Audit of Air Carrier Worker Support Certifications - Gate Gourmet

Summary

Treasury's Office of Inspector General issued Audit Report OIG-27-002, dated October 1, 2026, on the certifications Gate Gourmet, Inc. (GGI) made to Treasury for the Air Carrier Payroll Support Program (PSP1) under the CARES Act. The audit found that GGI reported correct information in five of seven application sections reviewed but overstated its awardable amount by $2,806,063: unallowable corporate officers' compensation of $1,768,875 and differences between accrual-based figures and actual compensation paid of $1,037,188. Applying the 69.7-percent pro-rata distribution, GGI received a $1,955,826 overpayment, but because GGI returned $10,695,209 of unexpended PSP1 funds, no additional funds are owed back to Treasury. The OIG recommends that Treasury review GGI's requested amounts under PSP2 and PSP3 and seek reimbursement if applicable.

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SENSITIVE BUT

UNCLASSIFIED
Audit Report

OIG-27-002

CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS

Audit of Air Carrier Worker Support
Certifications — Gate Gourmet, Inc.

October 1, 2026

Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
PSP2

PSP3
Treasury

Payroll Support Program Extension, Consolidated Appropriations
Act, 2021

Payroll Support Program 3, American Rescue Plan Act of 2021

Department of the Treasury
This Page Intentionally Left Blank
October 1, 2026

Jeffrey Stout
Acting Chief Program Officer
Department of the Treasury

This report presents the results of our audit of Gate Gourmet,
Inc.’s (GGI)' 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).? 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.* 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)* and contractors.

Our audit objective was to assess the accuracy, completeness, and
sufficiency of GGI’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

Hereinafter, “GGI” refers to the certifications made by Gate Gourmet, Inc. and Gate Serve, LLC. Both
entities were approved by Treasury to receive PSP1 funds.

2 P.L. 116-136 (March 27, 2020)

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).

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 —
Gate Gourmet, Inc. (OIG-27-002)
September 30, 2019, and included the certified PSP1 Application,
sworn financial statement, tax forms, and other documentation
submitted to Treasury on April 4, 2020.

To accomplish the objective, we reviewed applicable laws,
regulations, and Treasury’s policies and procedures, including but
not limited to, Title IV, Subtitle B, A/r Carrier Worker Support of the
CARES Act; Guidelines and Application Procedures for Payroll
Support to Air Carriers and Contractors under Division A, Title 1V,
Subtitle B of the Coronavirus Aid, Relief, and Economic Security
Act (Guidelines); PSP1 Agreement; and Frequently Asked
Questions: Application Procedures for Payroll Support to Air
Carriers and Contractors. We interviewed key personnel from GGl,
Treasury, and contracted consultants engaged by Treasury to
evaluate certified company applications. We conducted our
fieldwork from April 2020 through May 2024. Appendix 1 contains
a more detailed description of our audit objective, scope, and
methodology.

Results in Brief

We found that GGI, a contractor, reported correct information for
five of seven sections reviewed on its PSP1 Application.° These
sections are: (1) Applicant Information, (2) Applicant Type,

(3) Financial Institution Information, (4) Additional Information, and
(5) Certification. We also found that GGI reported incorrect
information in the Awardable Amounts and Employment Levels
sections of the PSP1 Application.

GGI overstated its awardable amount by $2,806,063. Specifically,
we found the (1) inclusion of unallowable corporate officers’
compensation, totaling $1,768,875, and (2) differences between
accrual-based financial information used to prepare the PSP1
Application and the actual compensation paid, totaling
$1,037,188.

° The PSP1 Application is comprised of eight sections. One section, Taxpayer Protection, was not

subject to audit procedures because it generally does not apply to non-241 air carriers.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
Treasury’s awards to contractors under PSP1 included a
69.7-percent® pro-rata distribution of application amounts. Applying
this formula, GGI received a $1,955,826 overpayment from
Treasury; however, GGI returned $10,695,209 of unexpended
PSP1 funds as instructed by Treasury in accordance with the
Payroll Support Program Extension (PSP2), authorized by the
Consolidated Appropriations Act (CAA), 2021.’ As a result, no
additional funds are owed back to Treasury. Due to instances of
non-compliance with PSP1, we recommend that Treasury review
GGI’s requested amount for unallowable expenses, under PSP2,
and Payroll Support Program 3 (PSP3), authorized by the American
Rescue Plan Act of 2021,° and seek reimbursement for
overpayment, if applicable.

