[Federal Register Volume 64, Number 158 (Tuesday, August 17, 1999)]
[Notices]
[Pages 44777-44778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21276]


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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration


Passenger Facility Charge Audit Guide for Air Carriers--
Procedures for Examining Air Carrier Passenger Facility Charge 
Collection, Remittance, and Reporting Practices

AGENCY: Federal Aviation Administration, Department of Transportation.

ACTION: Notice of availability; Request for comments.

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SUMMARY: The Federal Aviation Administration (FAA) is issuing interim 
guidance for conducting annual audits of air carrier Passenger Facility 
Charge (PFC) collection, remittance, and reporting practices. An air 
carrier collecting PFC's from at least 50,000 passengers annually is 
required to provide for an annual audit of its PFC accounts by an 
accredited independent public accountant. An auditor engaged to audit 
the air carrier's PFC accounts is required to report ``on the fairness 
and reasonableness of the carrier's procedures for collecting, holding, 
and dispersing PFC revenues.'' In addition, an auditor is required to 
report whether the quarterly reports of PFC accounts that the air 
carriers must provide to airports ``fairly represent the net 
transactions in the PFC account.''
    The interim guidance is issued for a one-year review and comment 
period. It is intended that this interim guidance be used for air 
carrier PFC audits will final guidance is issued, which will occur 
after the evaluation and disposition of comments from the review 
period. Use of the interim and final guidance is voluntary, although 
the FAA will have greater confidence in audits conducted in accordance 
with the guide.
    Interested parties may access the Passenger Facility Charge Audit 
Guide for Air Carriers through the Internet at http://www.faa.gov/arp/
audit.htm. Alternatively, the guide may be obtained by contacting the 
individual listed below under the heading FOR FURTHER INFORMATION 
CONTACT.

DATES: Interim guidance effective August 17, 1999; Comments must be 
submitted must be submitted on or before August 16, 2000.

ADDRESSES: Comments should be mailed, in triplicate, to Federal 
Aviation Administration, Airports Financial Assistance Division, 
Attention: Passenger Facility Charge Branch (APP-530), 800 Independence 
Avenue, S.W., Room 619, Washington, DC 20591.

FOR FURTHER INFORMATION CONTACT: Joseph Hebert, Program Analyst, 
Passenger Facility Charge Branch, Airports Financial Assistance 
Division (APP-530), Federal Aviation Administration, 800 Independence 
Avenue, S.W., Washington, DC 20591, (202) 267-3845.

