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November 14, 2018

Quality Control Review of the Independent Auditor’s Report on the Federal Aviation Administration’s Audited Consolidated Financial Statements for Fiscal Years 2018 and 2017

Required by the Chief Financial Officers Act of 1990
Project ID: 
QC2019009
View PDF Document
What We Looked At
We contracted with the independent public accounting firm KPMG LLP to audit the Federal Aviation Administration’s (FAA) financial statements as of and for the fiscal years ended September 30, 2018, and September 30, 2017, and to provide a report on internal control over financial reporting and compliance with laws and other matters. The contract required that the audit be performed in accordance with U.S. generally accepted Government auditing standards, Office of Management and Budget audit guidance, and the Governmental Accountability Office’s and Council of the Inspectors General on Integrity and Efficiency’s Financial Audit Manual. In connection with the contract, we performed a quality control review of KPMG’s report dated November 9, 2018, related documentation, and inquired of its representatives.
 
What We Found
Our quality control review disclosed no instances in which KPMG did not comply, in all material respects, with U.S. generally accepted Government auditing standards.
 
Recommendations
FAA concurs with KPMG’s five recommendations.

Recommendations

Open

Closed

Closed on 02.13.2020
No. 1 to FAA

KPMG recommends that FAA management develop sufficient procedures and controls to address the identified GITC control deficiencies.

Closed on 02.06.2020
No. 2 to FAA

KPMG recommends that FAA management monitor progress to ensure that the GITC procedures and controls are implemented and operating effectively.

Closed on 03.17.2020
No. 3 to FAA

KPMG recommends that FAA management design and document policies, procedures, and controls related to the review of inventory shop orders that include standardized reports, an appropriate precision threshold for required analysis or follow-up, and evidence of review.

Closed on 03.17.2020
No. 4 to FAA

KPMG recommends that FAA management design and implement policies and procedures to conduct a held for repair unit cost calculation review, including approvals of adjustments due to unique circumstances.

Closed on 02.25.2020
No. 5 to FAA

KPMG recommends that FAA management revise its existing policy of expensing all projects initiated via RE&D funding, to include projects that have progressed beyond the preliminary design stage, and design and implement controls at the appropriate level of precision to determine whether projects should be expensed or capitalized, in accordance with the applicable accounting standards.