Financial Management
Audit of the Centennial of Flight Commission for FY 2001 Gao ID: GAO-02-730R June 21, 2002The Centennial of Flight Commission was created in November to commemorate the 100th anniversary of the Wright brothers' flight at Kitty Hawk, North Carolina, in 1903. The Commission is to provide recommendations and advice to the President, Congress, and federal agencies on the most effective ways to encourage and promote national and international participation and sponsorships in commemoration of the centennial of powered flight. All 156 of the Commission's recorded obligations and expenditures during fiscal year 2001 were supported by documentation that was approved by management. The Commission recorded no donations, user fees, or in-kind donations for fiscal year 2001. The Commission's financial records for fiscal year 2001 contained some minor errors that went unnoticed due to a lack of complete records being maintained by the Commission, as well as the Federal Aviation Administration and the National Aeronautics and Space Administration which provide administrative support to the Commission.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-02-730R, Financial Management: Audit of the Centennial of Flight Commission for FY 2001
This is the accessible text file for GAO report number GAO-02-730R
entitled 'Financial Management: Audit of the Centennial of Flight
Commission for FY 2001' which was released on June 21, 2002.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
GAO-02-730R:
United States General Accounting Office
Washington, DC 20548:
June 21, 2002:
The Honorable Ernest F. Hollings:
Chairman:
The Honorable John McCain:
Ranking Minority Member:
Committee on Commerce, Science, and Transportation:
United States Senate:
The Honorable Don Young:
Chairman:
The Honorable James L. Oberstar:
Ranking Democratic Member:
Committee on Transportation and Infrastructure:
House of Representatives:
Subject: Financial Management: Audit of the Centennial of Flight
Commission for FY 2001:
The Centennial of Flight Commission (Commission) was created on
November 13, 1998, by the Centennial of Flight Commemoration Act
(Public Law 105-389, as amended by Public Law 106-68). The purpose of
the Commission is to commemorate the 100th anniversary of the Wright
brothers‘ flight at Kitty Hawk, North Carolina that occurred on
December 17, 1903. The Commission is to provide recommendations and
advice to the President, the Congress, and federal agencies on the most
effective ways to encourage and promote national and international
participation and sponsorships in commemoration of the centennial of
powered flight. We are required by the act to audit the financial
transactions of the Commission. This report presents the results of our
audit of the Commission‘s fiscal year 2001 financial transactions, with
cumulative information since the Commission‘s inception. We previously
reported the results of our audit on Commission financial transactions
for fiscal years 1999 and 2000.[Footnote 1]
Results in Brief:
We found that all 156 of the Commission‘s recorded obligations and
expenditures during fiscal year 2001 were supported by documentation
that was approved by management. The Commission recorded no donations,
user fees, or in-kind donations for fiscal year 2001.
We also found that the Commission‘s financial records for fiscal year
2001 contained some minor errors that went unnoticed due to a lack of
complete records being maintained by the Commission, as well as the
Federal Aviation Administration (FAA) and the National Aeronautics and
Space Administration (NASA) who provide administrative support to the
Commission. We are making recommendations to the Commission to correct
these errors and to maintain a complete record or log of Commission
financial transactions. The Commission agreed with our recommendations.
Background:
The Commission was created to provide recommendations and advice to the
President, the Congress, and federal agencies on the most effective
ways to:
(1) encourage and promote national and international participation and
sponsorship by companies, governments, individuals, and organizations
to commemorate the centennial of powered flight;
(2) plan and develop, in coordination with the First Flight Centennial
Commission, the First Flight Centennial Foundation of North Carolina,
and the 2003 Committee of Ohio, programs and activities that are
appropriate to commemorate the 100th anniversary of powered flight;
(3) maintain, publish, and distribute a calendar or register of
national and international programs and projects concerning the dates,
events, and places of historical and commemorative significance
regarding aviation history in general and the centennial of powered
flight in particular;
(4) provide national coordination for celebrations to take place
throughout the United States during the centennial year;
(5) assist in conducting educational, civic, and commemorative
activities relating to the centennial of powered flight throughout the
United States;
(6) encourage the publication of popular and scholarly works on the
history of aviation or the centennial of powered flight; and;
(7) advise the United States with regard to gaining support for and
facilitating international recognition of the importance of aviation
history and attend international meetings regarding such activities.