SUPPLEMENTARY INFORMATION: Title 49, USC, Section 40117, authorizes the 
Secretary of Transportation (further delegated to the FAA 
Administrator) to approve the local imposition of a PFC of $1, $2, or 
$3 per enplaned passenger for use on certain airport projects. On May 
29, 1991, the FAA issued 14 CFR Part 158 outlining policies and 
procedures for the PFC program. Under Part 158, public agencies 
controlling commercial service airports can apply to the FAA for 
authority to impose a PFC for use on eligible projects. The proceeds 
from such PFC's are to be used to finance approval, eligible airport-
related projects.
    Once a public agency's application for the imposition of a PFC is 
approved by the FAA, it must notify air carriers and foreign air 
carriers required to collect PFC's at its airport(s) of the approval. 
Once notified, an air carrier is required to collect PFC's on tickets 
it issues showing an enplacnement at that airport (with certain 
exceptions). The air carrier is also required to notify its agents, 
including other issuing carriers, of the collection requirements. Air 
carriers or their agents collect PFC's from passengers on behalf of the 
public agency at the time of air travel ticket (or its equivalent) 
issuance. Air carriers are responsible for all PFC funds from the time 
of collection to remittance to the public agency and must provide 
quarterly reports to the public agency showing the total amounts of PFC 
revenue collected and refunded, as well as any amount withheld by the 
air carrier as collection compensation in accordance with section 
158.53 of Part 158. For the purposes of an audit under section 158.69, 
collection is defined as the point when agents or other intermediaries 
remit PFC revenue to the carrier.
    An air carrier collecting PFC's from at least 50,000 passengers 
annually is required to provide for an annual audit of its PFC accounts 
by an accredited independent public accountant. The audit shall be made 
available to the public agency, upon request. Although not specifically 
required by the regulation, the audit should also be submitted to the 
FAA, upon request. Auditors engaged to audit the air carrier's PFC 
accounts are required to report `` on the fairness and reasonableness 
of the carrier's procedures for collecting, holding, and dispersing PFC 
revenues.'' In addition, auditors are required to report whether the 
quarterly reports of PFC accounts that the air carriers must provide to 
airports ``fairly represent the net transactions in the PFC account'' 
(section 158.69(b)(1) of Part 158). The FAA expects these audits to be 
filed in a timely manner and should normally coincide with the 
carrier's fiscal year and annual corporate audit cycle.
    To facilitate the conduct of audits that meet the requirements of 
the statute and regulation, the FAA has prepared the Passenger Facility 
Charge Audit Guide for Air Carriers. The procedures contained in the 
guide for testing and reporting on PFC's collected, withheld, refunded/
exchanged, and remitted during the year are intended to assist the 
auditor in accomplishing the audit and internal control structure 
attestation. This guide is not intended to supplant the auditor's 
judgment of procedures to be performed. The auditor should use 
professional judgment to tailor the procedures so that the audit 
objectives are achieved. However, the auditor must address all 
applicable internal control requirements.
    The interim guidance describes the collection, remittance, and 
reporting requirements of 14 Code of Federal Regulations (CFR) Part 158 
(the implementing regulation for Title 49, United States Code (USC), 
Section 40117, that established PFC authority) in a requirements-
objective-procedure format. This format is similar to that used in the 
FAA Airport Improvement program supplement to OMB Circular A-133 and 
should appear familiar to auditors.
    The guide also relies on the testing of nonstatistical samples of 
lifted tickets or equivalent records as an agreed-upon procedure for 
providing an airport-level assessment of air carrier compliance with 
part 158 collection and remittance requirements. An air carrier 
utilizing these procedures should provide copies of the agreed-upon 
procedures to requesting public agencies. The carrier should also 
provide a copy of the reports to the FAA, if requested.
    The use of this guide by auditors on behalf of the air carriers 
will provide the FAA and airports collecting PFC's with

[[Page 44778]]

an acceptable level of assurance that the air carrier has followed 
regulatory procedures. Although the guide is not intended to define the 
sole method of complying with the audit requirements of section 158.69 
of Part 158, the FAA has determined that the use of the procedures in 
this audit guide by the auditors for an air carrier will provide 
sufficient assurance that the air carrier has met the requirements of 
Part 158 such that the FAA would not normally require additional 
reports, undertake an audit of the carrier, or request Department of 
Transportation, Office of the Inspector General (DOT OIG), intervention 
on the FAA's behalf. The FAA would not normally initiate further 
monitoring efforts unless an airport or other source subsequently 
substantiates a significant violation of the regulation.
    The FAA will not have the same level of confidence with an air 
carrier whose auditors have not used the procedures outlined in this 
guide. Accordingly, alleged collection and remittance discrepancies 
raised by airports through their monitoring of local PFC revenue 
against air carriers whose auditors have not used this guidance are 
more likely to trigger additional FAA monitoring activities, including 
requiring additional reports, the undertaking of an audit, or a request 
for DOT OIG intervention. This guidance shall not, however, foreclose 
other FAA options for enforcing correct collection and remittance 
procedures and responding to allegations of improper collection and 
remittance practices. The FAA expects air carriers to attain a 
reasonable level of accuracy with regard to PFC remittances.

    Issued in Washington, DC on August 10, 1999.
Catherine M. Lang,
Acting Director, Office of Airport Planning and Programming.
[FR Doc. 99-21276 Filed 8-16-99; 8:45 am]
BILLING CODE 4910-13-M