Performance And Accountability Report - Fiscal Year 2013 - Federal Aviation Administration - U.s. Department Of Transportation Page 81
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150 Federal Aviation Administration
Independent Auditors’ Report
Internal Control Over Financial Reporting
EXHIBIT I
SIGNIFICANT DEFICIENCIES
______________________________________________________________________________________
In addition, our testing of the grant accrual as of September 30, 2013 revealed the following errors in key
inputs and assumptions used in the calculation of the estimate:
•
The grant disbursement data used in the calculation of the grant accrual was incomplete, as two
months of data was erroneously excluded from the accrual calculation.
•
The grant accrual calculation erroneously did not include an accrual for costs associated with one
grant that was awarded in August 2013.
The errors above were not detected by management in the review of these accruals at year-end.
Cause/Effect
The errors above related to overflight fee revenue first occurred after personnel at the Enterprise Service
Center implemented a Dataloader tool in June 2013 to post overflight fee revenue transactions to the
general ledger. The Dataloader did not always properly capture overflight fee revenue and, as a result,
posted incorrect transactions to the general ledger. A manual review of the transactions posted by the
Dataloader tool was not consistently performed to ensure the recorded amounts were consistent with the
related source documentation and general ledger inputs.
The conditions above related to the grant accrual occurred because personnel within the Office of Financial
Reporting and Accountability did not perform procedures to validate the completeness and accuracy of key
inputs provided by other organizations within FAA for use in calculating year-end accruals. As a result,
Grants Payable and Expenses were overstated by $80 million as a result of the error related to incomplete
disbursements, and understated by $65 million as a result of the exclusion of one grant from the accrual.
The net impact was an overstatement to Grants Payable and Expenses of $15 million. The draft FY 2013
Performance and Accountability Report provided to us contained errors caused by the conditions described
above.
Failure to perform sufficient review controls over key general ledger inputs and outputs increases the risk
and the likelihood that material differences will not be detected or corrected timely.
Recommendations
We recommend that FAA design and implement policies and procedures 1) to ensure transactions are
recorded properly in the general ledger and 2) to validate the completeness and accuracy of key inputs and
assumptions that are the basis for transactions recorded to the general ledger.
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Federal Aviation Administration
Fiscal Year 2013
Performance and Accountability Report
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