Audit Report - Oig 24 045 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
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Audit Report OIG-24-045 of the Office of Inspector General, Department of the Treasury, dated September 26, 2024, titled Audit of Air Carrier Worker Support Certifications - Suburban Air Freight, Inc. The memorandum from the Assistant Inspector General for Audit states that a certified independent public accounting firm performed the audit under a contract monitored by the office. It states that the objective was to assess the accuracy, completeness, and sufficiency of Suburban’s sworn financial statement or other data used to certify amounts submitted for the Air Carrier Payroll Support Program (PSP1). It states that the firm found that Suburban, a cargo air carrier, incorrectly compiled data used for the Awardable Amounts section of the PSP1 Application, resulting in a $61,535 overstatement.
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- Oig 24 045 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
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Audit Report
OIG-24-045
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - Suburban Air Freight, 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 – Suburban
Air Freight, Inc.
Attached is our audit report for the Audit of Air Carrier Worker Support Certification –
Suburban Air Freight, Inc. (Suburban) (OIG-24-045; 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 Suburban’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 Suburban, a cargo air carrier, incorrectly compiled
data used for the Awardable Amounts section of the PSP1 Application, 2 resulting in
a $61,535 overstatement. Specifically, the:
• Inclusion of unallowable corporate officer compensation, resulted in a
overstatement;
1
P.L. 116–136 (March 27, 2020).
2
Suburban submitted the PSP1 Application and related supporting documentation on April 3, 2020.
• Usage of earned3 and accrual-based financial information instead of actual
amounts paid during the applicable period from April 1, 2019 through
September 30, 2019, resulted in a overstatement.
On May 28, 2021, Suburban recertified to Treasury and acknowledged the inclusion of
corporate officer compensation in its PSP1 Application totaling . The money
was returned to Treasury via a wire transfer on December 3, 2021. As a result, no
additional amounts are owed back to Treasury.
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 Suburban’s compliance with Treasury’s PSP1 policies and procedures. S&R
is responsible for the attached auditor’s report and the conclusions expressed therein.
Our review found no instances in which S&R did not comply, in all material respects,
with generally accepted government auditing standards.
We appreciate the courtesies and cooperation provided to S&R and our staff during
the audit. If you have any questions or require further information, please contact me
at (202) 486-1420, or a member of your staff may contact Lisa DeAngelis, Deputy
Assistant Inspector General for Audit, at (202) 487-8371.
Attachment
cc: Gregory Till, Chief Operating Officer, Office of Capital Access, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital Access,
Department of the Treasury
Jason Morrow, Attorney Advisor, Department of the Treasury
Jeff Davis, Partner, Saggar & Rosenberg, P.C.
3
Suburban used earned rather than paid salaries and wages in its awardable amount calculation.
According to Treasury’s PSP1 guidance, the awardable amount should consist of figures paid during
April 1, 2019 through September 30, 2019. The use of salaries and wages earned results in
compensation paid outside of the applicable period. For example, salaries and wages earned in
September 2019 and paid in October 2019.
Contents
Audit Report
Results in Brief ...................................................................................................2
Background ........................................................................................................3
PSP1 Interim Audit Report ...............................................................5
Suburban Air Freight, Inc.................................................................6
Audit Results......................................................................................................6
Finding 1 Inaccurate Compilation of the PSP1 Application Awardable Amounts....7
Corporate Officer Compensation ......................................................7
Accrual-Based Application ...............................................................8
Appendices
Appendix 1: Objective, Scope, and Methodology ..................................................11
Appendix 2: Suburban Management Response .....................................................15
Appendix 3: Treasury Management Response ......................................................16
Appendix 4: Report Distribution ..........................................................................19
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
S&R Saggar & Rosenberg, P.C.
SOC 1 System and Organizational Controls
Suburban Suburban Air Freight, Inc.
Treasury Department of the Treasury
i
This Page Intentionally Left Blank
September 26, 2024
Jessica Milano
Chief Program Officer
Department of the Treasury
This report presents the results of our audit of Suburban Air
Freight, Inc.’s (Suburban) 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 Suburban’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
time period from April 1, 2019 through September 30, 2019, and
included the certified PSP1 Application, sworn financial statement,
1
P.L. 116–136 (March 27, 2020).
2
The financial assistance provided under the CARES Act was split between Passenger Air Carriers
($25 billion), Cargo Air Carriers ($4 billion), and Contractors ($3 billion).
3
Passenger and cargo air carriers that are not required to report salaries and wages to DOT under
14 CFR, Part 241, “Uniform System of Accounts and Reports for Large Certificated Air Carriers”.
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 1
tax returns, and other documentation submitted to Treasury on
April 3, 2020. 4
To accomplish the objective, we reviewed applicable laws and
regulations and Treasury’s policies and procedures, including but
not limited to, the Title IV, Subtitle B, Air Carrier Worker Support of
the CARES Act; Guidelines and Application Procedures for Payroll
Support to Air Carriers and Contractors (Guidelines); PSP1
Agreement; and Frequently Asked Questions: Application
Procedures for Payroll Support to Air Carriers and Contractors. We
interviewed key personnel from Suburban, Treasury, and
contracted consultants engaged by Treasury to evaluate certified
company applications. We conducted our fieldwork from
August 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 Suburban, a cargo 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, Suburban
incorrectly reported information in the Awardable Amounts section
of the PSP1 Application.