The Congress provided the Commission with specific budgetary authority
as part of the appropriation for FAA operations for fiscal year 2001
and FAA made the funds available to the Commission by allotment. Only
the administrators of NASA or FAA, or employees designated to act on
their behalf, are authorized by the act to procure supplies, services,
and property, and to make or enter into leases and other legal
agreements on behalf of the Commission. FAA and NASA give the Commission
personnel support and other services without charge. The Commission
reimburses NASA for office space, printing, supplies, and equipment.
NASA and FAA provide accounting services to the Commission, and FAA
provided all procurement services on behalf of the Commission for
fiscal year 2001. The Commission recognizes expenditures when paid.
Scope and Methodology:
We examined all of the Commission‘s financial transactions (obligations
and expenditures) recorded during fiscal year 2001 for proper
supporting documentation and management approval. Because we limited
our examination to those transactions recorded for the Commission by
FAA and NASA, the risk exists that there could be unrecorded
transactions not included in our examination. We traced the recorded
transactions to supporting documentation, including contracts, purchase
orders, invoices, credit card statements, and travel vouchers. The FAA
maintains all contracts and supporting documentation for the
Commission‘s transactions. FAA and NASA processed all of the
Commission‘s 156 obligation and expenditure transactions recorded
during fiscal year 2001.
We also obtained an understanding of the accounting procedures and
related internal controls of the Commission, financial accounting
services provided by the FAA operations office, and other services
provided by NASA. We also performed procedures to determine whether
Commission management had approved the transactions.
We performed our work in Washington, D.C., in March and April 2002 in
accordance with U.S. generally accepted government auditing standards
for performance audits. We requested comments on a draft of this report
from the Executive Director of the Centennial of Flight Commission and
received a written response from Commission which incorporated views
from FAA and NASA. Those comments are summarized in a later section and
are included as an enclosure to this report.
Audit of Commission Financial Transactions:
We found that all 156 of the Commission‘s recorded obligations and
expenditures during fiscal year 2001 were supported by documentation
that was approved by management. The Commission recorded no donations,
user fees, or in-kind donations for fiscal year 2001.
The schedule in table 1 below presents the Commission‘s appropriations,
obligations, unobligated amounts, and expenditures for cash outlays for
fiscal years 1999 through 2001.
Table 1: Centennial of Flight Commission Schedule of Appropriations,
Obligations, and Expenditures for Fiscal Years 1999 through 2001 as of
September 30, 2001:
Appropriations:
Fiscal year 1999: $250,000;
Fiscal year 2000: $600,000;
Fiscal year 2001: $748,350;
Total: $1,598,350.
Appropriations: Less: obligations (contractual):
Fiscal year 1999: $249,658;
Fiscal year 2000: $599,929;
Fiscal year 2001: $744,828;
Total: $1,594,415.
Appropriations: Underobligated (overobligated):
Fiscal year 1999: $342;
Fiscal year 2000: $71;
Fiscal year 2001: $3,522;
Total: $3,935.
Expenditures as of September 30, 2001 (cash outlays):
Fiscal year 1999: $249,658;
Fiscal year 2000: $508,444;
Fiscal year 2001: $19,552;
Total: $777,654.
Unexpended obligations:
Fiscal year 1999: $0;
Fiscal year 2000: $91,485;
Fiscal year 2001: $725,276;
Total: $816,761.
Source: Centennial of Flight Commission accounting data received from
the Commission but maintained by the FAA on behalf of the Commission,
as adjusted for errors detected during our audit.