In the Employment Levels section, GGI correctly reported 10,260
as the average number of employees for 2019; however, the
company incorrectly reported the number of involuntary reductions
after March 1, 2020. GGI reported 8,727 as the number of
involuntary reductions after March 1, 2020 and stated that the
number included involuntary terminations, employee schedule
reductions, and salary reductions. We were only able to identify
250 involuntary terminations from March 1, 2020, to April 4, 2020
(PSP1 Application submission date) based on documentation
provided by the company. Treasury management stated that they
had no plans to use the information in the involuntary reductions
after March 1, 2020 field. As such, we are not reporting this
discrepancy as a finding.

6
7

GGI did not receive the 20.3 percent top-off payment from Treasury.

P.L. 116-260, The CAA, 2021 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). Section 412 of the CAA, 2021 stated “Not later than

April 5, 2021, each contractor described in section 4111(3)(A)(i) that has received funds pursuant to
such section 4112 shall report to the Secretary on the amount of such funds that the contractor has
expended through March 31, 2021. If the contractor has expended an amount that is less than 100
percent of the total amount of funds the contractor received under such section, the Secretary shall
initiate an action to recover any funds that remain unexpended as of April 30, 2021.”

P.L. 117-2, The American Rescue Plan of 2021 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 —
Gate Gourmet, Inc. (OIG-27-002)
As a part of our reporting process, we provided GGI management
with an opportunity to comment on a draft of this report. In a
written response, management stated that although they respect
the OIG’s conclusion that certain individuals were corporate
officers, they note that the finding arises out of a good-faith
difference in interpretation of relevant requirements rather than any
deliberate inclusion of non-qualifying individuals. Additionally,
management stated that although the award included
compensation to individuals that OIG believes are corporate
officers, GGI did not use any of the award to pay their
compensation. Regarding the accrual-based financial information,
management stated that the awardable amount data used for GGI’s
application came from its income statement because it was a
reliable and comprehensive source of information. GGI management
believed that accrued-based accounting is a well-recognized and
permissible method. They further noted that prior OIG reports
indicate that creating the PSP1 Application using accrual-based
financial information was not a prohibited compilation method
under Treasury’s PSP1 Application guidelines.

We acknowledge both of GGI’s concerns. We recognize GGI’s
interpretation of the definition of a corporate officer; however,
Treasury’s PSP1 Agreement defines a corporate officer as “...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.” Accordingly, we based our determination on the
definition provided by Treasury, along with discussions held with
GGI management and a review of the company’s 2019
organization chart.

While the use of accrual-based financial information is not a
prohibited method, Treasury’s guidelines define the awardable
amount as “an amount that such carriers certifies...as the amount
of wages, salaries, benefits, and other compensation paid by such
carrier during the time period.” As such, we used Treasury
guidelines and reviewed GGI’s actual compensation paid to its
employees and paid benefit invoices during the time period from
April 1, 2019, through September 30, 2019. GGI’s management
response, in its entirety, is included as appendix 2 of this report.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
Background

In a written response, Treasury management agreed that any
overpayment of PSP funds should be reimbursed. Management also
stated it will review awardable amounts requested under PSP2 and
PSP3 and seek recoupment where appropriate. Management should
include its planned corrective actions and expected completion date
in the Joint Audit Management Enterprise System (JAMES).
Treasury management’s response, in its entirety, is included as
appendix 3 of this report.

Title IV, Subtitle B, of the CARES Act, Air Carrier Worker Support,
requires Treasury to provide financial assistance to air carriers and
contractors that must exclusively be used for the continuation of
payments of employees’ wages, salaries, and benefits. Financial
assistance is to be provided to:

(1) passenger air carriers, in an aggregate amount up to
$25 billion;

(2) cargo air carriers, in an aggregate amount up to
$4 billion; and

(3) contractors, in an aggregate amount up to $3 billion.

According to the CARES Act, Treasury is required to provide
financial assistance to air carriers that report salaries and benefits
to DOT (referred to as 241 air carriers),° 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 the DOT (referred to as non-241 air carriers), and
contractors, financial assistance is required to be an amount that
the air carrier or contractor certifies using sworn financial
statements or other appropriate data as to the amount of wages,
salaries, benefits, and other compensation paid to employees

®° 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. GGI is not a Large Certificated Air Carrier.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
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 number of involuntary reductions after
March 1, 2020.

