Audit Report - Oig 26 024 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
Summary
Treasury Office of Inspector General Audit Report OIG-26-024, Audit of Air Carrier Worker Support Certifications – Air Wisconsin Airlines LLC, dated March 13, 2026, addressed to Jeffrey Stout, Acting Chief Program Officer. The audit covered the period from April 1, 2019, through September 30, 2019 and the PSP1 Application submitted on April 3, 2020. The Results in Brief state that Air Wisconsin reported correct information for five of the seven sections reviewed and incorrect information in the Awardable Amounts and Employment Levels sections, overstating its awardable amount by $3,057,188. It states that Air Wisconsin received a $2,390,721 overpayment and that Treasury reduced $2,746,628 from the company's PSP2 payment on July 15, 2021.
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- Oig 26 024 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier
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“Audit Report - Oig 26 024 Coronavirus Disease 2019 Pandemic Relief Programs Audit Of Air Carrier.”
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SENSITIVE BUT
UNCLASSIFIED
(SBU)
asu ry
T r e
U.S.
SBU Cover Sheet
For further information, refer to the
Treasury Security Manual (TD P 15-71) at
http://intranet.treas.gov/security/
TD F 15-05.11 (3/07)
Audit Report
OIG-26-024
CORONAVIRUS DISEASE 2019 PANDEMIC RELIEF
PROGRAMS
Audit of Air Carrier Worker Support
Certifications – Air Wisconsin Airlines LLC
March 13, 2026
Office of Inspector General
Department of the Treasury
This Page Intentionally Left Blank
Contents
Audit Report
Results in Brief .............................................................................................. 2
Background ................................................................................................... 5
Treasury Disbursement Processes ............................................... 7
PSP1 Interim Audit Report .......................................................... 8
Air Wisconsin Airlines LLC .......................................................... 9
Audit Results................................................................................................. 9
Finding Inaccurate Compilation for the PSP1 Application Awardable Amount 10
Recommendation..................................................................... 14
Appendices
Appendix 1: Objective, Scope, and Methodology ............................................. 15
Appendix 2: Air Wisconsin Management Response .......................................... 19
Appendix 3: Treasury Management Response ................................................. 21
Appendix 4: Major Contributors to This Report ................................................ 24
Appendix 5: Report Distribution ..................................................................... 25
Abbreviations
Air Wisconsin Air Wisconsin Airlines LLC
AWAC AWAC Aviation, Inc.
CARES Act Coronavirus Aid, Relief, and Economic Security Act
DOT Department of Transportation
Guidelines Guidelines and Application Procedures for Payroll Support to
Air Carriers and Contractors under Division A, Title IV,
Subtitle B of the Coronavirus Aid, Relief, and Economic
Security Act
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
Treasury Department of the Treasury
ii
This Page Intentionally Left Blank
March 13, 2026
Jeffrey Stout
Acting Chief Program Officer
Department of the Treasury
This report presents the results of our audit of Air Wisconsin
Airlines LLC’s (Air Wisconsin) certification 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 2019.2 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.
Our audit objective was to assess the accuracy, completeness,
and sufficiency of Air Wisconsin’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
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 –
Air Wisconsin Airlines LLC (OIG-26-024) 1
returns, and other documentation submitted to Treasury on
April 3, 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
under Division A, Title IV, Subtitle B of the Coronavirus Aid,
Relief, and Economic Security Act (Guidelines); PSP1
Agreement; and Frequently Asked Questions: Application
Procedures for Payroll Support to Air Carriers and Contractors.
We interviewed key personnel from Air Wisconsin, Treasury,
and contracted consultants engaged by Treasury to evaluate
certified company applications. We conducted our fieldwork
from September 2020 through September 2023. Appendix 1
contains a more detailed description of our audit objective,
scope, and methodology.
Results in Brief
We found that Air Wisconsin, a passenger air carrier, reported
correct information for five of the seven sections reviewed on
its PSP1 Application. 5 These sections are: (1) Applicant
Information, (2) Applicant Type, (3) Financial Institution
Information, (4) Additional Information, and (5) Certification. We
also found that Air Wisconsin reported incorrect information in
the Awardable Amounts and Employment Levels sections of the
PSP1 Application.
Air Wisconsin overstated its awardable amount by $3,057,188.
