Audit Report - Oig 25 011 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
Summary
Department of the Treasury Office of Inspector General Audit Report OIG-25-011, Audit of Air Carrier Worker Support Certifications - AerSale, Inc., dated November 19, 2024, with a memorandum from Deborah L. Harker, Assistant Inspector General for Audit, to Jessica Milano, Chief Program Officer. It states that the audit, performed by Saggar & Rosenberg, P.C. under a contract monitored by OIG, assessed the accuracy, completeness and sufficiency of AerSale's sworn financial statement or other data used to certify compensation amounts for the Air Carrier Payroll Support Program (PSP1), covering April 1, 2019 through September 30, 2019. It states that AerSale incorrectly compiled data in the Awardable Amounts section of its application, but understated its requested amount by $559,783 and did not over-request PSP1 financial assistance.
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Audit Report
OIG-25-011
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications - AerSale, Inc.
November 19, 2024
Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
November 19, 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 – AerSale,
Inc.
Attached is our audit report for the Audit of Air Carrier Worker Support Certification –
AerSale, Inc. (AerSale) (OIG-25-011); dated November 19, 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 AerSale’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 AerSale incorrectly compiled data used for the
Awardable Amounts section of the PSP1 Application. Specifically, the:
• Inclusion of unsupported life insurance benefit amounts, resulted in an
overstatement of .
However, the overstatements were entirely offset by:
1
P.L. 116–136 (March 27, 2020).
• Differences between actual healthcare benefits paid and the application figures
compiled using actuarial estimates, 2 resulting in an understatement of
$235,593; and
• Exclusion of non-aviation leased employees’ compensation, resulting in an
understatement of .
Overall, AerSale understated its requested amount by $559,783 and did not
over-request PSP1 financial assistance despite partial non-compliance with application
requirements.
Our contract required that the audit be performed in accordance with generally
accepted government auditing standards. In connection with the contract, we
reviewed S&R’s report and related documentation and inquired of its representatives.
Our review, as differentiated from an audit performed in accordance with generally
accepted government auditing standards, was not intended to enable us to express an
opinion on AerSale’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, Audit
Director, at (202) 487-8371.
Attachment
cc: Gregory Till, Chief Operating Officer, Office of Capital Access, Department of
the Treasury
Danielle Christensen, Deputy Chief Program Officer, Office of Capital Access,
Department of the Treasury
Jason Morrow, Senior Counsel, Department of the Treasury
Jeff Davis, Partner, Saggar & Rosenberg, P.C.
2
An actuarial estimate is a mathematical model used to forecast uncertain variables or events for the
purposes of calculating insurance premiums or benefits.
Contents
Audit Report
Results in Brief ...................................................................................................2
Background ........................................................................................................3
Treasury Disbursement Processes ....................................................5
PSP1 Interim Audit Report ...............................................................6
AerSale, Inc...................................................................................7
Audit Results......................................................................................................8
Finding 1 AerSale Did Not Over-Request PSP1 Financial Assistance Despite Partial
Non-Compliance with Application Requirements .................................9
Appendices
Appendix 1: Objective, Scope, and Methodology ..................................................11
Appendix 2: AerSale Management Response........................................................15
Appendix 3: Treasury Management Response ......................................................16
Appendix 4: Report Distribution ..........................................................................19
Abbreviations
AerSale AerSale, Inc.
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
PSP3 Payroll Support Program 3, American Rescue Plan Act of 2021
S&R Saggar & Rosenberg, P.C.
SOC 1 System and Organizational Controls
Treasury Department of the Treasury
i
This Page Intentionally Left Blank
November 19, 2024
Jessica Milano
Chief Program Officer
Department of the Treasury
This report presents the results of our audit of AerSale, Inc.’s
(AerSale) 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 AerSale’s sworn
financial statement or other data used to certify the wages,
salaries, benefits, and other compensation amounts submitted and
approved by Treasury for PSP1. The scope of our audit covered the
period from April 1, 2019 through September 30, 2019, and
included the certified PSP1 Application, sworn financial statement,
1
P.L. 116–136 (March 27, 2020).
2
The financial assistance provided under the CARES Act was split between Passenger Air Carriers
($25 billion), Cargo Air Carriers ($4 billion), and Contractors ($3 billion).
3
Passenger and cargo air carriers that are not required to report salaries and wages to DOT under
14 CFR, Part 241, “Uniform System of Accounts and Reports for Large Certificated Air Carriers”.
Audit of Air Carrier Worker Support Certifications – AerSale, Inc.
