Audit Report - Oig 24 042 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
- Issuer
- Inspector general and oversight reports
- Document type
- Audit Report
- Case
- Oig 24 042 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
Summary
Audit Report OIG-24-042 of the Department of the Treasury Office of Inspector General, dated September 26, 2024, on the Air Carrier Payroll Support Program (PSP1) certifications of passenger air carrier Superior Transportation Associates, Inc. (STA). Saggar & Rosenberg, P.C. performed the audit under contract, covering April 1, 2019 through September 30, 2019. It finds STA overstated its awardable amount by $240,092, citing unallowable corporate officer compensation, unsupported other compensation and accrual-based accounting differences. With PSP1 awards distributed at 78.2 percent pro-rata, the report questions a $187,752 overpayment and recommends reimbursement and review of STA's PSP2 and PSP3 requests. STA management states it believes its figures were correct under its reading of the instructions, and Treasury management concurred with the recommendations.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
Audit Report
OIG-24-042
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - Superior Transportation
Associates, 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 – Superior
Transportation Associates, Inc.
Attached is our audit report for the Audit of Air Carrier Worker Support Certifications –
Superior Transportation Associates, Inc. (STA) (OIG-24-042; 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
STA’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 that STA, a passenger air carrier, incorrectly compiled
data used for the Awardable Amounts section of the PSP1 Application, resulting in
a $240,092 overstatement. Specifically, the:
• Inclusion of unallowable corporate officer compensation, resulted in a
overstatement;
1
P.L. 116–136 (March 27, 2020).
• Inclusion of unsupported “other compensation” amounts, resulted in a
overstatement; and
• Differences between accrual-based accounting information used to prepare the
PSP1 Application, for “salaries and wages” and “benefits”, and the actual
compensation paid, resulted in a understatement.
Treasury’s awards to passenger air carriers under PSP1 included a 78.2-percent
pro-rata distribution of application amounts. Applying this formula, STA received a
$187,752 overpayment from Treasury.
Accordingly, S&R recommends that Treasury’s Chief Program Officer:
• Seek reimbursement of the $187,752 overpayment for PSP1 financial
assistance; and
• Review STA’s requested amount for unallowable expenses, under the Payroll
Support Program Extension (PSP2) 2 authorized by the Consolidated
Appropriations Act, 2021 and the Payroll Support Program 3 (PSP3) 3 authorized
by the American Rescue Plan Act of 2021, and seek reimbursement for the
overpayment, if applicable.
Our contract required that the audit be performed in accordance with generally
accepted government auditing standards. In connection with the contract, we
reviewed S&R’s report and related documentation and inquired of its representatives.
Our review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to express an
opinion on STA’s compliance with Treasury’s PSP1 policies and procedures. S&R is
responsible for the attached auditor’s report and the conclusions expressed therein.
Our review found no instances in which S&R did not comply, in all material respects,
with generally accepted government auditing standards.
We appreciate the courtesies and cooperation provided to S&R and our staff during
the audit. If you have any questions or require further information, please contact me
at (202) 486-1420, or a member of your staff may contact Lisa DeAngelis, Deputy
Assistant Inspector General for Audit, at (202) 487-8371.
2
The Consolidated Appropriations Act, 2021 (P.L. 116—260), enacted on December 27, 2020,
created the Airline Worker Support Extension for passenger air carriers and certain contractors.
Treasury referred to this as Payroll Support Program Extension (PSP2).
3
The American Rescue Plan of 2021 (P.L. 117—2), enacted on March 11, 2021, created the Air
Transportation Payroll Support Program Extension authorizing Treasury to provide additional
assistance to passenger air carriers and contractors that received financial assistance under PSP2.
Treasury referred to this as Payroll Support Program 3 (PSP3).
Attachment
cc: 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 ........................................................................................................4
Treasury Disbursement Processes ....................................................6
PSP1 Interim Audit Report ...............................................................7
Superior Transportation Associates, Inc. ...........................................8
Audit Results......................................................................................................8
Finding 1 Inaccurate Compilation of the PSP1 Application Awardable Amount .....9
Corporate Officer Compensation ......................................................9
Unsupported Other Compensation ..................................................10
Accrual-Based Application for Salaries and Wages and Benefits .........10
Recommendations ........................................................................12
Appendices
Appendix 1: Objective, Scope, and Methodology ..................................................13
Appendix 2: Schedule of Monetary Benefits .........................................................17
Appendix 3: STA Management Response.............................................................18
Appendix 4: Treasury Management Response ......................................................19
Appendix 5: Report Distribution ..........................................................................22
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
PSP1 Payroll Support Program, CARES Act
PSP2 Payroll Support Program Extension, Consolidated Appropriations
Act, 2021
i
PSP3 Payroll Support Program 3, American Rescue Plan Act of 2021
S&R Saggar & Rosenberg, P.C.