Suburban overstated its awardable amount by $61,535.
Specifically, we found (1) the inclusion of unallowable corporate
officer compensation, resulting in a overstatement,
(2) usage of earned6 and accrual-based financial information
instead of actual amounts paid during the applicable period from
4
Suburban submitted the PSP1 Application and related supporting documentation on April 3, 2020.
5
The PSP1 Application is comprised of eight sections. Four sections - Financial Institution Information,
Employment Levels, Taxpayer Protection, and Additional Information, were not subject to audit
procedures. Details regarding the sections not reviewed can be found in appendix 1.
6
Suburban used earned rather than paid salaries and wages in its awardable amount calculation.
According to Treasury’s PSP1 guidance, the awardable amount should consist of figures paid during
April 1, 2019 through September 30, 2019. The use of salaries and wages earned results in
compensation paid outside of the applicable period. For example, salaries and wages earned in
September 2019 and paid in October 2019.
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 2
April 1, 2019 through September 30, 2019, resulted in a
overstatement.
Suburban subsequently recertified to Treasury and acknowledged
the inclusion of unallowable corporate officer compensation of
in its PSP1 Application and returned the excess funds.
The amounts returned to Treasury exceed the non-compliance
amount of $61,535. As a result, no additional amounts are owed
back to Treasury.
As part of our reporting process, we provided Suburban
management with an opportunity to comment on a draft of this
report. In a written response, Suburban management
acknowledged that the initial PSP1 Application submission was
overstated, but the company re-certified the application to correct
the overstatement and returned the overstated amount in
accordance with instructions received from Treasury. Suburban
management’s response, in its entirety, is included as appendix 2
of this report.
In a written response, Treasury management stated the draft report
describes work performed by OIG’s contractor to determine
whether the recipient’s requested awardable amounts complied
with Treasury’s program requirements. The draft report notes the
extensive fieldwork conducted for this review between
August 2023 and November 2023, including interviewing
Suburban’s management and reviewing a wide range of the
company’s financial records and corporate documents. In relation
to Suburban, Treasury management noted that OIG’s contractor
found no amounts were owed back to Treasury. Treasury
management appreciates the OIG’s work on this engagement and
looks forward to working with the OIG to protect the integrity of
the PSP and other recovery programs. Treasury management’s
response, in its entirety, is included as appendix 3 of this report.
Background
Title IV, Subtitle B, of the CARES Act, Air Carrier Worker Support,
requires Treasury to provide financial assistance to air carriers and
contractors that must exclusively be used for the continuation of
payments of employees’ wages, salaries, and benefits. Financial
assistance is to be provided to:
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 3
(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), 7 in an amount equal to
the salaries and benefits reported to DOT for the period
April 1, 2019 through September 30, 2019. For air carriers that do
not report such data to DOT (referred to as non-241 air carriers),
and contractors, financial assistance is required to be in an amount
that the air carrier or contractor certifies using sworn financial
statements or other appropriate data as the amount of wages,
salaries, benefits, and other compensation paid to employees
during the period of April 1, 2019 through September 30, 2019.
The amounts submitted on the application to Treasury were
considered sworn financial statements. To be eligible for payments,
air carriers and contractors 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
7
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. Suburban is not a Large, Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 4
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
Federal Tax Return, 8 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 9 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.
PSP1 Interim Audit Report
In a prior audit report, 10 OIG identified two systemic issues
affecting the payment amounts administered to all PSP1 recipients
8
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.
9
The certifying officials attested under penalty of perjury that the information and certifications
provided in the application and its attachments are true and correct.
10
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 - Suburban Air Freight,
Inc. (OIG-24-045) 5
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.
Suburban Air Freight, Inc.
Headquartered in Omaha, Nebraska, Suburban is a cargo air carrier
that offers an all-weather fleet of turbine powered aircrafts for
cargo transport on a charter basis.
Suburban submitted its PSP1 Application totaling $1,194,590 on
April 3, 2020, all of which was awarded by Treasury.
Disbursements to Suburban were as follows:
• July 16, 2020: $597,295
• August 3, 2020: $298,648
• September 1, 2020: $298,647
Audit Results
We found that Suburban 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 Suburban reported incorrect information in the
Awardable Amounts section. The company included unallowable
corporate officer compensation, resulting in a
overstatement. The company used earned and accrual-based
financial information to prepare the salaries, wages, and benefit
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 6
amounts, resulting in a overstatement. As a result, the
aggregate overstatement is $61,535 as illustrated in Table 1.
