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Quality Control Review of the Management Letter for FAA’s Audited Consolidated Financial Statements for Fiscal Years 2019 and 2018

Required by the Chief Financial Officer Act of 1990
Project ID: 
QC2020024
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 2019 and 2018. In addition to its audit report on FAA’s financial statements, KPMG issued a management letter that discusses eight 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 eight recommendations in its management letter. FAA concurred with all eight recommendations.

Recommendations

Open

Closed

Closed on 07.14.2020
No. 1 to FAA

KPMG recommends that FAA management consider adjusting the EC&D liability for any significant changes in factors impacting the EC&D liability that can be reasonably estimated (i.e., inflation) as of and for the year ended September 30, 2019.

Closed on 07.28.2020
No. 2 to FAA

KPMG recommends that FAA management develop an information processing guide to assist in the effective operation of the HQ Journal Entry Control Log Reconciliation to ensure the reconciliation is consistently utilizing complete and accurate information, including all entries posted by usernames with HQ journal entry posting responsibility.

No. 3 to FAA

KPMG recommends that FAA management revise policies and procedures to ensure that the review of grant invoices includes the review and validation of compliance with terms and conditions per the applicable grant agreement.

No. 4 to FAA

KPMG recommends that FAA management enforce the policy that monthly audits are conducted by ESC-EDC personnel, as required by TOPS policy, to ensure that the bi-weekly log reviews are completed as required. In addition, FAA should ensure that the required monthly audits are tracked via checklist and certified by ESC-EDC personnel who conducted the audit. If ESC-EDC personnel determine that the bi-weekly reviews have not been properly completed, the ESC-EDC personnel should follow-up with the DBA to ensure that incomplete reviews are remediated and future bi-weekly log reviews are completed timely, as required by TOPS policy.

No. 5 to FAA

KPMG recommends that FAA management update the purchase request application system's SSP to reflect the design and implementation of the formalized procedures for performance of the periodic user recertification.

No. 6 to FAA

KPMG recommends that FAA management design and implement a process in coordination with Human Resources, to ensure that the contractor and the environmental cleanup tracking application system owner remove terminated users within a defined period of time subsequent to the individuals' termination date.

No. 7 to FAA

KPMG recommends that FAA management implement a change control procedure which includes: change control documents, change control board approval, configuration change testing, and development team approval prior to preceding with implementing changes into production.

Closed on 12.16.2020
$1,006,230,000
No. 8 to FAA

KPGM recommends that FAA management continue to perform its existing monitoring procedures over excise tax revenue allocations by the IRS. In addition, KPMG recommends that FAA management communicate instances where allocations and certifications of excise tax revenue are materially inconsistent with expectations to Department of Transportation leadership and to the Department of Transportation's Office of the Inspector General to facilitate the timely allocation and certification of excise tax revenues by the IRS.