SOC 1 System and Organizational Controls
STA Superior Transportation Associates, Inc.
Treasury Department of the Treasury
ii
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 Superior
Transportation Associates, Inc.’s (STA) 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 STA’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, tax returns,
and other documentation submitted to Treasury on April 3, 2020. 4
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”.
4
STA submitted the PSP1 Application and related supporting documentation on April 3, 2020.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 1
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 STA, Treasury, and contracted
consultants engaged by Treasury to evaluate certified company
applications. We conducted our fieldwork from July 2023 through
November 2023. Appendix 1 contains a more detailed description
of our objective, scope, and methodology.
Results in Brief
In brief, S&R found that STA, a passenger air carrier, 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. However, STA incorrectly
reported information in the Awardable Amounts section of the
PSP1 Application.
STA overstated its awardable amount by $240,092. Specifically,
we found (1) the inclusion of unallowable corporate officer
compensation, resulting in a overstatement,
(2) unsupported “other compensation” amounts, resulting in a
overstatement, and (3) differences between the
accrual-based accounting information used to prepare the PSP1
Application, for “salaries and wages” and “benefits”, and the
actual compensation paid to its employees, resulting in an
understatement of . Treasury’s awards to passenger air
carriers under PSP1 included a 78.2-percent pro-rata distribution of
application amounts. Applying this formula, we found that STA
received a $187,752 overpayment from Treasury. As a result, we
question the costs totaling $187,752 and recommend that the
Chief Program Officer seek reimbursement of the $187,752
overpayment to STA for PSP1. Additionally, we recommend that
Treasury review STA’s requested amount for unallowable
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 - Superior
Transportation Associates, Inc. (OIG-24-042) 2
expenses, under the Payroll Support Program Extension (PSP2) 6
authorized by the Consolidated Appropriations Act, 2021 and the
Payroll Support Program 3 (PSP3) 7 authorized by the American
Rescue Plan Act of 2021, and seek reimbursement for
overpayment, if applicable.
Appendix 2 contains more details on questioned costs.
As part of our reporting process, we provided STA management an
opportunity to comment on a draft of this report. In a written
response, STA management stated that after receiving an
explanation during the audit process, the company understands
that there was an unintentional overstatement of $187,752 8
regarding corporate officer compensation and benefits.
Additionally, STA management stated that the company believes
its PSP1 Application numbers were stated correctly at the time of
application based on the interpretation of instructions provided.
Although STA management stated that they believe the PSP1
Application numbers were correct at the time of the application,
both the CARES Act and Treasury’s Application instructions
(referred to as “Guidelines” throughout this report) 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)”. Also, the PSP1
Agreement between Treasury and STA, effective May 15, 2020,
provides additional information regarding corporate officers, which
is detailed in the Audit Results section of this report. STA’s PSP1
Application included corporate officer compensation for the Chief
Executive Officer and Chief Operating Officer, which were ineligible
for PSP1 financial assistance. STA management’s response, in its
entirety, is included as appendix 3 of this report.
6
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).
7
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).
8
As noted in the report, the net overstatement of the awardable amount is $240,092. Since Treasury
disbursed PSP1 funds pro-rata for passenger air carriers at 78.2 percent of the requested awardable
amount, STA received an overpayment of $187,752.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 3
In a written response, Treasury management concurred with our
recommendations and agreed that any overpayments of PSP funds
should be recouped. Treasury stated it will conduct a review of the
findings, consider any response from the recipient, and seek
recoupment of any amounts that Treasury determines have been
overpaid. In addition, Treasury will review awardable amounts
requested under PSP2 and PSP3 and seek recoupment where
appropriate. Treasury management will need to record an estimated
completion date for these actions in the Joint Audit Management
Enterprise System (JAMES). Management’s planned corrective
actions meet the intent of our recommendations. Treasury
management’s response, in its entirety, is included as appendix 4
of this report.
