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

Required by the Chief Financial Officers Act of 1990
Project ID: 
QC2018024

What We Looked At
This report presents the results of our quality control review (QCR) of KPMG LLP’s management letter related to the audit it conducted, under contract with us, of the Federal Aviation Administration’s (FAA) consolidated financial statements for fiscal years 2017 and 2016. In addition to its audit report on FAA’s financial statements, KPMG issued a management letter that discusses internal control matters that it was not required to include in its audit report. 

What We Found
Our QCR of KPMG’s management letter disclosed no instances in which KPMG did not comply, in all material respects, with generally accepted Government auditing standards. 

Recommendations
KPMG made nine recommendations in its management letter. FAA concurred with all nine recommendations.

Recommendations

Open

Closed

Closed on 12.14.2018
No. 1 to FAA

KPMG recommends that management document their consideration of any factors that could impact the estimate in the current FY when preparing the annual grant accrual estimate.

Closed on 12.14.2018
No. 2 to FAA

KPMG recommends that management further document their analysis over the lookback review. Management should consider all factors that could result in a variance between the accrual and lookback calculation, make a determination as to the potential impact in the current year accrual calculation and ensuring the documented factors are accurately described and necessary revisions to the methodology are made.

Closed on 12.14.2018
No. 3 to FAA

KPMG recommends that management implement controls at the appropriate level of precision to ensure expense transactions are accurate, valid and properly posted to the general ledger.

Closed on 12.14.2018
No. 4 to FAA

KPMG recommends that management develop and implement its policies and procedures to ensure invoices are reviewed at the appropriate level of precision to ensure that amounts are properly expensed or capitalized. KPMG also recommends that management require appropriate level of detail from their contractors in order to effectively distinguish capital transactions from expense transactions.

No. 5 to FAA

KPMG recommends that the FAA perform a review of the AP accrual, including the procurement samples used for the percentage allocation, at a level of detail or precision to identify errors in order to prevent a misstatement.

Closed on 12.14.2018
No. 6 to FAA

KPMG recommends that LCSS implement policies and procedures to ensure LCSS user access is approved prior to the access being granted. In addition, KPMG recommends that LCSS management maintain documentation of the approvals, and ensure that user account request tickets are maintained properly.

Closed on 12.14.2018
No. 7 to FAA

KPMG recommends that the LCSS implement the procedures outlined by the LCSS System Security Plan to ensure that terminated and inactive users are removed appropriately and timely.

Closed on 12.14.2018
No. 8 to FAA

KPMG recommends that LCSS implement a process to review user access on a periodic basis.

Closed on 12.14.2018
No. 9 to FAA

KPMG recommends that the LCSS implement policies and procedures to ensure that periodic access reviews have a defined timeline, frequency, and provide adequate detail for the reviewer to determine if access is appropriate based on the user's roles and responsibilities.