5. Awardable Amounts — applicant’s sworn financial statement
consisting of salaries, wages, benefits, and other compensation
for the period April 1, 2019, through September 30, 2019.

6. Taxpayer Protection — a table that outlines in detail the
proposed financial instrument to be issued to Treasury.

7. Additional Information — applicant's verification of submitting its
Internal Revenue Service Form 941, Employer’s Quarterly

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
Federal Tax Return,'° 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'' 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
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

10 Internal Revenue Service 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.

"' 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 —
Gate Gourmet, Inc. (OIG-27-002)
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,'? 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
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

'2 Treasury OIG, Interim Audit Update: Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), O\G-21-025 (March 31, 2021)

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
Audit Results

the recipient did not qualify for, or apply for, PSP2 and PSP3
funding, were required to be repaid to Treasury.

Gate Gourmet, Inc.

Headquartered in Reston, Virginia, GGI is a contractor that globally
provides in-flight catering services from the United States for
airlines from over 30 airports.

GGI submitted two PSP1 applications on April 4, 2020, for
SE (Gate Gourmets, Inc.) and SY (Gate Serve,
LLC). Both entities were approved by Treasury to receive PSP1
funds. Treasury combined the applications for both entities,
totaling $MM awardable amount, and issued one PSP1
Agreement to Gate Gourmet, Inc., citing Gate Serve, LLC as an
additional recipient. GGI did not receive a contractor top-off
payment, resulting in a total award of $171,424,598. Treasury’s
disbursements to GGI were as follows:

e June 19, 2020: $85,712,299

e June 30, 2020: $42,856,149.50
e July 31, 2020: $38,480,000.14
e August 7, 2020: $4,376,149.36

On August 27, 2021, GGI returned to Treasury $10,695,209 of
unexpended PSP1 funds as instructed by Treasury in accordance
with the CAA, 2021. GGI received $74,750,674 for each of the
PSP2 and PSP3 applications. PSP2 and PSP3 were not the subject
of this audit.

GGI reported correct information for five of seven sections
reviewed on its PSP1 Application. These sections are: (1) Applicant
Information, (2) Applicant Type, (3) Financial Institution
Information, (4) Additional Information, and (5) Certification. We
compared information provided in each section of the PSP1

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
Finding

Application to supporting documentation, including organizational
charts, earnings statements, employee termination reports, and pay
history reports, among other items.

In the Awardable Amounts section, GGI included (1) unallowable
corporate officers compensation, and (2) a difference in
accrual-based financial information used to prepare the PSP1
Application and the actual compensation paid, resulting in an
overstatement of $2,806,063.

Treasury’s awards to contractor carriers under PSP1 included a
69.7-percent pro-rata distribution of application amounts for
contractor carriers who did not receive the top-off amount.
Applying this formula, GGI received $1,955,826 overpayment;
however, the company returned $10,695,209 of unexpended PSP1
funds to Treasury offsetting the total overpayment amount. As a
result, no additional amounts are owed back to Treasury.

In the Employment Levels section, GGI correctly reported the
average number of employees for 2019. We noted that the
company incorrectly reported the number of involuntary reductions
after March 1, 2020 in the Employment Levels section. Treasury
management stated that they had no plans to use the information
in the involuntary reductions after March 1, 2020 field. Although
we are not reporting this discrepancy as a finding, we are
highlighting it as a matter of concern.

Inaccurate Compilation of the PSP1 Application
Awardable Amount

Both the CARES Act and Treasury’s Guidelines define “employee”
as “an individual, other than a corporate officer, who is employed
by an air carrier or contractor in the United States (including its
territories and possessions).”

The signed PSP1 Agreement, effective June 19, 2020, defines:

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);

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
10
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:

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 paid by such carrier during the time period.

