Those Not in the Governing Class Still Call it,
'Fraud' and/or 'Theft.'
Department of Transportation's Inspector General was asked to have
a look at some airport accounting issues, as a service to the
cash-strapped FAA. It turns out that, if this small sample is
representative, the FAA may not really have a budget problem at all
-- it may be looking at criminal conspiracies.
The report notes, "Given the budget constraints now facing FAA,
the results of this report regarding diversions of airport funds
underscore the need for continued and vigilant oversight of airport
They didn't have time or manpower to do a thorough audit, so
they looked at just five large airports: Miami-Dade (FL), Detroit
Metro (MI), San Antonio (TX), Allegheny County (Pittsburgh), and
Cleveland (OH). There are some big "cracks" in the FAA's system,
that apparently allow too much to "fall through."
they found wasn't pretty: "At a sample of five airport sponsors
reviewed, we found approximately $40.9 million in potential revenue
diversions that were not detected by FAA's primary oversight
methods. This amount includes about $39 million that was not
detected by independent auditors during single audit work, and
$1.74 million that was not disclosed by airport sponsors in airport
financial reports. These amounts were not detected because
independent auditors of airport sponsors were not sufficiently
aware of relevant Office of Management and Budget (OMB) guidance on
auditing airport revenue, and airport sponsors were not adhering to
FAA policies on requirements for airport financial reports."
Auditors encouraged but reticent.
of the Inspector General says that, if what's promised is
delivered, things should get better: "Since we completed our field
work, FAA has also taken steps to improve airport financial
reporting processes... In our opinion, the actions taken by FAA and
AICPA should improve FAA's ability to detect and prevent airport
revenue diversions." The OIG warns, "The key to success now lies in
implementation and follow-through on the part of FAA and
"We have brought the issue of the diversion of funds to the
Federal Aviation Administration's attention," said David Barnes, a
spokesman for the inspector general's office. "Now, the FAA has to
conduct an investigation..." Oh, boy.