Background
Title IV, Subtitle B, of the CARES Act, Air Carrier Worker Support,
requires Treasury to provide financial assistance to air carriers and
contractors that must exclusively be used for the continuation of
payments of employees’ wages, salaries, and benefits. Financial
assistance is to be provided to:
(1) passenger air carriers, in an aggregate amount up to
$25 billion;
(2) cargo air carriers, in an aggregate amount up to $4 billion;
and
(3) contractors, in an aggregate amount up to $3 billion.
According to the CARES Act, Treasury is required to provide
financial assistance to air carriers that report salaries and benefits
to the DOT (referred to as 241 air carriers), 9 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
9
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. STA is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 4
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 had to enter into agreements with
Treasury certifying that they meet certain required assurances,
terms, and conditions.
On March 30, 2020, Treasury posted on its website the
Guidelines, which included the PSP1 Application. The PSP1
Application is comprised of eight sections:
1. 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.
5. Awardable Amounts ─ applicant’s sworn financial statement
consisting of salaries, wages, benefits, and other compensation
for the period April 1, 2019, through September 30, 2019.
6. Taxpayer Protection ─ table that outlines in detail the proposed
financial instrument to be issued to the Treasury.
7. Additional Information ─ applicant’s verification of submitting its
Internal Revenue Service (IRS) Form 941, Employer’s Quarterly
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 5
Federal Tax Return, 10 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 11 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
additional 2.2 percent, the top-off amount, for passenger air
carriers making the final awarded 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
10
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.
11
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 - Superior
Transportation Associates, Inc. (OIG-24-042) 6
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, 12 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
the recipient did not qualify for, or apply for, PSP2 and PSP3
funding, were required to be repaid to Treasury.
12
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 - Superior
Transportation Associates, Inc. (OIG-24-042) 7
Superior Transportation Associates, Inc.
Headquartered in Costa Mesa, California, STA is a passenger air
carrier that provides strategic private aviation solutions to its
customers.
STA submitted its PSP1 Application totaling on
April 3, 2020. STA received the passenger air carrier top-off for a
total award of $3,729,662, or 78.2 percent of the company’s
requested amount. Treasury’s disbursements to STA were as
follows:
• May 19, 2020: $1,208,245
• June 2, 2020: $604,122
• July 1, 2020: $604,123
• August 3, 2020: $604,122
• September 1, 2020: $604,123
• October 1, 2020: $104,927
In addition to PSP1, Treasury awarded STA $2,523,006 under
PSP2 and $2,353,208 under PSP3. PSP2 and PSP3 were not the
subject of this audit.
Audit Results
We found that STA 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, air carrier certificate, IRS
Form 941, executive-level business charts, payroll registers, and
third-party benefit invoices.
We also found that STA reported incorrect information in the
Awardable Amounts section. The company included unallowable
corporate officer compensation, resulting in a
overstatement. In addition, STA was unable to support the
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 8
amounts requested for “other compensation”, resulting in a
overstatement. However, STA’s accrual-based accounting
information used to prepare the PSP1 Application, for “salaries and
wages” and “benefits”, was less than the actual compensation
paid to its employees by , resulting in an aggregate
overstatement of $240,092.
Since Treasury disbursed PSP1 funds pro-rata for passenger air
carriers at 78.2 percent of the requested awardable amount, STA
received an overpayment of $187,752.
Finding 1 Inaccurate Compilation of the PSP1 Application
Awardable Amount
Corporate Officer Compensation
Both the CARES Act and Treasury’s Guidelines define “employee”
as “an individual, other than a corporate officer, who is employed
by an air carrier or contractor in the United States (including its
territories and possessions).”
In addition, the signed PSP1 Agreement, effective date
May 15, 2020, subsequently defines a corporate officer as:
with respect to the Recipient, its president; any vice president
in charge of a principal business unit, division, or function (such
as sales, administration, or finance); any other officer who
performs a policy-making function; or any other person who
performs similar policy making functions for the Recipient.
Executive officers of subsidiaries or parents of the Recipient
may be deemed Corporate Officers of the Recipient if they
perform such policy-making functions for the Recipient.
We identified six STA executives through discussion with
management and review of the company’s 2019 organizational
chart. Two of those executives met the definition of a corporate
officer per the PSP1 Agreement. STA included unallowable
compensation paid to both corporate officers, resulting in an
overstatement of . The two executives were the Chief
Executive Officer, and the Chief Operating Officer.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 9
STA management stated that there was a lack of guidance
regarding the requirement to exclude corporate officers from the
awardable amount calculation on the PSP1 Application.
