Friday, April 11, 2014

Federal audit faults Federal Aviation Administration for inadequate oversight of Los Angeles International Airport (KLAX) revenue use

Significant holes in record keeping at Los Angeles International Airport and inadequate oversight by the Federal Aviation Administration has made it difficult to ensure that millions of dollars in airport revenue are being spent properly for law enforcement, a new government audit has found.

The review by the U.S. Department of Transportation's inspector general revealed that Los Angeles World Airports, the operator of LAX, has paid at least $7.9 million in the last few years to the Los Angeles Police Department without documentation showing that the services provided were airport-related.

In addition, auditors found that airport officials have yet to complete a record-keeping system to prevent airport funds from being improperly paid to the LAPD, though they told the FAA two years ago they would do so. The LAPD shares law enforcement responsibilities at LAX with the Los Angeles Airport Police Department, a separate agency.

Under federal law, airport revenue can only be used to pay for services directly related to airport operations, public safety and capital improvements. If the city’s airport department pays the LAPD for anything else, it would be considered an illegal diversion and the airport would have to be fully reimbursed.

The audit, obtained by The Times this week, stems from complaints to members of Congress by the Los Angeles Airport Peace Officers Assn., which claimed that the LAPD was being paid millions of dollars for administrative overhead, officer salaries and police work that had nothing to do with LAX.

Responsible for ensuring that airport revenue is spent properly, the FAA first reviewed the association’s complaint in 2012. Officials found inadequate record keeping and a few billing errors. They also found that LAPD improperly charged the airport $1.7 million for a K-9 unit that responded to calls away from the airport.

Reacting to continuing congressional concerns, the Department of Transportation reviewed the situation and evaluated the performance of the FAA. Its report will be officially released Friday.

Auditors concluded that the FAA failed to identify instances of unsupported and unauthorized expenditures of airport funds. They recommended that the FAA redo its review to determine whether revenue diversion is occurring and to make sure the airport department improves record keeping.

The inspector general also uncovered discrepencies of about $49 million in the annual and internal financial reports prepared by Los Angeles World Airports. One set of records, for example, left out $4.6 million in legal fees, while $7.2 million in parking revenue was missing from a financial report to the FAA.

Finally, the review found that the airport has rented out several of its properties well below market value and that it spent $360,000 in federal airport grants without documenting how the money was used.

Airport officials told the inspector general’s office that the accounting irregularities were due to data processing errors that are now being corrected.

FAA officials declined to comment because the audit has not been released yet. They stated in the report that they agreed with five of the six recommendations and partially concurred with one. The agency provided the Department of Transportation with proposals to solve the problems and a time frame to implement them.