(OIG-25-011) 1
tax returns, and other documentation submitted to Treasury on
April 10, 2020. 4
To accomplish the objective, we reviewed applicable laws,
regulations, and Treasury’s policies and procedures, including but
not limited to, 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 AerSale, Treasury, and contracted
consultants engaged by Treasury to evaluate certified company
applications. We conducted our fieldwork from August 2023
through June 2024. Appendix 1 contains a more detailed
description of our objective, scope, and methodology.
Results in Brief
In brief, S&R found that AerSale, a contractor, reported correct
information for three of the four sections reviewed on its PSP1
Application. 5 These sections are: (1) Applicant Information,
(2) Applicant Type, and (3) Certification. For the Awardable
Amounts section, we found that AerSale was unable to provide
sufficient supporting documentation to demonstrate that
requested for life insurance benefits were eligible for PSP1.
However, the unsupported life insurance benefit amounts were
entirely offset by (1) differences between actual healthcare
benefits paid and the application figures compiled using actuarial
estimates, 6 resulting in an understatement of $235,593; and
(2) exclusion of non-aviation leased employees’ compensation,
resulting in an understatement of . Overall, AerSale
understated its requested amount by $559,783 and did not
4
AerSale submitted its initial PSP1 Application and related support documentation totaling
on April 10, 2020. AerSale later revised its awardable amount to on
May 20, 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
An actuarial estimate is a mathematical model used to forecast uncertain variables or events for the
purposes of calculating insurance premiums or benefits.
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 2
over-request PSP1 financial assistance despite partial
non-compliance with application requirements.
As part of our reporting process, we provided Aersale management
with an opportunity to comment on a draft of this report. In a
written response, Aersale management stated it does not dispute
that substantiation was not provided for life insurance expenses.
The company also noted it did not pursue additional support in the
interest of time, as well as consideration of the offsetting
understatements that greatly exceeded this amount. Aersale
management’s response, in its entirety, is included as appendix 2
of this report.
In a written response, Treasury management stated the draft report
describes work performed by OIG’s contractor to determine
whether the recipient’s requested awardable amount complied with
Treasury’s program requirements. The draft report notes the
extensive fieldwork conducted for this review between
August 2023 and June 2024, including interviewing AerSale’s
management and reviewing a wide range of the company’s
financial records and corporate documents. In relation to AerSale,
Treasury management noted that OIG’s contractor found no
amounts were overpaid. Treasury management appreciates the
OIG’s work on this engagement and looks forward to working with
the OIG to protect the integrity of the PSP and other recovery
programs. Treasury management’s response, in its entirety, is
included as appendix 3 of this report.
Background
Title IV, Subtitle B, of the CARES Act, Air Carrier Worker Support,
requires Treasury to provide financial assistance to air carriers and
contractors that must exclusively be used for the continuation of
payments of employees’ wages, salaries, and benefits. Financial
assistance is to be provided to:
(1) passenger air carriers, in an aggregate amount up to
$25 billion;
(2) cargo air carriers, in an aggregate amount up to $4 billion;
and
(3) contractors, in an aggregate amount up to $3 billion.
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 3
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), 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 carriers), and
contractors, financial assistance is required to be in an amount that
the air carrier or contractor certifies using sworn financial
statements or other appropriate data as the amount of wages,
salaries, benefits, and other compensation paid to employees
during the period of April 1, 2019 through September 30, 2019.
The amounts submitted on the application to Treasury were
considered sworn financial statements. To be eligible for payments,
air carriers and contractors must enter into agreements with
Treasury certifying that they meet certain required assurances,
terms, and conditions.
On March 30, 2020, Treasury posted on its website the
Guidelines, which included the PSP1 Application. The PSP1
Application is comprised of eight sections:
1. Applicant Information ─ (1) applicant name; (2) taxpayer
identification number and address; and (3) contact person’s
name, title, phone number, and email address.
2. Applicant Type ─ selection of applicant type whether it is
passenger air carrier, cargo air carrier, or contractor.
Additionally, if the applicant is a contractor, this section would
identify the contractor’s service functions and the name of the
air carrier or airport to which services are provided. Finally, this
section includes affiliate and parent company information.
3. Financial Institution Information ─ (1) the applicant’s account
number and routing number; and (2) the financial institution’s
name, address, and telephone number.
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. AerSale is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 4
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 ─ a table that outlines in detail the
proposed financial instrument to be issued to Treasury.
7. Additional Information ─ applicant’s verification of submitting its
Internal Revenue Service (IRS) Form 941, Employer’s Quarterly
Federal Tax Return, 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.
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
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.
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 5
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 those contractors
was 69.7 percent.