GGI incorrectly certified the PSP1 awardable amount resulting in an
overstatement of $2,806,063. Specifically:

e Corporate Officers Compensation — We determined the total
compensation paid to 11 corporate officers was
SHE; however, GGI only removed Si from
its awardable amount calculation, resulting in an
overstatement of $1,768,875. Based on discussions with
GGI management and a review of the company’s 2019
organization chart, we determined that GGI had 11
executives that met the definition of corporate officer per
the PSP1 Agreement. The corporate officers were the
(1) President; (2) Chief Financial Officer; (3) Chief Human
Resource Officer; (4) Vice President Procurement; (5) Vice
President Sales and Service; (6) General Counsel; (7) Vice
President International Gateways and Network; (8) Vice
President Operations and Support; (9) Vice President
Operations (Hubs); (10) Vice President Catering Plant
Support; and (11) Vice President Finance and
Communication Technology.

e Differences in Accrual-Based Financial Information — GGI
prepared the PSP1 Application using accrual-based financial

data, resulting in a requested amount of

however, the actual compensation paid to company

employees was SEE, a variance of $1,037,188.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
11
GGI management's interpretation of the corporate officer definition
is an individual performing only policy-making functions. They
noted that it was an oversight to include the compensation for the
Chief Human Resource Officer. GGI management also stated that
the accrual-based data was a single consolidated source of
information. The alternative was to use more dispersed, individual
reports, and invoices. In addition, in the absence of any direction
from Treasury, and during a time of a global pandemic, they
believed that accrual-based data was an appropriate way to provide
the awardable amount information.

Since Treasury disbursed PSP1 funds pro-rata for contractors,
without top-off payment, at 69.7 percent of the requested amount,
GGI received an overpayment of $1,955,826. Table 1 illustrates
the aggregate overpayment.

Table 1. Aggregate Overstatement and Pro-Rated Overpayment

Description Amount
PSP1 Application Requested Amount EF tst~—~—COY

Less Corporate Officer Compensation $(1,768,875)

Less Differences in Accrual-Based Financial Data $(1,037,188)
OIG PSP1 Calculated Amount es
Overstatement $2,806,063
PSP1 Passenger Pro-rata 69.7%
Pro-Rated Overpayment $1,955,826

Source: OIG Calculation of Awardable Amount

On August 27, 2021, GGI returned $10,695,209 of unexpended
PSP1 funds to Treasury, in accordance with the CAA, 2021 (see
footnote 7), offsetting the overpayment. As a result, no additional
amounts are owed back to Treasury.

To remedy the findings noted in the prior OIG audit report, (see
footnote 12) Treasury required PSP2 applicants to recertify their
PSP1 awardable amounts. On January 13, 2021, GGI erroneously
certified to Treasury under PSP2, that its PSP1 Application did not
include corporate officer compensation. Due to instances of
non-compliance in the PSP1 awardable amount, the company may

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
12
have potentially included unallowable expenses in its PSP2 and
PSP3 financial assistance requests.

Recommendation

We recommend that Treasury’s Acting Chief Program Officer:

1. Review GGI’s requested amount for unallowable expenses
under PSP2 and PSP3, and seek reimbursement for
overpayment, if applicable.

Management Response

Treasury will review awardable amounts requested under
PSP2 and PSP3 and seek recoupment where appropriate.

OIG Comment

Management’s planned corrective actions meet the intent of
our recommendation. Management should include its planned
corrective actions and expected completion date in JAMES.

We appreciate the courtesies and cooperation provided to our staff
during the audit. If you wish to discuss the report, you may
contact me at (202) 439-6354 or Christopher Culbreath, Acting
Audit Manager, at (202) 486-1983. Major contributors to this
report are listed in appendix 4. A distribution list for this report is
provided as appendix 5.

/s/

Julie Wong
Acting Deputy Assistant Inspector General for Audit

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
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Appendix 1: Objective, Scope, and Methodology

Our objective was to assess the accuracy, completeness, and
sufficiency of Gate Gourmet, Inc.’s (GGI) 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 Payroll Support
Program (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, tax forms, and other
documentation submitted to Treasury on April 4, 2020.

To accomplish this objective, we performed the following activities
during audit fieldwork conducted remotely from April 2020 through
May 2024:

e 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);

o 14 CFR Part 241, Uniform System of Accounts and
Reports for Large Certificated Air Carriers, amended
May 31, 2024;

o Title IV, Subtitle A, Airline Worker Support Extension of
the Consolidated Appropriations Act, 2021; and

o Title VII, Subtitle C, Air Transportation Payroll Support
Program Extension of the American Rescue Plan Act of
2027.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
14
Appendix 1: Objective, Scope, and Methodology

« Reviewed Treasury’s policies, procedures, and guidelines related
to PSP1:

o Guidelines and Application Procedures for Payroll Support
to Air Carriers and Contractors under Division A, Title 1V,
Subtitle B of the Coronavirus Aid, Relief, and Economic
Security Act, which included the PSP1 Application,
March 30, 2020;

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);

o Frequently Asked Questions: Application Procedures for
Payroll Support to Air Carriers and Contractors,
April 3, 2020;

o Treasury’s Payroll Support Program to Air Carriers and
Contractors Internal Program Review Guide, July 2020;
and

o Information Memorandum for the Decision Committee of
the Air Carrier and Contractors Payroll Support Program,
May 20, 2020.

