Financial Management
Audit of the Centennial of Flight Commission for Fiscal Year 2003 and though May 19, 2004 Gao ID: GAO-04-599R June 18, 2004The 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, 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 financial transactions for fiscal year 2003 and through May 19, 2004, with cumulative information since the Commission's inception. We previously reported the results of our audits on Commission financial transactions for fiscal years 1999 and 2000, 2001, and 2002. This will be our final audit of the Commission because, in accordance with Public Law 105-389, the Commission must issue its final report to the President and the Congress no later than June 30, 2004, after which it has 60 days to terminate its operations. The Commission issued its final report on April 20, 2004, and terminated its operations by June 1, 2004.
We found that the Commission's 117 recorded obligations and expenditures during fiscal year 2003 and through May 19, 2004, were substantially supported by documentation that was approved by management. The Commission also recorded the receipt of payments under several licensing agreements for use of the logo of the Centennial of Flight Commission. The Commission recorded no other receipts for user fees, cash donations, or in-kind donations for fiscal year 2003 and through May 19, 2004. Additional financial transactions may occur after May 19, 2004, to fully close out Commission activities. The Commission also corrected three minor findings in its fiscal year 2002 records that we previously reported.
GAO-04-599R, Financial Management: Audit of the Centennial of Flight Commission for Fiscal Year 2003 and though May 19, 2004
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June 18, 2004:
The Honorable John McCain:
Chairman:
The Honorable Ernest F. Hollings:
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 Fiscal Year 2003 and through May 19, 2004:
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, 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 financial transactions for fiscal year 2003 and through
May 19, 2004, with cumulative information since the Commission's
inception. We previously reported the results of our audits on
Commission financial transactions for fiscal years 1999 and
2000,[Footnote 1] 2001,[Footnote 2] and 2002.3 This will be our final
audit of the Commission because, in accordance with Public Law 105-389,
the Commission must issue its final report to the President and the
Congress no later than June 30, 2004, after which it has 60 days to
terminate its operations. The Commission issued its final report on
April 20, 2004, and terminated its operations by June 1, 2004.
The Centennial of Flight Commemoration Act created the Commission and
authorized appropriations to the Commission in specific
amounts[Footnote 3] for fiscal years 1999 through 2004 (Public Law No.
105-389, 112 Stat. 3486, 3494). For fiscal years 1999 through 2001, the
Congress provided in the annual appropriation for the Federal Aviation
Administration (FAA) operations that either a specific amount or a
minimum specified amount should be for the Commission. For fiscal years
2002 through 2004, FAA did not specifically receive an appropriation
for the Commission. However, FAA allotted to the Commission $900,000 in
fiscal year 2002, $900,000 in fiscal year 2003, and $400,000 in fiscal
year 2004 from its operations account, which was available to fund the
Commission.
Results in Brief:
We found that the Commission's 117 recorded obligations and
expenditures during fiscal year 2003 and through May 19, 2004, were
substantially supported by documentation that was approved by
management. The Commission also recorded the receipt of payments under
several licensing agreements for use of the logo of the Centennial of
Flight Commission. The Commission recorded no other receipts for user
fees, cash donations, or in-kind donations for fiscal year 2003 and
through May 19, 2004. Additional financial transactions may occur after
May 19, 2004, to fully close out Commission activities. The Commission
also corrected three minor findings in its fiscal year 2002 records
that we previously reported.
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.
For fiscal years 2003 and 2004, FAA made funds available to the
Commission by allotment. Only the administrators of the National
Aeronautics and Space Administration (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 to the Commission for fiscal
years 2003 and 2004. The Commission recognizes expenditures when paid
and revenue when received.
Scope and Methodology:
We examined the Commission's 117 financial transactions (obligations,
expenditures, and receipts) recorded during fiscal year 2003 and
through May 19, 2004, 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, invoices, credit card receipts,
travel vouchers, and copies of checks. FAA maintains all contracts and
supporting documentation for the Commission's transactions. FAA and
NASA processed all of the Commission's 117 obligation, expenditure, and
receipt transactions recorded during fiscal year 2003 and through May
19, 2004.
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., from March 2 through May 19,
2004, 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.
Fiscal Year 2002 Commission Records Were Corrected:
We previously reported[Footnote 4] three minor findings in fiscal year
2002 Commission records that the Commission subsequently corrected.
First, Commission records contained a minor error of $937 where NASA
underrecorded Commission travel expenses that NASA subsequently
corrected. Second, we identified an internal control weakness over
licensing agreements where the Commission did not monitor the timely
receipt of fees in accordance with the agreements. The Commission
subsequently developed a spreadsheet to track royalty payments.