Unsupported Other Compensation
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 paid by such carrier
during the time period.
STA requested of “other compensation” on its PSP1
Application. We found that the “other compensation” amounts
were unsupported and could not be traced to payroll information
for the April through September 2019 period. STA management
stated that it was unable to determine how it produced the
amounts requested for “other compensation.”
Accrual-Based Application for Salaries and Wages and
Benefits
STA used accrual-based accounting information, totaling
for “salaries and wages” and “benefits”, rather than
the actual paid amounts of to prepare the PSP1
Application, which resulted in an understatement of .
STA management stated that it used accrual-based accounting
information to prepare the PSP1 Application for “salaries and
wages” and “benefits” because it was readily available and served
as a rational basis for its financial assistance request.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 10
The inclusion of corporate officers resulted in an overstatement of
, and unsupported other compensation amounts in the
PSP1 Application resulted in an overstatement of .
However, these overstatements were offset by differences
between actual amounts paid to employees and the application
figures for “salaries and wages” and “benefits”, compiled using
accrual-based accounting information of . As a result, the
residual net overstatement is $240,092, as illustrated in Table 1
below.
Table 1: Aggregate Overstatement
Other
Description Salaries/Wages Benefits Compensation Total
Actual
Supported
Compensation
Less: Corporate
Officers
Allowable
Compensation
PSP1
Application
Net $(240,092)
Overstatement
Source: S&R Calculation of Awardable Amount
Since Treasury disbursed PSP1 funds pro-rata for passenger air
carriers at 78.2 percent of the requested awardable amount, STA
received an overpayment of $187,752.
To remedy the findings noted in the prior OIG audit report, 13
Treasury required PSP2 applicants to recertify their PSP1
awardable amounts. STA erroneously certified to Treasury under
PSP2, that its PSP1 Application did not include corporate officer
compensation. Treasury stated it relies on applicants’ certifications
that they did not include unallowable expenses (i.e. corporate
officer compensation and employer-side payroll taxes) and no
further validation checks were performed; as a result, the company
13
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 - Superior
Transportation Associates, Inc. (OIG-24-042) 11
likely erroneously included corporate officer compensation in its
PSP2 and PSP3 financial assistance request.
Recommendations
S&R recommends that Treasury’s Chief Program Officer:
1. Seek reimbursement of the $187,752 overpayment of PSP1
financial assistance.
Management Response
Treasury will conduct a review of the findings, consider any
response from the recipient, and seek recoupment of any
amounts that Treasury determines have been overpaid.
OIG Comment
Management’s planned corrective actions meet the intent of our
recommendation. Treasury management will need to record an
estimated completion date for these actions in JAMES.
2. Review STA’s requested amount for unallowable expenses,
under PSP2 and PSP3, and seek reimbursement for the
overpayment, if applicable.
Management Response
Treasury will review awardable amounts requested under PSP2
and PSP3 and seek recoupment where appropriate.
OIG Comment
Management’s planned corrective actions meet the intent of our
recommendation. Treasury management will need to record an
estimated completion date for these actions in JAMES.
******
We appreciate the courtesies and cooperation provided to our staff
during the audit. A distribution list for this report is provided as
appendix 5.
Saggar & Rosenberg, P.C. /s/
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 12
Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of Superior Transportation Associates, Inc.’s (STA)
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. 14
To accomplish this objective, Saggar & Rosenberg, P.C. (S&R)
performed the following activities during audit fieldwork conducted
remotely from July 2023 through November 2023:
• Reviewed applicable Federal laws and regulations, including:
o Title IV, Subtitle B, Air Carrier Worker Support, of the
Coronavirus Aid, Relief, and Economic Security Act
(CARES Act); 15 and
o 14 CFR, Part 241, 16 Uniform System of Accounts and
Reports for Large Certificated Air Carriers, amended
December 28, 2023.
• Reviewed Treasury’s policies, procedures, and guidance related
to PSP1:
o Guidelines and Application Procedures for Payroll Support
to Air Carriers and Contractors, which included the
PSP1 Application, March 30, 2020;
o PSP1 Agreement;
14
STA submitted the PSP1 Application and related support documentation on April 3, 2020.
15
P.L. 116–136 (March 27, 2020).
