Feb 01, 2018
DENVER – Denver’s airport is making progress to ensure airlines pay all the fees they owe, but there’s still room for improvement to ensure all money is collected in a timely and accurate manner. That’s according to a new follow-up report from Denver Auditor Timothy M. O’Brien, CPA, and his office.
“Airlines are one of the largest sources of revenue for the airport,” Auditor O’Brien said. “It’s essential to make sure the money is managed efficiently and effectively.”
The report looks at the progress made on 14 recommendations from a 2016 audit of DIA’s management of airline agreements. The most recent independently audited financial statements for DIA report that in 2014, 2015 and 2016, airline revenue represented 54%, 50% and 47% respectively of the total airline operating revenues. The original audit found weaknesses that impacted the airport’s ability to effectively collect some revenue from those airlines.
One area still in need of improvement is the process of receiving money from airlines and crediting them for the correct invoices and fees. Our audit team found, despite the 2016 recommendation, payments are still often misapplied and then staff has to contact the airline representatives to reconcile disputed transactions. Some misapplied payments could result in disputed accrued interest penalties and extra work for staff.
We also found some remaining room for improvement in the billing process of airline space changes. Airlines pay for space that they occupy in the terminal, on concourses and in some cases in hangars. As business needs change, airlines frequently request more, less or different space. Since the original audit, DIA has improved the procedures for identifying space changes and amending airline use and lease agreements, however there are still flaws in the timely billing of these changes, identifying new rates and generating new invoices.
We found airline space changes that occurred between January 2017 and June 2017 that had not been billed to airlines as of Nov. 1, 2017. The goal is to get space change billing updated within 30 days. Those in charge of following through on this 30-day requirement are not always successfully doing so. We found in 2017 some space change bills were not processed for billing for three to eight months.
We also found some flaws in the follow-through on cross training finance personnel staff to ensure no gap in duties related to properly applying payments and billing non-space revenue in a timely manner when one person is unavailable or leaves the organization. There is also still room for improvement in ensuring yearly space inspections happen. While the Policy and Procedures Guide now requires the inspections, there are no instructions for documenting and resolving concerns, or even a log to track that the inspections are completed.
There are several areas where the airport has made significant improvement. DIA’s senior vice president of airline affairs has started requiring a review of airline use and lease agreements twice a year. The airport has also improved controls to monitor liability insurance and surety bonds to ensure compliance with airline use and lease agreements.