Specifically, we found the (1) inclusion of five corporate
officers’ compensation, resulting in a $ overstatement;
(2) inclusion of employer-side payroll taxes, resulting in a
$ overstatement; (3) inclusion of per diem, resulting
in a $ overstatement; (4) data compilation errors for
4
Air Wisconsin submitted its PSP1 Application and related supporting documentation on
April 3, 2020.
5
The PSP1 Application is comprised of eight sections. One section - Taxpayer Protection, was not
subject to audit procedures because it generally does not apply to non-241 air carriers.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 2
benefits, resulting in a $ understatement; and
(5) exclusion of allowable airmen trainee wages, resulting 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, Air Wisconsin
received a $2,390,721 overpayment from Treasury. As a result,
we questioned the cost totaling $2,390,721. We confirmed
that Treasury took corrective action by reducing $2,746,628
from the company’s Payroll Support Program Extension (PSP2) 6
payment on July 15, 2021. Due to instances of non-compliance
with PSP1, we recommend that Treasury review Air
Wisconsin’s requested amount for unallowable expenses, under
the PSP2 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.
Furthermore, in the Employment Levels section, Air Wisconsin
correctly reported the “number of involuntary reductions after
March 1, 2020”; however, the company reported 1,774 as the
“average number of employees 2019” but should have reported
1,784. Air Wisconsin calculated the number by using two
headcount data points, dated January 2, 2019, and
January 2, 2020, and included corporate officers. Our
calculation was based on a 12-month average of 2019
employees and excluded corporate officers. As a result, the
company understated the number by 10 employees on the PSP1
Application. Treasury management stated that the reported
information has no impact on determining the awardable
amount. As such, we are not reporting this discrepancy as a
finding.
As a part of our reporting process, we provided Air Wisconsin
management with an opportunity to comment on a draft of this
report. In a written response, while Air Wisconsin management
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).
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 3
did not contest the report in any material respect, they
presented calculations estimating an underpayment from
Treasury for PSP2 and PSP3 financial assistance. Air Wisconsin
management also noted that if Treasury conducts an audit of
PSP2 and PSP3 as recommended and determines the company
was undercompensated, the company should be made whole
for any underpayment. Additionally, Air Wisconsin management
expressed that we stated in the Results in Brief section that we
are not reporting the Employment Levels discrepancy as a
finding; however, they believe that we reported it as a finding
when stating that Air Wisconsin reported incorrect information
in the Employment Levels section of the PSP1 Application. Air
Wisconsin management recommended that we include a
footnote to distinguish the Employment Levels as a concern and
Awardable Amount as a finding.
We maintain that the information presented in this report is
accurate. As noted, PSP2 and PSP3 were outside the scope of
this audit. We recommended Treasury review the company’s
requested amounts for PSP2 and PSP3 due to instances of
non-compliance in the PSP1 Awardable Amounts section. Also,
we found discrepancies in the Employment Levels section in the
PSP1 Application. Although these discrepancies did not impact
awardable amounts, the discrepancies support our conclusion.
Air Wisconsin management’s response, in its entirety, is
included as appendix 2 of this report.
In a written response, Treasury management concurred with our
recommendation and agreed that any overpayments of PSP
funds should be recouped. Treasury stated it 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).
Managements planned corrective actions meet the intent of our
recommendation. Treasury’s management response, in its
entirety, is included as appendix 3 of this report.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 4
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 DOT (referred to as 241 air carriers), 8 in an amount
equal to the salaries and benefits reported to DOT for the period
April 1, 2019, through September 30, 2019. For air carriers
that do not report such data to DOT (referred to as non-241 air
carriers), and contractors, financial assistance is required to be
in an amount that the air carrier or contractor certifies using
sworn financial statements or other appropriate data as the
amount of wages, salaries, benefits, and other compensation
paid to employees during the period of April 1, 2019 through
September 30, 2019. The amounts submitted on the application
to Treasury were considered sworn financial statements. To be
eligible for payments, air carriers and contractors must enter
into agreements with Treasury certifying that they meet certain
required assurances, terms, and conditions.
8
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. DOT notified Air Wisconsin that they were granted Large
Certificated Air Carrier status on July 24, 2020, with a backdated effective date as of
January 1, 2018. Air Wisconsin applied for PSP1 financial assistance on April 3, 2020 as a
non-241 air carrier before they were granted 241 air carrier status.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 5
On March 30, 2020, Treasury posted on its website the
Guidelines, which included the PSP1 Application. The PSP1
Application is comprised of eight sections:
1. Applicant Information ─ (1) applicant name; (2) taxpayer
identification number and address; and (3) contact
person’s name, title, phone number, and email address.