16
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. STA is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 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 STA representatives 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; 17 and organizational hierarchy
information.
• Reviewed Government Accountability Office’s (GAO) Standards
for Internal Control in the Federal Government 18 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 STA’s payroll system, was
17
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.
18
GAO-14-704G (September 2014).
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 14
Appendix 1: Objective, Scope, and Methodology
significant to the audit objective. 19 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
STA’s payroll system, we reviewed a System and
Organizational Controls 1 (SOC 1) report, 20 Data Supplier
Questionnaire, 21 and interviewed STA 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 22 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. STA prepared the PSP1 Application using payroll and
benefit information from the accrual-based accounting system
of record. 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
SOC 1 report and Data Supplier Questionnaire for the payroll
system, and interviewed STA management responsible for
generating and using the data. Based on our assessment, we
determined that the data was sufficiently reliable to support the
findings and conclusions to answer the objective of this audit.
We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate
19
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.
20
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.
21
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.
22
GAO-20-283G (December 2019).
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 15
Appendix 1: Objective, Scope, and Methodology
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 - Superior
Transportation Associates, Inc. (OIG-24-042) 16
Appendix 2: Schedule of Monetary Benefits
According to the Code of Federal Regulations, 23 a questioned cost
is a cost that is questioned by the auditor because of an audit
finding:
(a) which resulted from a violation or possible violation of a
statute, regulation, or the terms and conditions of a Federal
award, including for funds used to match Federal funds;
(b) where the costs, at the time of the audit, are not supported
by adequate documentation; or
(c) where the costs incurred appear unreasonable and do not
reflect the actions a prudent person would take in the
circumstances.
Questioned costs are to be recorded in the Department of the
Treasury’s (Treasury) Joint Audit Management Enterprise System.
The amount will also be included in the Office of Inspector General
(OIG) Semiannual Report to Congress. It is Treasury management's
responsibility to report to Congress on the status of the agreed to
recommendations with monetary benefits in accordance with
5 USC 405.
Recommendation Questioned Costs
Recommendation No. 1 $187,752
The questioned cost represents amounts provided by Treasury
under the Payroll Support Program (PSP1). As discussed in
Finding 1, Superior Transportation Associates, Inc. overstated its
PSP1 Application awardable amount to Treasury by $240,092 due
to (1) the inclusion of corporate officer compensation;
(2) unsupported “other compensation” amounts; and
(3) differences between accrual-based accounting information used
to prepare the PSP1 Application, for “salaries and wages” and
“benefits”, and the actual compensation paid. However, since
Treasury disbursed PSP1 funds pro-rata for passenger air carriers at
78.2 percent of the requested amount, the questioned cost related
to the overstated PSP1 Application is $187,752.
23
2 CFR § 200.84 – Questioned Cost.
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 17
Appendix 4: Treasury Management Response
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 19
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 20
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 21
Appendix 5: Report Distribution
Department of the Treasury
Treasury Secretary
Deputy Secretary
Treasury Audit Liaison
Office of Strategic Planning and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group
Superior Transportation Associates, Inc.
Chief Executive Officer
Chief Operating Officer
Office of Management and Budget
OIG Budget Examiner
United States Senate
Committee on Homeland Security and Governmental Affairs
Committee on Finance
Committee on Banking, Housing, and Urban Affairs
Committee on Commerce, Science, and Transportation
Committee on Appropriations
Committee on the Budget
United States House of Representatives
Committee on Oversight and Accountability
Committee on Financial Services
Committee on the Budget
Committee on Transportation and Infrastructure
Audit of Air Carrier Worker Support Certifications - Superior
Transportation Associates, Inc. (OIG-24-042) 22
This Page Intentionally Left Blank
REPORT WASTE, FRAUD, AND ABUSE
Submit a complaint regarding Treasury OIG Treasury Programs and Operations
using our online form: https://oig.treasury.gov/report-fraud-waste-and-abuse
TREASURY OIG WEBSITE
Access Treasury OIG reports and other information online: https://oig.treasury.gov/
File and source
- File
- OIG-24-042-coronavirus-disease-2019-pandemic-relief-programs-audit-of-air-carrier.pdf
- Size
- 1,335,453 bytes
- SHA-256
- f539fd688c5d2df87456f8f6d78f6e067f0bf7a655479e678ca28a879c11237e
- Original
- oig.treasury.gov