« Performed 100-percent testing for seven of the eight sections
of the PSP1 Application—specifically, the Applicant Information,
Applicant Type, Financial Institution Information, Employment
Levels, Awardable Amounts, Additional Information, and
Certification sections. The Taxpayer Protection section was not
reviewed because it generally does not apply to non-241 air
carriers. According to Treasury, the Employment Levels section
had no impact on Treasury’s determination of recipients’ award
amounts. As such, we are not reporting the discrepancy as a
finding.

« Reviewed the July 29, 2020 press release'* from the House of
Representatives Select Subcommittee on the Coronavirus Crisis
announcing the launch of an investigation into waste and abuse
in Treasury's Payroll Support Program. On October 9, 2020, the

'3 “Committees Launch Investigation Into Waste and Abuse In Treasury’s Payroll Support Program,”
published July 29, 2020. https://coronavirus-democrats-oversight.house.gov/news/press-

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)

15
Appendix 1: Objective, Scope, and Methodology

Selected Subcommittee issued a Staff Analysis Report,'* noting
that GGI was among the contractors that laid off and
furloughed employees while the application was pending.

e« Interviewed key Treasury personnel and contracted consultants
engaged by Treasury to aid in its evaluation of the air carriers’
and the contractors’ certified applications and other data.

e« Interviewed GGI representatives responsible for the completion
and submission of the sworn financial statement. The amounts
submitted in the Awardable Amounts section of the PSP1
Application were considered the sworn financial statement.

e Reviewed sworn financial statement and documents to support
the requested payroll support amount. The documentation
included, but was not limited to, (1) PSP1 Application;

(2) 2019 Internal Revenue Service Form 941, Employer’s
Quarterly Federal Tax Return; (3) 2019 Internal Revenue Service
Form 851, Affiliation Schedule;'° (4) 2019 organizational charts;
(5) April 2019 through September 2019 Earnings Statements;
(6) PSP1 Agreement; and (7) employee pay history and furlough
information.

e Reviewed Government Accountability Office’s Standards for
Internal Control in the Federal Government 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 GGI’s payroll systems, was
significant to the audit objective.'® This component states that
control activities are the actions management establishes

‘4 “Unnecessary Costs: How the Trump Administration Allowed Thousands of Workers to Lose Their
Jobs,” published October 9, 2020. https://coronavirus-democrats-
oversight.house.gov/news/reports/new-report-shows-treasury-let-aviation-companies-fire-workers-
while-reaping-federal
Internal Revenue Service Form 851 is a tax form that a parent corporation of an affiliated group files
with its consolidated income tax return to (1) identify the common parent corporation and each
member of the affiliated group; (2) report the amount of overpayment credits, estimated tax
payments, and tax deposits attributable to each corporation; and (3) determine that each subsidiary
corporation qualifies as a member of the affiliated group.
'© The five components of internal control are Control Environment, Risk Assessment, Control
Activities, Information and Communication, and Monitoring.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
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Appendix 1: Objective, Scope, and Methodology

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
GGI’s payroll systems, we examined GGI’s response to Data
Supplier Questionnaires,'’ reviewed System and Organizational
Controls 1 (SOC 1) reports,'® and interviewed GGl’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 Government Accountability Office’s Assessing Data
Reliability guidance, which states that 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 needed to support
the findings, conclusions, or recommendations in the context of
the audit objective. GGI used Termination Reports from its
human resource system and accrual-based data from its
financial reporting systems to complete the PSP1 Application.
As such, we compared data from the Termination Reports to
Pay and Job History Reports. Additionally, to assess the
accrual-based data we compared 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. During testing, GGI management informed us
there were errors/limitations regarding the “termination date” in
the Termination Reports. In some instances, the recorded
“termination date” is the data entry date, which could occur
days or weeks after terminating employees. To mitigate the
issue, we reviewed:

e GGI’s Termination Reports from March 1, 2020, to
April 4, 2020 (PSP1 Application submission date) and selected
a sample of 25 out of 250 employees to validate the “terminate
date.” Based on our review of the Pay and Job History Reports,

'7 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.

