DENVER – The airport is behind by nearly half a million dollars in billing or collecting fees for the security badges it issues to thousands of workers, according to a new audit released this month from Denver Auditor Timothy M. O’Brien, CPA.
The Airport Security Section issues the badges, which allow employees of private contractors and government agencies to access select areas of Denver International Airport. Workers who get the badges must undergo a fingerprint check and a security review, and Airport Security charges employers a variety of fees to pay for its services.
“Ninety percent of Airport Security’s badging revenue each year is invoiced rather than paid directly,” Auditor O’Brien said. “As such, the airport should be ensuring proper documentation and oversight of collections and late fees.”
Auditor O’Brien directed his team to evaluate the Airport Security Section to determine whether its monitoring and enforcement of controls were adequate to ensure airport badges are properly accounted for and controlled.
Audit work found that airport security is currently owed or foregoing collection on more than $430,000 because of outstanding fees, lack of late fee collection due to system functionality issues, and no follow-up with employers who owe the airport money.
“The airport has represented that most of that amount has been collected,” Auditor O’Brien said after Audit Committee.
When an employee, contractor or approved worker needs a security badge at the airport, they must either pay the fees directly during the badging process or receive invoices for the service. While the operating guidelines for direct payment are clear and documented, the process for indirect payment through invoices is inconsistent and less formalized.
We found instances where some invoices were more than a year overdue. From January 2017 through March 2018, the airport’s finance office processed more than $1.4 million in badging transactions. Twenty percent of the invoice revenue was overdue from more than 1,600 outstanding invoices.
Airport Security says it’s up to the finance office to follow up on unpaid invoices. According to Airport Security, once the billing invoices are sent to finance for processing, its job is done. Although it is the finance office’s responsibility to collect and record revenue, it is Airport Security’s responsibility to assess fees or penalties for badging transactions.
The airport is losing out on another $39,400 in late fees and interest payments from the overdue invoices. The finance office points to a recent change in systems to the Workday program, which is the new system of financial record for the city. Under the old system, the airport could add late fees to the invoices when they were greater than $5. Now, however, that functionality doesn’t exist, so the airport has not been adding any late fees at all. This creates no incentive for people or companies to pay invoices on time.
The audit team also found inconsistencies in monitoring of the contract with HSS, Inc., for security guards. The current contract for $115 million dollars through February 2021 is large enough that the audit team felt it was important to ensure effective monitoring. While some controls for the contract were good, the airport could do a better job of monitoring paid time off accrual and billing.
The airport agreed to our recommendations related to billing, reporting and security oversight.
The audit team made other recommendations related to the audit privately to the airport for security purposes.