2. Applicant Type ─ selection of applicant type whether it is
passenger air carrier, cargo air carrier, or contractor.
Additionally, if the applicant is a contractor, this section
would identify the contractor’s service functions and the
name of the air carrier or airport to which services are
provided. Finally, this section includes affiliate and parent
company information.
3. Financial Institution Information ─ (1) the applicant’s
account number and routing number; and (2) the financial
institution’s name, address, and telephone number.
4. Employment Levels ─ applicant’s average number of
employees for 2019 and number of involuntary
reductions after March 1, 2020.
5. Awardable Amounts ─ applicant’s sworn financial
statement consisting of salaries, wages, benefits, and
other compensation for the period April 1, 2019, through
September 30, 2019.
6. Taxpayer Protection ─ a table that outlines in detail the
proposed financial instrument to be issued to the
Treasury.
7. Additional Information ─ applicant’s verification of
submitting its Internal Revenue Service (IRS) Form 941,
Employer’s Quarterly Federal Tax Return, 9 covering the
period April 1, 2019, through September 30, 2019, along
with the PSP1 Application submitted to Treasury.
9
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.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 6
8. Certification ─ names, titles, and signatures of two
certifying officials 10 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 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 case-by-case basis. Generally, Treasury disbursed
the top-off amounts for passenger air carriers in
September 2020.
10
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 –
Air Wisconsin Airlines LLC (OIG-26-024) 7
PSP1 Interim Audit Report
In a prior audit report, 11 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.
11
Treasury OIG, Interim Audit Update: Air Carrier and Contractor Certifications for Payroll Support
Program (Interim Audit), OIG-21-025 (March 31, 2021)
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 8
Air Wisconsin Airlines LLC
Headquartered in Appleton, Wisconsin, Air Wisconsin is a
passenger air carrier that operates as a regional airline and
provides services throughout the Midwest and East Coast.
Air Wisconsin submitted its PSP1 Application
totaling $ on April 3, 2020. Air Wisconsin received
the passenger air carrier top-off for a total award of
$42,184,798, or 78.2 percent of the company’s requested
amount. Treasury’s disbursements to Air Wisconsin were as
follows:
• April 23, 2020: $13,666,004.35
• June 4, 2020: $6,833,002.17
• July 21, 2020: $6,833,002.17
• August 6, 2020: $6,833,002.17
• September 9, 2020: $6,833,002.18
• October 6, 2020: $1,186,784.59
In addition to PSP1, Treasury awarded Air Wisconsin
$35,733,867 under PSP2 and $33,328,978 under PSP3. PSP2
and PSP3 were not the subject of this audit.
Audit Results
Air Wisconsin reported correct information for five of seven
sections reviewed on its PSP1 Application. These sections are:
(1) Applicant Information, (2) Applicant Type, (3) Financial
Institution Information, (4) Additional Information, and
(5) Certification. We compared information provided in each
section of the PSP1 Application to supporting documentation,
including DOT Air Operator Certification, 12 IRS Form 941,
12
An Operator Certification is issued to an air carrier that will conduct intrastate air transportation.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 9
organizational charts, payroll registers, employee furlough
information, and bank statements, among other items.
For the remaining two sections, Awardable Amounts and
Employment Levels, Air Wisconsin reported incorrect
information. Air Wisconsin incorrectly included $ of
unallowable corporate officer compensation, $ of
employer-side payroll taxes, and $ of per diem; however,
the overstatement was partially offset by $ due to data
compilation errors in the benefits calculation; and the exclusion
of $ allowable airmen trainee wages. Overall, the
company overstated its awardable amount by $3,057,188.
Treasury’s awards to passenger air carriers under PSP1 included
a 78.2-percent pro-rata distribution of application amounts.
Applying this formula, Air Wisconsin received $2,390,721
overpayment from Treasury. We confirmed that Treasury took
corrective action by reducing $2,746,628 from the company’s
PSP2 payment on July 15, 2021.
Furthermore, in the Employment Levels section, Air Wisconsin
correctly reported the “number of involuntary reductions after
March 1, 2020;” however, the company incorrectly reported
the “average number of employees 2019.” Treasury
management stated that the reported information had no impact
on determining the awardable amount. As such, we are not
reporting this discrepancy as a finding.
