14 CFR, Part 241,18 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;
16
Prospect submitted the PSP1 Application and related supporting documentation on April 10, 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 the Department of Transportation. Prospect and its affiliates are not Large Certificated Air
Carriers.
Audit of Air Carrier Worker Support Certifications – Prospect Airport
Services, Inc. (OIG-24-043) 13
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 Prospect management responsible for 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, 19 and organizational hierarchy
information.
• Reviewed Government Accountability Office’s (GAO) Standards
for Internal Control in the Federal Government 20 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 Prospect’s payroll system, was
19
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.
20
GAO-14-704G (September 2014).
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 14
Appendix 1: Objective, Scope, and Methodology
significant to the audit objective.21 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
Prospect’s payroll system, we examined Prospect’s response to
Data Supplier Questionnaires, 22 reviewed a System and
Organizational Controls 1 (SOC 1), 23 and interviewed Prospect’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 Reliability 24 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. Prospect prepared the PSP1 Application using
bi-weekly payroll compensation from April 2019 through
September 2019, which included information developed from
Prospect’s payroll and financial accounting systems. We
compared details generated from the 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
Prospect’s response to the Data Supplier Questionnaire for the
payroll and financial accounting systems, reviewed the SOC 1
report for the payroll system, and interviewed Prospect’s
management responsible for generating and using the data.
Based on our assessment, we determined that the data was
21
The five components of internal control are Control Environment, Risk Assessment, Control
Activities, Information and Communication, and Monitoring.
22
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.
23
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.
24
GAO-20-283G (December 2019).
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 15
Appendix 1: Objective, Scope, and Methodology
sufficiently reliable to support the findings and conclusions to
answer the objective of this audit.
We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and
conclusions based on our audit objective. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 16
Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications – Prospect Airport
Services, Inc. (OIG-24-043) 18
Audit of Air Carrier Worker Support Certifications - Prospect Airport
Services, Inc. (OIG-24-043) 20
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
Prospect Airport Services, Inc.
President
Vice President
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
Audit of Air Carrier Worker Support Certifications – Prospect Airport
Services, Inc. (OIG-24-043) 21
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