A day after the European Aviation Safety Agency (EASA) was criticised by UK lawmakers for poor management, its US counterpart, the Federal Aviation Administration has revealed an eight-year accounting issue in an otherwise favourable annual review. The review also highlighted a failure to meet the aviation accident fatality reduction target, largely due to the December 2005 crash of Southwest flight 1248 at Midway airport, Chicago and the August accident at Blue Grass airport in Lexington, Kentucky of Comair flight 5191.
The FAA says it is developing a corrective action plan to deal with the accounting problem, which has been highlighted by its auditor KPMG as part of a wider procedural review.
“Last year, KPMG raised eight issues for us to address this year. We successfully addressed seven of them, but in working the eighth issue, we found many FAA assets going back as far as 1998 had not been expensed or capitalised,” FAA administrator Marion Blakey revealed yesterday during a 'town hall forum' moderated discussion group in Washington, DC to discuss the agency’s strategic flight plan.
She adds: “Unfortunately, we learned the depth of the problem too late for us to produce adequate supporting documentation to our auditors.”
A corrective plan drafted by FAA chief financial officer Ramesh Punwani and the agency’s air traffic organisation (ATO) finance staff is expected to be implemented in the next couple of months.
Failing to remedy all of the KPMG’s concerns was one of two milestones the FAA missed as part of its “organisational excellence” goal, which in addition to increased safety, greater capacity and international leadership makes up the foundation of its Flight Plan roadmap for 2007-2010.
The second missed milestone involved an employee attitude survey, which resulted in a 34% approval rate for management effectiveness and accountability “well below our target of 38%”, says Blakey.
Other areas of the organisational excellence goal were met. “I’m exceedingly proud of the fact that our major acquisitions are on schedule and on budget,” says Blakey. “We used to be the poster child for delays and cost overruns. Now, more than 97% of our major acquisitions are on schedule and on budget, a truly remarkable achievement given where we were just a few years ago.”
The White House Office of Management and Budget’s long-term goal for all federal agencies calls for 90% of major acquisitions to be on schedule and budget so the FAA is “grading well above the curve”, says Blakey.
She says the FAA has also had “tremendous success” in cost savings. The total costs “we saved and avoided in our cost control programmes this year was approximately $68 million. That’s in addition to over $100 million in savings last year”.
Although the FAA is meeting all of its performance goals for capacity, and in the international arena, the agency failed to achieve one of its key targets for aviation safety.
“We’ve known for a while that we weren’t going to make the target for reducing the fatal accident rate in commercial aviation. With Midway and Lexington [aircraft accidents] factored in, the fatal accident rate per 100,000 departures over the last three years is 0.020. The goal was 0.018. This is a tough one. That’s one in every five million takeoffs,” says Blakey.
She adds: “The reality we’re facing is the accident rate’s so low that it’s becoming more challenging to improve on it. So we have a new initiative in the flight plan to identify new ways to measure our progress in commercial aviation safety.”
Overall, however, the FAA administrator today gave a glowing review of the agency’s progress during fiscal year 2006.
“We set 30 performance targets and hit 27 of them. That allows me to say proudly that under our pay for performance system, we’ll be able to award a 100 percent payout for the OSI [the organisational success increase].”
Additionally, she says, fiscal year 2006 represented “the first time in nine years we achieved our operational error performance target” with 4.09 errors per million activities this year, against a goal of no more than 4.27.
Source: FlightGlobal.com