Finding Inaccurate Compilation for the PSP1 Application
Awardable Amount
Both the CARES Act and Treasury’s Guidelines define
“employee” as “an individual, other than a corporate officer,
who is employed by an air carrier or contractor in the United
States (including its territories and possessions).”
The signed PSP1 Agreement, effective April 20, 2020, defines:
corporate officer as with respect to the recipient, its
president; any vice president in charge of a principal
business unit, division, or function (such as sales,
administration, or finance); any other officer who performs a
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 10
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; and
salary as without duplication of any amounts counted as
benefits, a predetermined regular payment, typically paid on
a weekly or less frequent basis but which may be expressed
as an hourly, weekly, annual or other rate, as well as cost-
of-living differentials, vacation time, paid time off, sick leave,
and overtime pay, paid by the recipient to its employees, but
excluding any federal, state, or local payroll taxes paid by
the recipient.
Treasury’s Guidelines define:
wages, salaries, benefits, and other compensation as
remuneration paid by the applicant to its employees for
personal services and includes salaries, wages, overtime pay,
cost-of-living differentials, and other similar compensation,
as distinguished from per diem allowances or reimbursement
for expenses incurred by personnel for the benefit of the
applicant; and
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.
Air Wisconsin incorrectly certified the PSP1 awardable amount
resulting in an overstatement of $3,856,423. Specifically, Air
Wisconsin included:
• Compensation for the (1) Secretary and Legal Counsel;
(2) Managing Director of Human Resource; (3) Director
and President, AWAC Aviation Inc. (AWAC); 13
(4) Director and Secretary, AWAC and Manager, Air
Wisconsin; and (5) Director and President, AWAC and
Chairman Board of Directors, resulting in an
overstatement of $ . The five executives all met
13
AWAC Aviation, Inc. is the sole member of Air Wisconsin Airlines LLC.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 11
the definition of corporate officer per the PSP1
Agreement, through discussions with management, and
review of Air Wisconsin’s 2019 organizational chart.
• Employer-side payroll taxes, resulting in an overstatement
of $ .
• Per diem, resulting in an overstatement of $ .
Air Wisconsin management stated that the inclusion of
corporate officer compensation and employer-side payroll taxes
was due to Treasury’s unclear guidance and broad definition of
wages, salaries, benefits, and other compensation. Management
also stated they were confused as to whose compensation
should have been included or excluded from the application and
they relied on the DOT Form 41, Schedule P-6 14 guidance to
include payroll taxes. Additionally, management stated that they
relied on IRS’s taxable per diem definition15 and considered per
diem as wages; therefore, included it in the awardable amount.
The $3,856,423 overstatement was partially offset due to
exclusion of allowable benefits and airmen trainee wages.
Specifically, Air Wisconsin removed:
• Estimated fringe benefits, resulting in an understatement
of $ .
• Wages of airmen trainees who met the definition of
“employee” per Treasury’s guidance, resulting in an
understatement of $ .
Air Wisconsin management stated that the estimated amount of
fringe benefits was removed to ensure that they reported
conservatively, and any errors were due to oversight. Further,
14
DOT Form 41, Schedule P-6 is a financial reporting document filed by 241 air carriers with DOT.
It lists categories of 1) salaries and related fringe benefits (fringe benefits includes payroll tax
information); 2) materials purchased; and 3) services purchased.
15
IRS defines taxable per diem as payments made to employees if 1) no expense report is filed with
the employer, 2) the expense report does not include date, time, place, amount, and business
purpose, 3) a flat amount is given to the employee, or 4) per diem is paid in excess of the
allowable standard federal rate; therefore considered wages, subject to wages and employment
taxes for IRS purposes. (https://www.irs.gov/pub/irs-regs/per_diem_faq_%26_a_v1.pdf)
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 12
Air Wisconsin management stated that they excluded airman
trainee wages because they did not consider airman trainees as
employees for the purpose of the PSP1 Application.
Overall, the $ overstatement for corporate officer
compensation, $ overstatement for employer-side
payroll taxes, $ overstatement for per diem, $
understatement of data compilation errors for benefits, and
$ understatement for exclusion of airmen trainee
wages, resulted in an aggregate overstatement of $3,057,188.
Since Treasury disbursed PSP1 funds pro-rata for passenger air
carriers at 78.2 percent of the requested awardable amount, Air
Wisconsin received an overpayment of $2,390,721. Table 1
illustrates the aggregate overpayment.
