Financial Management: Audit of the Centennial of Flight
Commission for Fiscal Year 2003 and though May 19, 2004
(18-JUN-04, GAO-04-599R).
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, 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.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-599R
ACCNO: A10484
TITLE: Financial Management: Audit of the Centennial of Flight
Commission for Fiscal Year 2003 and though May 19, 2004
DATE: 06/18/2004
SUBJECT: Audit reports
Financial statement audits
Aviation
Financial records
Internal controls
Reporting requirements
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GAO-04-599R
United States General Accounting Office Washington, DC 20548
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 2000,1 2001,2 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
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).
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 amounts4 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 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) 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.
Page 3 GAO-04-599R Centennial of Flight Commission Audit
Fiscal Year 2002 Commission Records Were Corrected
We previously reported6 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
o $350,000 for services related to the Commission's Outreach Plan,
o $230,000 for NASA Web site maintenance,
o $169,349 for Web site enhancement,
o $124,780 for NASA interagency reimbursable services, and
o $6,001 for travel and miscellaneous expenses.
The Commission's obligations for fiscal year 2004 totaled $140,591 and
consisted of
o $82,544 for NASA Web site maintenance,
o $50,677 for NASA interagency reimbursable services, and
o $7,370 for travel and miscellaneous expenses.
5 GAO-03-888R.
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
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.
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.
Page 5 GAO-04-599R Centennial of Flight Commission Audit
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.
McCoy Williams
Director
Financial Management and Assurance
(195033)
*** End of document. ***