Table 1: Aggregate Overstatement by Month
PSP1 Awardable Amount
Month Application Re-Calculated by S&R Variance
April 2019
May 2019
June 2019
July 2019
August 2019
September 2019
TOTAL $1,194,590 $1,133,055 $(61,535)
Source: S&R Calculation of Awardable Amount
However, on May 28, 2021, Suburban recertified to Treasury and
acknowledged the inclusion of unallowable corporate officer
compensation of in its PSP1 Application and returned the
excess funds. The amounts returned to Treasury exceed the
non-compliance amount of $61,535. As a result, no additional
amounts are owed back to Treasury.
Finding 1 Inaccurate Compilation of the PSP1 Application
Awardable Amounts
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
July 14, 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
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 7
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 five Suburban 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. Suburban included unallowable
compensation paid to both corporate officers, resulting in an
overstatement of . The two executives were the President
and Treasurer. Suburban management stated that it was initially
unaware of specific requirements to exclude corporate officers
from the PSP1 Application.
Accrual-Based Application
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.
Suburban used earned 11 and accrual-based financial information
from its payroll and accounting systems, rather than actual paid
amounts, to prepare the PSP1 Application. However, the actual
amount of wages, salaries, and benefits paid to company
11
Suburban used earned rather than paid salaries and wages in its awardable amount calculation.
According to Treasury’s PSP1 guidance, the awardable amount should consist of figures paid during
April 1, 2019 through September 30, 2019. The use of salaries and wages earned results in
compensation paid outside of the applicable period. For example, salaries and wages earned in
September 2019 and paid in October 2019.
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 8
employees was , which is less than the requested
amount of $1,194,590. As a result, Suburban overstated the
requested amount by , as illustrated in Table 2.
Table 2. PSP1 Application Compared to Actual Supported Costs
Requested
Category Amount Actual Amount Variance
Salaries/Wages
Benefits
TOTAL $1,194,590
Source: S&R Calculation of Eligible Compensation
Suburban management stated that they prepared the PSP1
Application using earned and accrual-based amounts from
April 1, 2019 through September 30, 2019, rather than
compensation paid, because that was their interpretation of the
PSP1 requirements at the time of the application.
The inclusion of corporate officers and differences between actual
amounts paid to employees and the application figures compiled
using earned and accrual-based accounting information resulted in
an aggregate overstatement of $61,535.
To remedy the findings noted in the prior OIG audit report, 12
Treasury required cargo applicants to recertify their PSP1
awardable amounts via a recertification portal. On May 28, 2021,
Suburban recertified to Treasury and acknowledged the inclusion of
unallowable corporate officer compensation in its PSP1
Application. The excess funds were returned to Treasury via a wire
transfer on December 3, 2021. As a result, no additional amounts
are owed back 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 - Suburban Air Freight,
Inc. (OIG-24-045) 9
We appreciate the courtesies and cooperation provided to our staff
during the audit. A distribution list for this report is provided as
appendix 4.
Saggar & Rosenberg, P.C. /s/
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 10
Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of Suburban Air Freight, Inc.’s (Suburban) 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, 2020.13
To accomplish this objective, Saggar & Rosenberg, P.C. (S&R)
performed the following activities during audit fieldwork conducted
remotely from August 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);14 and
o 14 CFR, Part 241,15 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;
13
Suburban submitted the PSP1 Application and related support documentation on April 3, 2020.
14
P.L. 116—136 (March 27, 2020).
15
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. Suburban is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 11
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 Suburban 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; 16 and organizational hierarchy
information.
• Reviewed Government Accountability Office’s (GAO) Standards
for Internal Control in the Federal Government 17 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 Suburban’s payroll system, was
16
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.
17
GAO-14-704G (September 2014).
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 12
Appendix 1: Objective, Scope, and Methodology
significant to the audit objective.18 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
Suburban’s payroll system, we reviewed a System and
Organizational Controls 1 (SOC 1) report, 19 Data Supplier
Questionnaire,20 and interviewed Suburban management
responsible for generating and using the data. Additional details
regarding our assessment of the reliability of the data are
reported in the section below.
• Reviewed GAO’s Assessing Data Reliability 21 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. Suburban prepared the PSP1 Application using gross
pay earned between April 1, 2019, and September 30, 2019,
as well as company fringe benefit premiums and employer 401k
match contributions, which included information developed from
Suburban’s payroll and financial accounting systems. We
compared payroll 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 Questionnaires for the payroll
and accounting systems and interviewed Suburban’s
management responsible for generating and using the data.
Based on our assessment, we determined that the data was
18
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.
19
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.
20
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.
21
GAO-20-283G (December 2019).
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 13
Appendix 1: Objective, Scope, and Methodology
sufficiently reliable to support the findings and conclusions to
answer the objective of this audit.
We conducted this performance audit in accordance with generally
accepted government auditing standards. Those standards require
that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and
conclusions based on our audit objective. We believe that the
evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 14
Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 16
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 17
Audit of Air Carrier Worker Support Certifications - Suburban Air Freight,
Inc. (OIG-24-045) 18
Appendix 4: Report Distribution
Department of the Treasury
Deputy Secretary
Treasury Audit Liaison
Office of Strategic Planning and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group
Suburban Air Freight, Inc.
President
Treasurer
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 - Suburban Air Freight,
Inc. (OIG-24-045) 19
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