Table 1. Aggregate Overstatement and Pro-Rated Overpayment
Description Amount
PSP1 Application Requested Amount $
Less Corporate Officer Compensation $
Less Employer-Side Payroll Taxes $
Less Per Diem $
Plus Data Compilation Errors for Benefits $
Plus Airmen Trainee Wages $
OIG PSP1 Calculated Amount $50,887,566
Overstatement $3,057,188
PSP1 Passenger Pro-rata 78.2%
Pro-Rated Overpayment $2,390,721
Source: OIG Calculation of Awardable Amount
To remedy the findings noted in the prior OIG audit report (see
footnote 11), Treasury required PSP2 applicants to recertify
their PSP1 awardable amounts. Air Wisconsin certified to
Treasury and acknowledged under PSP2, that its PSP1
Application included unallowable corporate officer compensation
and employer-side payroll taxes, totaling $3,512,312. We
confirmed that Treasury took corrective action by reducing a
prorated amount of 78.2 percent, or $2,746,628 from the
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 13
company’s PSP2 payment on July 15, 2021. Due to instances
of non-compliance in the PSP1 awardable amount, the company
may have potentially included unallowable expenses in its PSP2
and PSP3 financial assistance requests.
Recommendation
We recommend that Treasury’s Acting Chief Program Officer:
1. Review Air Wisconsin’s requested amount for
unallowable expenses under PSP2 and PSP3, and seek
reimbursement for overpayment, if applicable.
Management Response
Treasury will review awardable amounts requested under
PSP2 and PSP3 and seek recoupment where appropriate.
OIG Comment
Management’s planned corrective actions meet the intent
of our recommendation. 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. If you wish to discuss the report, you
may contact me at (202) 439-6354, or Christopher Culbreath,
Acting Audit Manager at (202) 486-1983. Major contributors to
this report are listed in appendix 4. A distribution list for this
report is provided as appendix 5.
/s/
Julie Wong
Acting Deputy Assistant Inspector General for Audit
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 14
Appendix 1: Objective, Scope, and Methodology
Our objective was to assess the accuracy, completeness, and
sufficiency of Air Wisconsin Airlines LLC’s (Air Wisconsin)
sworn financial statement or other data used to certify the
wages, salaries, benefits, and other compensation amounts
submitted and approved by the Department of the Treasury
(Treasury) for the Payroll Support Program (PSP1).
The scope of our audit covered the period from April 1, 2019,
through September 30, 2019, and included the certified PSP1
Application, sworn financial statement, tax returns, and other
documentation submitted to Treasury on April 3, 2020.
To accomplish this objective, we performed the following
activities during audit fieldwork conducted remotely from
September 2020 through September 2023:
• 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); and
o 14 CFR Part 241, Uniform System of Accounts and
Reports for Large Certificated Air Carriers, amended
May 31, 2024.
• Reviewed Treasury’s policies, procedures, and guidelines
related to PSP1:
o Guidelines and Application Procedures for Payroll
Support to Air Carriers and Contractors under Division
A, Title IV, Subtitle B of the Coronavirus Aid, Relief,
and Economic Security Act, which included the PSP1
Application, March 30, 2020;
o PSP1 Agreement;
o Question and Answer: Payroll Support to Air Carriers
and Contractors, (April 2, 2020, April 3, 2020, and
April 20, 2020 versions); and
o Frequently Asked Questions: Application Procedures
for Payroll Support to Air Carriers and Contractors,
April 3, 2020.
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 15
Appendix 1: Objective, Scope, and Methodology
• Performed 100 percent testing for seven of the eight
sections of the PSP1 Application—specifically, the Applicant
Information, Applicant Type, Financial Institution
Information, Employment Levels, Awardable Amounts,
Additional Information, and Certification sections. The
Taxpayer Protection section was not reviewed because it
generally does not apply to non-241 air carriers. According
to Treasury, the Employment Levels section had no impact
on Treasury’s determination of recipients’ award amounts.
As such, we are not reporting the discrepancy as a finding.
• Interviewed key Treasury personnel and contracted
consultants engaged by Treasury to aid in its evaluation of
the air carriers’ and the contractors’ certified applications
and other data.
• Interviewed Air Wisconsin representatives responsible for the
completion and submission of the sworn financial statement.
The amounts submitted in the Awardable Amounts section
of the PSP1 Application were considered the sworn financial
statement.