Treasury disbursed an initial lump sum payment of one-third of the
awardable amount, followed by four equal subsequent payments to
ensure it provided sufficient and timely financial assistance
corresponding to the applicants’ payroll schedule. In instances
where Treasury needed to perform additional follow-up with
contractors or needed additional time to approve applications,
Treasury compressed the payment schedule on a case-by-case
basis. Generally, Treasury disbursed the top-off amounts for
contractors in February 2021.
PSP1 Interim Audit Report
In a prior audit report, 10 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
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 - AerSale, Inc.
(OIG-25-011) 6
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.
AerSale, Inc.
Headquartered in Doral, Florida, AerSale is a contractor that
provides a variety of services to commercial airlines including, but
not limited to, aircraft and component maintenance, repair and
overhaul, aircraft and engine sales and leasing, and used
serviceable material sales and parts exchange.
AerSale submitted its initial PSP1 Application totaling
on April 10, 2020. AerSale later revised its awardable amount to
on May 20, 2020, during Treasury’s application
review process. The company accepted the contractor top-off for a
total award amount of $16,389,428, or 90 percent of the
company’s requested amount. Treasury’s disbursements to AerSale
were as follows:
• June 10, 2020: $6,346,351
• July 1, 2020: $2,115,450
• August 3, 2020: $2,115,450
• September 1, 2020: $2,115,450
• February 22, 2021: $3,696,727
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 7
In addition to PSP1, Treasury awarded AerSale $5,535,985 under
the Payroll Support Program Extension (PSP2) 11 authorized by the
Consolidated Appropriations Act, 2021 and $5,535,985 under the
Payroll Support Program 3 (PSP3) 12 authorized by the American
Rescue Plan Act of 2021. PSP2 and PSP3 were not the subject of
this audit.
Audit Results
We found that AerSale reported correct information for three of the
four sections reviewed on its PSP1 Application. These sections are:
(1) Applicant Information, (2) Applicant Type, and (3) Certification.
We compared information provided in each section of the PSP1
Application to supporting documentation including general ledger
data, company sworn financial statement, IRS Form 941,
executive-level business charts, payroll registers, and third-party
benefit claims and invoices.
For the Awardable Amounts section, we found that AerSale was
unable to provide sufficient supporting documentation to
demonstrate that requested for life insurance benefits
were eligible for PSP1. However, the unsupported life insurance
benefit amounts were entirely offset by (1) differences between
actual healthcare benefits paid and the application figures compiled
using actuarial estimates, resulting in an understatement of
$235,593; and (2) exclusion of non-aviation leased employees’
compensation, resulting in an understatement of .
Overall, AerSale understated its requested amount by $559,783
and did not over-request PSP1 financial assistance despite partial
non-compliance with application requirements.
11
The Consolidated Appropriations Act, 2021 (P.L. 116–260), enacted on December 27, 2020,
created the Airline Worker Support Extension for passenger air carriers and certain contractors.
Treasury referred to this as Payroll Support Program Extension (PSP2).
12
The American Rescue Plan of 2021 (P.L. 117–2), enacted on March 11, 2021, created the Air
Transportation Payroll Support Program Extension authorizing Treasury to provide additional
assistance to passenger air carriers and contractors that received financial assistance under PSP2.
Treasury referred to this as Payroll Support Program 3 (PSP3).
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 8
Finding 1 AerSale Did Not Over-Request PSP1 Financial Assistance
Despite Partial Non-Compliance with Application
Requirements
Both the CARES Act and Treasury’s Guidelines define “employee”
as “an individual, other than a corporate officer, who is employed
by an air carrier or contractor in the United States (including its
territories and possessions).”
Treasury’s Guidelines define wages, salaries, benefits, and other
compensation as:
remuneration paid by the applicant to its employees for
personal services and includes salaries, wages, overtime pay,
cost-of-living differentials, and other similar compensation, as
distinguished from per diem allowances or reimbursement for
expenses incurred by personnel for the benefit of the applicant.
In addition, the Guidelines define Awardable Amounts as:
an amount that such contractor certifies, using sworn financial
statements or other appropriate data, as the amount of wages,
salaries, benefits, and other compensation that such contractor
paid its employees during the time period.
AerSale did not provide sufficient supporting documentation to
demonstrate that of the amounts requested for life
insurance benefits were eligible for PSP1. The company was unable
to provide life insurance invoices, itemized at the employee-level,
to quantify the amounts associated with ineligible corporate
officer’s benefits.
However, the unsupported benefits overstatement was
entirely offset by differences between actual healthcare benefits
paid and the application figures compiled using actuarial estimates,
totaling $235,593. This resulted in a total benefits understatement
of . Additionally, AerSale understated its salaries and
wages by not claiming amounts paid for non-aviation leased
employees, totaling , resulting in an aggregate
understatement of $559,783.