[End of table]
During fiscal year 2001 the Commission corrected an overobligation of
$29,729 that we previously reported for fiscal year 2000, which is
discussed later in this report.
The Commission also expended $501,961 to pay fiscal year 2000
obligations. In fiscal year 2001, the Commission received an allotment
of $750,000 from the FAA operations appropriation. This allotment was
subject to a .22 percent rescission for the fiscal year, reducing the
Commission‘s allotment to $748,350. The Commission‘s obligations for
fiscal year 2001 totaled $744,828, and consisted of:
* $300,000 for services related to the Commission‘s Outreach Plan,
* $122,387 for NASA interagency reimbursable services,
* $105,500 for online presentations of the Wright brothers‘ wind
tunnel, 1899 and 1901 gliders, and 1903 flyer,
* $60,000 for a Centennial of Flight website enhancement,
* $52,000 for a modification of a fiscal year 2000 contract for website
maintenance,
* $31,800 for a modification of a fiscal year 2000 contract to develop
timeline and essay content for the website,
* $20,600 for contractor services by the Library of Congress (LOC) to
complete a bibliography of the Wright brothers and convert their flight
logs to electronic format,
* $15,450 for LOC update of bibliographical records of the Wright
brothers,
* $10,450 for videos of 1899, 1900, and 1901 glider models,
* $10,300 for projects from the Wright Brothers Aeroplane Company,
* $6,000 for materials to construct a half-size glider,
* $5,341 for travel and miscellaneous expenses, and;
* $5,000 for a virtual reality flight simulation website.
As of September 30, 2001, only $19,552 had been expended against the
above obligations.
Weakness in Commission Internal Control:
As we previously reported,[Footnote 1] the Commission‘s obligations
exceeded its appropriation by $29,729 in fiscal year 2000, which caused
the Commission to be in violation of the Antideficiency Act.[Footnote
2] In response to the recommendations in our previous report, the FAA
subsequently reported the violation of the Antideficiency Act as
required by Office of Management and Budget Circular No. A-34,
Instructions on Budget Execution, and corrected the overobligation by
deobligating $29,800 of Commission fiscal year 2000 funds and
obligating $29,800 of Commission fiscal year 2001 funds. The Commission
and FAA also adjusted their records to properly account for the two
transactions that caused the overobligation.
We found that the Commission‘s financial records for fiscal year 2001
contained some minor errors. Specifically, the Commission‘s actual
travel expenditures were understated by a net amount of $957 because of
two transactions where the amount paid by NASA was not recorded and
several transactions where the amount paid by NASA was incorrectly
recorded. We also found that a NASA interagency agreement totaling
$122,387 was overpaid by $700. This amount should be refunded to FAA and
deposited to the credit of the appropriation initially obligated by the
agreement. Commission officials had no knowledge of these errors
because they were not maintaining a complete set of records and did not
periodically reconcile Commission transactions with amounts recorded by
FAA and NASA.
We believe that the above errors were caused by a lack of complete
records being maintained by the Commission, NASA, and FAA, coupled with
the lack of effective reconciliation between the three entities to
verify that Commission accounts were complete and accurate. In
addition, the Commission did not fully implement our prior audit
recommendation to strengthen internal control by reconciling its record
of approved obligations and expenditures monthly with FAA accounting
records maintained on behalf of the Commission. Due to the small number
of transactions, we agreed with the Commission and FAA that periodic
reconciliation instead of monthly would be sufficient. However, wherein
some transactions were not posted properly in fiscal year 2001, we are
reemphasizing our prior year recommendation for the need to reconcile
the Commission‘s record of approved obligations and expenditures with
transactions recorded on behalf of the Commission by both FAA and NASA.
Recommendations:
In addition to reemphasizing our prior year recommendation, we
recommend that the Executive Director of the Commission:
* maintain a complete record or log of Commission financial
transactions, including all appropriations, donations, user fees, in-
kind donations, obligations, and expenditures;
* correctly record travel expenses that resulted in a net
understatement $957; and;
* direct FAA to obtain a refund of $700 from NASA for the overpayment
on the interagency agreement.