'8 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.

Audit of Air Carrier Worker Support Certifications —
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Appendix 1: Objective, Scope, and Methodology

the recorded “termination date” in the Termination Reports were
accurate for the sampled employees.

o GGI’'s Termination Reports from June 19, 2020 (PSP1
Agreement date) to September 30, 2020, identified 122
employees with the status of “involuntary terminated.”
Based on our review of the Pay and Job History Reports,
the recorded “termination date” in the Termination
Reports were accurate for all but one employee. This
employee took a voluntary leave of absence in August
2020 but was mistakenly coded as an involuntary
termination.

To assess the reliability of GGI’s payroll, human resource, and
financial reporting systems, we (1) reviewed available SOC 1
reports; (2) reviewed the GGI’s completed Data Supplier
Questionnaires for GGI’s payroll, human resource, and financial
reporting systems; (3) observed and documented the process of
system generated payroll register, Pay and Job History Reports,
and Termination Reports; (4) ensured system generated data
were within the expected date range;'® and (5) interviewed GGI
representatives knowledgeable about the data. Based on our
assessment, we determined that the data were sufficiently
reliable to support the findings and conclusions to answer the
objective of this audit.

We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and
conclusions based on our audit objective. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.

'8 The Termination Reports and Pay and Job History Reports had a date range from March 1, 2020,
through September 30, 2020. The payroll registers had a date range from April 1, 2019, through
September 30, 2019.

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)
18
Appendix 2: Gate Gourmet Inc. Management Response

gategroup

April 21, 2026

Chris Culbreath

Auditor, CARES 1 Directorate
U.S. Department of the Treasury
Office of Inspector General

Re: Audit of Air Carrier Worker Support Certifications - Gate Gourmet Inc.

On behalf of Gate Gourmet, Inc. (“GGI"), we would like to thank you for the opportunity
to comment on the audit findings. GGI appreciates the thoroughness, flexibility, and
professionalism of the audit staff over the past several years. GGI takes its compliance
with federal standards very seriously and made every effort over the course of the audit
to respond completely and substantively to each inquiry. We also appreciate the report’s
recognition that there was no loss to the government, as GGI returned as unused more
than five times the dollar value of what the Office of Inspector General (“OIG”) believes
to be the overage in the award.

GGI notes as an initial matter that it submitted its PSP1 application in the midst of a
global pandemic that caused severe disruption and dislocation in the aviation industry.
GGI worked tirelessly to put together its application in a compliant fashion. Given the
compressed timeframe and the absence of a full set of guidance on certain issues, GGI
endeavored at all times to take reasonable positions based on its understanding and
interpretation of relevant issues. Although GGI firmly believes that every dollar is
important, GG! also believes that it is a testament to its good-faith efforts that the audit
noted only one finding resulting in 0.8 percent of the OIG calculated awardable amount.
With that context, GGI responds as follows to the first and only finding: that there was an
“inaccurate compilation of the PSP1 Application Awardable Amount.”

First, with regard to Corporate Officers, our understanding of the term's definition was
that an individual only becomes a Corporate Officer if they have policy-making authority.
As such, GG! looked at the substance of each person’s role to determine if that individual
was a Corporate Officer, not just their title.

Although GG! respects OIG’s conclusion that certain individuals were Corporate Officers
notwithstanding GGI’s contrary determination, we note that this finding arises out of a
good-faith difference in interpretation of relevant requirements rather than any deliberate
inclusion of non-qualifying individuals. Additionally, although the award included
compensation paid to individuals that OIG believes are Corporate Officers, GGI did not
use any of the award to pay their compensation.