For healthcare benefits, AerSale management stated that it used
actuarial estimates, as opposed to actual payments, to exercise
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
(OIG-25-011) 9
conservatism. Further, AerSale management elected not to pursue
additional efforts to obtain itemized life insurance supporting
documentation, as there was already a sufficient understatement in
amounts requested.
For “Salaries and Wages”, AerSale management stated that its
interpretation of the CARES Act was that only employees who
supported aviation operations would be eligible for PSP1 and
therefore excluded non-aviation leased employees.
To remedy the findings listed in the prior OIG audit report, 13
Treasury required PSP2 applicants to recertify their PSP1
awardable amounts. AerSale certified to Treasury under PSP2, that
its PSP1 Application did not include corporate officer compensation
or employer-side payroll taxes. Although AerSale was unable to
provide sufficient documentation to support the exclusion of
corporate officers’ life insurance benefits from the requested
amount, the company did not over-request PSP1 financial
assistance because the actual compensation incurred exceeded the
requested amount.
******
We appreciate the courtesies and cooperation provided to our staff
during the audit. A distribution list for this report is provided as
appendix 4.
Saggar & Rosenberg, P.C. /s/
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 - AerSale, Inc.
(OIG-25-011) 10
Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of AerSale, Inc.’s (AerSale) sworn financial statement
or other data used to certify the wages, salaries, benefits, and
other compensation amounts submitted and approved by the
Department of the Treasury (Treasury).
The scope of our audit covered the period from April 1, 2019
through September 30, 2019, and included the certified Payroll
Support Program (PSP1) Application, sworn financial statement,
tax returns, and other documentation submitted to Treasury on
April 10, 2020. 14
To accomplish this objective, Saggar & Rosenberg, P.C. (S&R)
performed the following activities during audit fieldwork from
August 2023 through June 2024:
• Reviewed applicable laws and regulations, including:
o Title IV, Subtitle B, Air Carrier Worker Support, of the
Coronavirus Aid, Relief, and Economic Security Act
(CARES Act); 15 and
o 14 CFR, Part 241, 16 Uniform System of Accounts and
Reports for Large Certificated Air Carriers,
December 28, 2023.
• Reviewed Treasury’s policies and procedures related to PSP1:
o Guidelines and Application Procedures for Payroll Support
to Air Carriers and Contractors (Guidelines), which
included the PSP1 Application, March 30, 2020;
o PSP1 Agreement;
14
AerSale submitted its initial PSP1 Application and related support documentation totaling
on April 10, 2020. AerSale later revised its awardable amount request to
on May 20, 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. AerSale is not a Large Certificated Air Carrier.
Audit of Air Carrier Worker Support Certifications – AerSale, Inc.
(OIG-25-011) 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 AerSale management responsible for the completion
and submission of the sworn financial statement in the
Awardable Amounts section of the PSP1 Application.
• Reviewed sworn financial statement and documents to support
the requested payroll support amount. The documentation
included general ledger data, company pay registers, benefit
claim information, Internal Revenue Service (IRS) Form 941,
Employer’s Quarterly Federal Tax Return 17 filings, 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 AerSale’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 - AerSale, Inc.
(OIG-25-011) 12
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
AerSale’s payroll and accounting system, we examined
AerSale’s response to Data Supplier Questionnaires, 20 reviewed
a System and Organizational Controls 1 (SOC 1), 21 and
interviewed AerSale’s management responsible for generating
and using the data. Additional details regarding our assessment
of the reliability of the data is reported in the section below.
• Reviewed GAO’s Assessing Data Reliability 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. AerSale prepared the PSP1 Application using payroll
and benefit compensation from April 2019 through
September 2019, which included information developed from
AerSale’s payroll and financial accounting systems. We
compared details generated from payroll registers at the
individual employee level, as well as third-party benefit data
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 examined the
Data Supplier Questionnaires for the payroll and financial
accounting systems, reviewed the SOC 1 report for the payroll
system, and interviewed AerSale’s 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.
19
The five components of internal control are Control Environment, Risk Assessment, Control
Activities, Information and Communication, and Monitoring.
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
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.
22
GAO-20-283G (December 2019).
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Appendix 1: Objective, Scope, and Methodology
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 - AerSale, Inc.
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Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications – AerSale, Inc.
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Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
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Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications - AerSale, Inc.
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Appendix 4: Report Distribution
Department of the Treasury
Deputy Secretary
Treasury Audit Liaison
Office of Strategic Planning and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group
AerSale, Inc.
Chief Executive Officer
Chief Financial 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
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