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Audit Reports

Date

Quality Control Review of the Federal Aviation Administration’s Audited Consolidated Financial Statements for Fiscal Years 2016 and 2015

Requested By
Required by the CFO Act
Project ID
QC2017011
File Attachment

This report presents the results of our quality control review (QCR) of the Federal Aviation Administration’s (FAA) audited consolidated financial statements for fiscal years 2016 and 2015. KPMG LLP, under contract to the Office of the Inspector General, issued a clean (unmodified) audit opinion on FAA’s financial statements. KPMG LLP reported two significant deficiencies in internal control over financial reporting. KPMG did not report any instances of reportable noncompliance with laws and regulations tested. Our QCR disclosed no instances in which KPMG LLP did not comply, in all material respects, with auditing standards. 

Recommendations

Closed on
No. 1 to FAA
Establish procedures and controls, at the appropriate level of precision, for unusual or infrequent events (e.g. system implementations, changes in accounting principles, or implementation of new accounting standards) in order to prevent or detect and correct a misstatement to the financial statements. Specifically for IT system implementations, establish an IT steering committee that is composed of management from all relevant stakeholder functional areas, including the IT office, program office, and financial reporting office to ensure that system implementation meets the needs of all users and that policies, procedures, and system controls are appropriately redesigned, as necessary, to respond to the process changes resulting from the system implementation
Closed on
No. 2 to FAA
Establish policies, procedures, and controls over the periodic review of inventory unit values and develop the process for extracting the necessary reports and recording the adjustments in LCSS.
Closed on
No. 3 to FAA
Establish policies, procedures, and controls to ensure that the inventory values assigned by LCSS are appropriate based on the asset condition.
Closed on
No. 4 to FAA
Establish policies, procedures, and controls to reconcile the inventory items that exist in the warehouse and are recorded in WMS with the inventory items recorded in LCSS.
Closed on
No. 5 to FAA
Perform an analysis of inventory by accounting groups and condition classifications to ensure that assets are recorded in LCSS with the appropriate condition code and the appropriate value
Closed on
No. 6 to FAA
Provide training to the repair shop technicians on the new process of applying costs to LCSS shop orders to ensure repair costs are completely and accurately recorded.
Closed on
No. 7 to FAA
Revise its policies and procedures to ensure that all assets, regardless of whether or not the assets were capitalized into PPE or expensed, that may require future decommissioning and cleanup activities are included in the liability.