23955 Oemocecy Orv, 27" Floor

Audit of Air Carrier Worker Support Certifications —
Gate Gourmet, Inc. (OIG-27-002)

Reston, VA 20191

19
Appendix 2: Gate Gourmet Inc. Management Response

gateqroup

Second, regarding the use of accrual-based financial information, the foundational
awardable amount data for GGI’s application came frorn its income statement because
it was a reliable and comprehensive source of information and allowed under PSP1
application guidelines (see the note below). GGI’s financial statements are prepared on
an accrual basis. In contrast, OIG used the actual payroll statements and vendor
invoices paid during the period, which essentially reflect the cash payments within
specific payroll cycles. As a result, timing differences are expected because of the
different accounting methods. For example, there will be a timing difference between the
payroll in pay statements and payroll expense recorded in the income statement. In the
absence of any direction on this point, and at a time when GGI was working on many
fronts to survive the pandemic’s severe impact on the aviation industry, GG! believed that
this was an appropriate way to provide the requested information.

We also note that OIG has indicated that “creating the PSP1 Application using accrual-
based financial information was not a prohibited compilation method under Treasury's
PSP1 Application guidelines.” OFFICE OF INSPECTOR GEN., DEP’T OF THE TREASURY, AUDIT OF AIR
CARRIER WORKER SUPPORT CERTIFICATIONS - XOJET AVIATION, LLC, OIG-22-041, at 11 (Sept. 28,
2022); see also OFFICE OF INSPECTOR GEN., DEP'T OF THE TREASURY, AUDITOF AIR CARRIER WORKER
SUPPORT CERTIFICATIONS - ALPINE AVIATION, INC., OIG-22-042 (Sept. 28, 2022) at 8 (“Creating
the PSP1 Application using accrual-based general ledger accounting data was not a
prohibited compilation method under Treasury’s PSP1 Application guidelines.”). Thus,
although GG! acknowledges O|G’s finding that there was a small mismatch between the
accrualand cash methods, we believe it is also important to acknowledge GGI’s use of a
well-recognized accounting method that it believed to be appropriate and permissible.

In sum, GGI appreciates OIG’s efforts during this audit and believes that the record
reflects GGI’s compliance-oriented efforts during the application process and strong
partnership with the OIG team during the audit. Given that the audit concluded that GGI
returned significantly more funds than OIG believes were improperly allocated, and
considering that any differences of opinion were due to GGI’s good-faith interpretation of
requirements, we respectfully submit that further audits of additional PSP rounds are
unnecessary. However, in the event that the Treasury Department determines that
additional audits are warranted, GGI commits to working constructively and
collaboratively with the audit team.

Sincerely,
President Chief Financial Officer
13953 Oemocracy Orive, 17" Floor
Reston VA 201514

Audit of Air Carrier Worker Support Certifications —
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Appendix 3: Treasury Management Response

> DEPARTMENT OF THE TREASURY
WASHINGTON, D.C. 20220

July 14, 2026

Julie Wong

Acting Deputy Assistant Inspector General for Audit

U.S. Department of the Treasury — Office of Inspector General
1500 Pennsylvania Avenue. N.W.

Washington, D.C. 20220

Dear Ms. Wong:

I wnite regarding the Office of Inspector General's (OIG) draft Audit of Air Carrier Worker
Support Certifications (Draft Report), regarding Gate Gourmet, Inc. (the Recipient). a recipient
of funds under Treasury's Payroll Support Program (PSP). The U.S. Department of the Treasury
(Treasury) appreciates OIG’s efforts.

Background on the Payroll Support Program

PSP was part of an effort to provide emergency assistance in response to the unprecedented
challenges presented by the COVID-19 public health emergency and had three iterations:

e The Coronavirus Aid, Relief, and Economic Secunty Act (CARES Act) was enacted on
March 27, 2020, and established the Payroll Support Program (PSP1) to provide financial
assistance to America’s passenger aif calmiers, cargo air camiers, and certain aviation
contractors. Treasury disbursed more than $28 billion to over 600 businesses in PSP1.
directly supporting more than 600,000 American jobs.

© In December 2020, the Consolidated Appropriations Act, 2021, created the Payroll
Support Program Extension (PSP2) for eligible passenger air carniers and certain aviation
contractors. Treasury disbursed over $15 billion to over 480 passenger air carmiers and
contractors under PSP2.

© In March 2021, the American Rescue Plan Act of 2021 provided an additional $15 billion
for Treasury to make further payroll support payments to entities that participated in
PSP2 (PSP3). Treasury disbursed over $14.5 billion to over 480 passenger air carriers
and contractors under PSP3.

