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entitled 'Financial Management: Audit of the Centennial of Flight 
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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 
brothersí 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 Commissionís fiscal year 2001 financial transactions, with 
cumulative information since the Commissionís 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 Commissionís 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 Commissionís 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 Commissionís 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 
Commissionís transactions. FAA and NASA processed all of the 
Commissionís 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 Commissionís 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 Commissionís 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 
Commissionís allotment to $748,350. The Commissionís obligations for 
fiscal year 2001 totaled $744,828, and consisted of: 

* $300,000 for services related to the Commissionís Outreach Plan, 

* $122,387 for NASA interagency reimbursable services, 

* $105,500 for online presentations of the Wright brothersí 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 Commissionís 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 Commissionís financial records for fiscal year 2001 
contained some minor errors. Specifically, the Commissionís 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 Commissionís 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 Commissionís 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 Commissionís 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] 

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