Agency Comments:
The Commission‘s Executive Director agreed with our recommendations and
stated that the Commission will immediately implement the first
recommendation and has already made corrections to implement the last
two recommendations. The Commission‘s response, which incorporated FAA
and NASA views, is presented as an enclosure to this report.
We are sending copies of this report to the Chairman of the Centennial
of Flight Commission and other interested parties. This report will
also be available on our home page at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions, please contact me at (202)
512-9406, or by e-mail at franzelj@gao.gov or Roger R. Stoltz,
Assistant Director, at (202) 512-9408, or by e-mail at stoltzr@gao.gov.
A key contributor to this report was Robert P. Preshlock, Jr.
Signed by:
Jeanette M. Franzel:
Acting Director:
Financial Management and Assurance:
Enclosure:
[End of section]
Enclosure: Comments from the Centennial of Flight Commission:
Centennial of Flight Commission:
1903-2002:
300 E Street, SW:
Washington, DC 20546-0001:
202-358-1903:
[hyperlink, http://www-centennialoffight.gov]:
June 14, 2002:
Ms. Jeanette Franzel:
Acting Director:
Financial Management and Assurance:
U.S. General Accounting Office:
Washington, DC 20548:
Dear Ms. Franzel:
We appreciate the opportunity to comment on the draft report containing
the results of your review on the financial transactions of the U.S.
Centennial of Flight Commission (Commission) for fiscal year 2001.
Copies of the draft report were provided to the Federal Aviation
Administration (FAA) and the National Aeronautics and Space
Administration (NASA), and their comments have been incorporated into
this response. The draft report makes three recommendations.
The first recommendation states:
Maintain a complete record or log of Commission financial transactions,
including all appropriations, donations, user fees, in-kind donations,
obligations and expenditures.
We concur with this recommendation. As a result of the prior year
audit, the Commission and the FAA did strengthen internal control by
reconciling our record of approved obligations and expenditures in
relation to our appropriations authority with FAA accounting records
maintained on behalf of the Commission. This was done on a periodic
basis. As a result of the 2001 audit, we will immediately initiate the
periodic reconciliation of the costs recorded on behalf of the
Commission by both NASA and the FAA.
The second recommendation states:
Correctly record travel expenses that resulted in a net understatement
(of) $957.
We concur with this recommendation. The travel expenses were corrected
on June 6, 2002.
The third recommendation states:
Direct FAA to obtain a refund of $700 from NASA for the overpayment on
the interagency agreement.
We concur with this recommendation. The $700 was withdrawn from NASA by
the FAA on May 29, 2002.
Sincerely,
Signed by:
Sharon C. Foster:
Executive Director:
Enclosure:
[End of section]
Footnotes:
[1] Financial Management: Audit of the Centennial of Flight Commission
(GAO-02-43R, Oct. 22, 2001).
[2] The Antideficiency Act (31 U.S.C. 1341(a)) provides that government
officials may not make or authorize an obligation or expenditure in an
amount in excess of, or in advance of, an amount available in an
appropriation.
[End of section]
GAO‘s Mission:
The General Accounting Office, the investigative arm of Congress,
exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO‘s commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO‘s Web site [hyperlink,
http://www.gao.gov] contains abstracts and full text files of current
reports and testimony and an expanding archive of older products. The
Web site features a search engine to help you locate documents using
key words and phrases. You can print these documents in their entirety,
including charts and other graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as ’Today‘s Reports,“ on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
[hyperlink, http://www.gao.gov] and select ’Subscribe to daily E-mail
alert for newly released products“ under the GAO Reports heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. General Accounting Office:
441 G Street NW, Room LM:
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov:
(202) 512-4800:
U.S. General Accounting Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