• Reviewed sworn financial statement and documents to
support the requested payroll support amount. The
documentation included, but was not limited to, (1) PSP1
Application; (2) Department of Transportation (DOT) Air
Operator Certification; (3) 2019 Internal Revenue Service
(IRS) Form 941, Employer’s Quarterly Federal Tax Return;
(4) 2019 IRS Form 851, Affiliation Schedule; 16 (5) 2019 and
2020 organizational charts; (6) 2019 consolidated income
statement; (7) April 2019 through September 2019 payroll
registers; (8) employee furlough information; (9) 2019
general ledger; (10) PSP1 Agreement; and (11) April 2020,
March 2021, and April 2021 bank statements.
• Reviewed Government Accountability Office’s Standards for
Internal Control in the Federal Government to identify the
components of internal control that are significant to the
audit objective. Understanding internal control within the
context of an entity’s internal control framework can help
16
IRS Form 851 is a tax form that a parent corporation of an affiliated group files with its
consolidated income tax return to (1) identify the common parent corporation and each member
of the affiliated group; (2) report the amount of overpayment credits, estimated tax payments,
and tax deposits attributable to each corporation; and (3) determine that each subsidiary
corporation qualifies as a member of the affiliated group.
Audit of Air Carrier Worker Support Certifications –
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Appendix 1: Objective, Scope, and Methodology
auditors determine whether internal control deficiencies
exist. We concluded that one of the five internal control
components, Control Activities, as related to Air Wisconsin’s
payroll systems, was significant to the audit objective.17 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 Air Wisconsin’s payroll systems, we
examined Air Wisconsin’s response to Data Supplier
Questionnaires,18 and interviewed Air Wisconsin’s
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 Government Accountability Office’s Assessing
Data Reliability 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. Air
Wisconsin used information generated from its payroll
systems to complete the PSP1 Application. As such, we
compared the information generated from the payroll
systems to the information in the “Employment Levels” and
“Awardable Amounts” sections of the PSP1 Application.
To assess the reliability of the company’s payroll systems,
we (1) reviewed the completed Data Supplier Questionnaires
for Air Wisconsin’s payroll systems; (2) observed and
documented the process of generating the furlough reports
by the company’s representative; (3) ensured generated
furlough reports, payroll registers, and airmen trainee
spreadsheet were within the expected date range; 19 and
(4) interviewed Air Wisconsin representatives knowledgeable
17
The five components of internal control are Control Environment, Risk Assessment, Control
Activities, Information and Communication, and Monitoring.
18
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.
19
The furlough reports had a date range from March 1, 2020, through September 30, 2020.
The payroll registers and airmen trainee spreadsheet had a date range from April 1, 2019,
through September 30, 2019.
Audit of Air Carrier Worker Support Certifications –
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Appendix 1: Objective, Scope, and Methodology
about the data. Based on our assessment, we determined
that the data were sufficiently reliable to support the findings
and conclusions to answer the objective of this audit.
We conducted this performance audit in accordance with
generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis
for our findings and conclusions based on our audit objective.
We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit
objective.
Audit of Air Carrier Worker Support Certifications –
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Appendix 2: Air Wisconsin Management Response
Audit of Air Carrier Worker Support Certifications –
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Appendix 3: Treasury Management Response
Audit of Air Carrier Worker Support Certifications –
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Audit of Air Carrier Worker Support Certifications –
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Appendix 4: Major Contributors to This Report
Olivia Scott, Acting Director
Christopher Culbreath, Acting Audit Manager
Adanech Balcha, Auditor-in-Charge
Yves Laison, Referencer
Audit of Air Carrier Worker Support Certifications –
Air Wisconsin Airlines LLC (OIG-26-024) 24
Appendix 5: Report Distribution
Department of the Treasury
Treasury Secretary
Deputy Secretary
Treasury Audit Liaison
Office of Strategy, Planning and Performance Improvement
Office of the Deputy Chief Financial Officer, Risk and Control
Group
Air Wisconsin Airlines LLC
Chief Executive Officer
Executive Vice President of Finance
Office of Management and Budget
OIG Budget Examiner
United States Senate
Committee on Homeland Security and Governmental Affairs
Committee on Finance
Committee on Banking, Housing, and Urban Affairs
Committee on Commerce, Science, and Transportation
Committee on Appropriations
Committee on the Budget
United States House of Representatives
Committee on Oversight and Government Reform
Committee on Financial Services
Committee on the Budget
Committee on Transportation and Infrastructure
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