The CARES Act set forth two different methodologies for calculating awardable amounts for the
largest carriers and for smaller air carriers and aviation contractors. For the largest air carers.
which received approximately 89% of the total PSP assistance, PSP1 amounts were based on
reports the carners had filed with the U.S. Department of Transportation under 14 C.F R. part
241. In contrast, the statute required Treasury to provide financial assistance to smaller air
carters and aviation contractors in an amount that the applicants certified, using swom financial
statements or other appropmate data, as the amount of wages, salaries. and benefits that they paid
to their employees during the time period from Apmil 1, 2019, through September 30, 2019.

Audit of Air Carrier Worker Support Certifications —
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Appendix 3: Treasury Management Response

For awards to the smaller companies, the PSP1 application and Treasury's guidelines made clear
that the awardable amounts should not include, inter alia, (1) any employer-side payroll taxes,
which are not paid to employees, and (2) compensation paid to corporate officers and non-
employee contractors. Before accepting PSP2 applications, Treasury published additional
guidance further emphasizing that such amounts should not be included in the companies’
awardable amount calculations.’ In both PSP1 and PSP2, Treasury required two officials of each
applicant, including at least one corporate officer, to certify that the information provided in the
application was correct and did not contain any matenally false or fraudulent statements.

In Apmil 2020, OIG began a series of audits of PSP1 recipients to determine whether they had
properly calculated their requested awardable amounts. In March 2021, OIG issued an Intenm
Audit Update, notifying Treasury that a number of recipients being audited had impemnissibly
included, in their PSP1 applications, employer-side payroll taxes or corporate officer
compensation in the calculation of the awardable amount, which may have resulted in an
overstatement of the amount of PSP1 funds requested. In response, Treasury promptly took a
series of remedial actions, including requiring that all PSP1 applicants receiving awards on the
basis of self-certification re-certify whether their awardable amounts included employer-side
payroll taxes or corporate officer compensation. Where a company informed Treasury that it had
improperly included those amounts in its application, Treasury either withheld future PSP1
disbursements or began pursuing debt recoupment. Through this process, Treasury has
successfully recouped more than $147 million of PSP overpayments.

OIG’s Finding

The Draft Report describes the work performed by OIG to determine whether the Recipient's
requested awardable amount complied with the guidelines provided by Treasury. The Draft
Report notes the extensive fieldwork conducted for this review between April 3 2020 and May
2024 to determine the accuracy of the information in the Recipient’s PSP1 application submitted
to Treasury, including interviewing the Recipient’s management and collecting and reviewing a
wide range of the company’s financial records and corporate documents.

OIG found that the Recipient overstated its requested awardable amount for PSP1 due to the
improper inclusion of unallowable corporate officers’ compensation and differences between
accrual-based financial information used to prepare the PSP1 Application and the actual
compensation paid. However, OIG also found that Recipient retumed unexpended PSP1 funds
in excess of the overstated amount. Therefore, no additional amounts are owed back to Treasury.
OIG recommends that Treasury review the requested amounts from the Recipient for PSP2 and
PSP3 assistance.

Treasury agrees with OIG that any overpayments of PSP funds should be reimbursed. Treasury
will review awardable amounts requested under PSP2 and PSP3 and seek recoupment where

' Because awardable amounts in PSP3 were calculated as a percentage of each company’s PSP2 award, companies
were not required to calculate awardable amounts for PSP3.

Audit of Air Carrier Worker Support Certifications —
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Appendix 3: Treasury Management Response

Again, Treasury appreciates OIG’s work on these engagements. We look forward to working
with you to protect the integnity of the PSP and other recovery programs.

Sincerely,

Jeffrey Stout
Deputy Chief Program Officer for Small Business
and Community Investment Programs

Audit of Air Carrier Worker Support Certifications —
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Appendix 4: Major Contributors to This Report

Olivia Scott, Acting Director

Christopher Culbreath, Acting Audit Manager
Sean Cornett, Auditor

Lawerence Delva-Gonzalez, Referencer

Audit of Air Carrier Worker Support Certifications —
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Appendix 5: Report Distribution

Department of the Treasury
Treasury Secretary
Deputy Secretary
Treasury Audit Liaison
Office of Strategy, Planning, and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group

Gate Gourmet, Inc.
Chief Financial Officer
Accounting Director
General Counsel

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 Government Reform
Committee on Financial Services
Committee on the Budget
Committee on Transportation and Infrastructure

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