Finally, due to a lack of monitoring, we also discovered as of our May
30, 2003, review, that the Commission had not received any royalty
payments for the quarters ended June 30, 2002, and September 30, 2002,
from one licensee. The Commission subsequently contacted the licensee
and on June 2, 2003, received a check for $2,000 in royalty payments
for the four quarters ended March 31, 2003.
Fiscal Year 2003 and 2004 Audit of Commission Financial Transactions:
We found that the Commission's 117 recorded obligations and
expenditures during fiscal year 2003 and through May 19, 2004, were
substantially supported by documentation that was approved by
management. In addition, the Commission recorded the receipt of several
royalty payments under licensing agreements for the use of the logo of
the Centennial of Flight Commission. The Commission recorded no other
receipts for user fees, cash donations, or in-kind donations for fiscal
year 2003 and through May 19, 2004.
From October 1, 2002, through May 19, 2004, the Commission expended
$88,810 to pay fiscal year 2001 obligations, $417,398 to pay fiscal
year 2002 obligations, $506,149 to pay fiscal year 2003 obligations,
and $7,370 to pay fiscal year 2004 obligations. For fiscal year 2003,
the Commission received from FAA's operations appropriation an
allotment of $900,000, less a rescission of $5,850, and received $8,100
in fees under a licensing agreement for the Commission's logo for total
funding of $902,250. For fiscal year 2004, the Commission received from
FAA's operations appropriation an allotment of $400,000 and received
$1,578 in fees under a licensing agreement for the Commission's logo
for total funding of $401,578. The Commission's obligations for fiscal
year 2003 totaled $880,130 and consisted of:
$350,000 for services related to the Commission's Outreach Plan,
$230,000 for NASA Web site maintenance,
$169,349 for Web site enhancement,
$124,780 for NASA interagency reimbursable services, and:
$6,001 for travel and miscellaneous expenses.
The Commission's obligations for fiscal year 2004 totaled $140,591 and
consisted of:
$82,544 for NASA Web site maintenance,
$50,677 for NASA interagency reimbursable services, and:
$7,370 for travel and miscellaneous expenses.
The schedule in table 1 presents the Commission's appropriations,
receipts, obligations, and expenditures (cash outlays) for fiscal years
1999 through 2004 as of May 19, 2004.
Table 1: Centennial of Flight Commission Schedule of Appropriations,
Receipts, Obligations, and Expenditures for Fiscal Years 1999 through
2004 as of May 19, 2004:
[See PDF for image]
Source: Centennial of Flight Commission.
Note: Accounting data were received from the Commission but maintained
by FAA on the Commission's behalf.
[A] Less rescission of $1,650 in fiscal year 2001 and $5,850 in fiscal
year 2003.
[B] Licensing fee for Commission logo.
[C] These amounts are not available for new obligations but may be used
to adjust existing obligations for up to 5 years when the account is
closed and any remaining balance is canceled.
[End of table]
As noted in table 1 above, between unobligated and unexpended
obligations, there remains $822,529 of unliquidated obligations,
including unbilled NASA web site maintenance and interagency
reimbursable services for fiscal year 2004, that had not yet been
billed. Therefore, additional expenditures, receipts, and
deobligations may occur after May 19, 2004, to fully close out
Commission financial activities.
Agency Comments:
The Executive Director of the Centennial of Flight was provided with a
draft copy of this report and indicated that it was accurate.
Copies of this report are available to interested parties and will also
be accessible on our home page at http://www.gao.gov.
If you or your staffs have any questions, please contact me at (202)
512-6906 or williamsm1@gao.gov or Roger R. Stoltz, Assistant Director,
at (202) 512-9408 or stoltzr@gao.gov. A key contributor to this report
was Deborah A. Silk.
Signed by:
McCoy Williams:
Director:
Financial Management and Assurance:
(195033):
FOOTNOTES
[1] U.S. General Accounting Office, Financial Management: Audit of the
Centennial of Flight Commission, GAO-02-43R (Washington, D.C.: Oct. 22,
2001).
[2] U.S. General Accounting Office, Financial Management: Audit of the
Centennial of Flight Commission for FY 2001, GAO-02-730R (Washington,
D.C.: June 21, 2002).
[3] U.S. General Accounting Office, Financial Management: Audit of the
Centennial of Flight Commission for FY 2002, GAO-03-888R (Washington,
D.C.: July 31, 2003).
[3] The Centennial of Flight Commemoration Act authorized $250,000 for
fiscal year 1999; $600,000 for fiscal year 2000; $750,000 for fiscal
year 2001; $900,000 for both fiscal years 2002 and 2003; and $600,000
for fiscal year 2004.
[4] GAO-03-888R.
