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[4910-13-M]

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Passenger Facility Charge Audit Guide for Public Agencies - Procedures

for Examining Public Agency Passenger Facility Charge Revenue

AGENCY: Federal Aviation Administration, Department of Transportation.

ACTION: Notice of Availability.

SUMMARY: The Federal Aviation Administration (FAA) is issuing guidance for

conducting annual audits of public agency Passenger Facility Charge (PFC)

revenue. Beginning in the year that PFC revenues are first collected by air

carriers on behalf of a public agency, such public agencies approved for PFC

collection are required to provide an annual independent audit of PFC revenue.

Use of the guidance is voluntary and is not the sole means of complying with the

audit requirements. However, 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 Public Agencies through the Internet at http://www.faa.gov/arp/530home.htm.

Alternatively, the guide may be obtained by contacting the individual listed below

under the heading FOR FURTHER INFORMATION CONTACT.

DATES: Guidance effective November 20, 2000.

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 of the United States Code

(U.S.C.), section 40117, authorizes the Secretary of Transportation (further
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delegated to the FAA Administrator) to approve the local imposition of a PFC of

$1, $2, $3, $4, or $4.50 per enplaned passenger for use on certain airport

projects. Legislation effecting PFC charge levels and criteria for approvals,

enacted shortly before the issuance of this notice, provides for the PFC level to

increase to $4 or $4.50. The increased PFC level is contingent on a public

agency demonstrating that it meets certain additional approval criteria. Certain of

these criteria apply only to medium and large hub airports. On May 29, 1991, the

FAA issued 14 Code of Federal Regulations (CFR) Part 158 outlining policies

and procedures for the PFC program. On May 30, 2000, the FAA issued a final

rule to amend Part 158 to allow, among other things, an increase in the PFC

level to $4 or $4.50. The final rule also included additional criteria for the

approval of the higher PFC levels.

Under Part 158, public agencies controlling commercial service airports

can apply to the FAA for authority to impose and/or use a PFC to finance

approved, eligible airport-related projects. Section 158.3 defines a public agency

to be a state or any agency of one or more states; a municipality or other political

subdivision of a state; an authority created by Federal, state, or local law; a taxsupported organization; or an Indian tribe or pueblo that controls a commercial

service airport. A private entity controlling an airport participating in the Pilot

Program for Private Ownership of Airports (49 U.S.C. 47134) may also apply to

impose a PFC.

The FAA must issue a final decision approving or disapproving a PFC

application, in whole or in part, no later than 120 days after the application is

received by the FAA from the public agency (section 158.27(c)(4)). Following the

FAA's full or partial approval of an application to impose a PFC, the public

agency must notify air carriers and foreign air carriers required to collect PFC's at

its airport(s) of the FAA's approval. The charge effective date of the PFC

collection is the first day of a month which is at least 60 days from the date the

public agency notifies the carriers of approval to impose the PFC. Air carriers

collecting PFC's are required by section 158.51 to remit the revenue collected to

the appropriate public agency on a monthly basis. PFC revenue collected by the

carrier shall be remitted to the public agency no later than the last day of the
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calendar month following the month in which the PFC was collected (or if that

date falls on a weekend or holiday, the first business day thereafter).

Beginning in the year that PFC revenues are first collected by air carriers

on behalf of a public agency, such public agencies approved for PFC collection

are required by section 158.67(c) to provide for an annual independent audit of

PFC revenue. Auditors engaged to audit PFC programs are required to "express

an opinion of the fairness and reasonableness of the public agency's procedures

for receiving, holding, and using PFC revenue." In addition, auditors must report

whether the quarterly reports filed by the public agencies under section 158.63(a)

"fairly represent the net transactions within the PFC account."

The PFC audit can be performed separately and specifically for the PFC

program or as part of an audit conducted under the Single Audit Act (as

amended). This latter option allows the examination of PFC revenues during the

performance of a Single Audit Act audit, although PFC revenues are not

considered to be Federal financial assistance as defined by OMB Circular A-133

and the requirements of the A-133 Compliance Supplement do not apply to the

PFC program. Due to inconsistencies between the PFC program and the

requirements of A-133, PFC revenues should be reported on a separate

schedule and findings and questioned costs relating to PFC's should be called

out separately. Only in the case where a project is jointly funded with Federal

funds and PFC revenues would the requirements of A-133 also apply to an audit

of PFC revenues.

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 Public Agencies." The procedures contained in the guide for testing

and reporting on PFC's received, held, and used during the year are intended to

assist the auditor in meeting audit requirements. 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

compliance requirements. 
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The guidance describes the receipt, holding, use, and reporting

requirements of Part 158. The suggested 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 use of this guide by auditors on behalf of

the public agencies will provide the FAA, air carriers, and the public with an

acceptable level of assurance that the public agency has followed regulatory

procedures or, through the audit process, noted weaknesses in its policies and

procedures, and has or will take corrective action to improve its process.

Although the guide is not intended to define the sole method of complying

with the audit requirements of section 158.67(c), the FAA has determined that

the use of the procedures in this audit guide by the auditors for a public agency

will provide sufficient assurance that the public agency has met the requirements

of Part 158 such that the FAA would not normally require additional reports,

undertake an audit of the public agency, or request Department of

Transportation, Office of the Inspector General (DOT OIG), intervention on the

FAA’s behalf. This guidance shall not, however, foreclose other FAA options for

responding to and enforcing correct holding and use procedures. The FAA

expects public agencies to attain a reasonable level of accuracy with regard to

PFC remittances.

Issued in Washington, DC on October 11, 2000 .

Catherine M. Lang,

Director, Office of Airport Planning and Programming