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November 13, 2017

Report on the Quality Control Review of the Federal Aviation Administration’s Audited Consolidated Financial Statements for Fiscal Years 2017 and 2016

Required by the CFO Act
Project ID: 
QC2018006
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What We Looked At
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 2017 and 2016. KPMG LLP, under contract to us, issued a clean (unmodified) audit opinion on FAA’s financial statements. KPMG LLP reported one material weakness and one significant deficiency in internal control over financial reporting. KPMG did not report any instances of reportable noncompliance with laws and regulations tested.
 
What We Found
Our QCR disclosed no instances in which KPMG LLP did not comply, in all material respects, with auditing standards.

Recommendations

Open

Closed

Closed on 12.14.2018
No. 1 to FAA

KPMG recommends that management continue to refine the EC&D estimation methodology to ensure that the methodology is based on relevant, sufficient, and reliable data which is properly supported by sufficient appropriate audit evidence.

Closed on 12.14.2018
No. 2 to FAA

KPMG recommends that management review any refinements to the methodology to ensure that the estimate is presented in conformity with applicable accounting principles and that the related disclosure is adequate.

Closed on 12.14.2018
No. 3 to FAA

KPMG recommends that management establish appropriate communication channels with personnel outside of the Financial Statements and Reporting Division to ensure proper communication and coordination related to the calculation of material financial statement information.

Closed on 12.14.2018
No. 4 to FAA

KPMG recommends that management perform an adequate review and approval of the accounting estimates, including: 1) Review of sources of relevant factors; 2) Review of development of assumptions; 3) Review of reasonableness of assumptions and resulting estimates; and 4) Consideration of changes in previously established methods to arrive at accounting estimates.

Closed on 12.14.2018
No. 5 to FAA

KPMG recommends that management develop and implement policies and procedures to ensure that only assets that exist and that may require future decommissioning and cleanup activities are included in the EC&D liability estimate.