Federal Reports

What We Looked AtOn March 9, 2015, the Federal Aviation Administration (FAA) established requirements for air carriers to implement a formal, top down approach to identifying and managing safety risks, known as safety management systems (SMS). However, recent events have raised concerns about FAA's safety oversight, particularly for Southwest Airlines, one of the largest passenger air carriers in the United States. In early 2018, our office received a hotline complaint regarding FAA's oversight of Southwest Airlines and a number of operational issues at the carrier. Then, in April 2018, Southwest Airlines Flight 1380 suffered an engine failure that resulted in the first U.S. passenger fatality in over 9 years. We initiated an audit to assess FAA's oversight of Southwest Airlines' systems for managing risk.What We FoundOur review identified a number of concerns regarding FAA's safety oversight of Southwest Airlines. First, Southwest Airlines continues to fly aircraft with unresolved safety concerns. For example, FAA learned in 2018 that the carrier regularly and frequently communicated incorrect aircraft weight and balance data to its pilots--a violation of FAA regulations and an important safety issue. Southwest Airlines also operates aircraft in an unknown airworthiness state, including more than 150,000 flights on previously owned aircraft that did not meet U.S. aviation standards--putting 17.2 million passengers at risk. In both cases, the carrier continues operating aircraft without ensuring compliance with regulations because FAA accepted the air carrier's justification that the issues identified were low safety risks. Second, FAA inspectors do not evaluate air carrier risk assessments or safety culture as part of their oversight of Southwest Airlines' SMS. This is because FAA has not provided inspectors with guidance on how to review risk assessments or how to evaluate and oversee a carrier's safety culture. As a result, FAA cannot provide assurance that the carrier operates at the highest degree of safety in the public's interest, as required by law.Our RecommendationsFAA concurred with all 11 of our recommendations to improve its oversight of Southwest Airlines' systems for managing risk and provided appropriate planned actions and completion dates.

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The University of Southern California did not complete verification of applicant data in accordance with Federal requirements for 7 of the 60 students included in our statistical random sample. As a result, the university improperly disbursed $21,530 in Title IV aid to four students and improperly disbursed $1,000 less in Title IV aid than one student was eligible to receive. There was no effect on the amount of Title IV aid disbursed for the other two students. Based on the results of our statistical random sample, we estimate that the University of Southern California did not complete verification in accordance with Federal requirements for 184 (12 percent) of the 1,534 Pell recipientsselected for verification for award year 2017–2018.We also found that the University of Southern California did not accurately report verification results to the Central Processing System and Common Origination and Disbursement System for 8 of the 60 students included in our statistical random sample. Based on the results of our statistical random sample, we estimate that the University of Southern California did not accurately report verification results for 199 (13 percent) of the 1,534 Pell recipients selected for verification for award year 2017–2018.

Under the Affordable Care Act, the Centers for Medicare & Medicaid Services (CMS) operates the federally facilitated marketplace (Federal marketplace) in States that chose not to operate their own marketplaces. Prior OIG audits of the Federal marketplace covering the 2014 coverage year determined that not all of the marketplace's internal controls were effective in ensuring that individuals were properly determined eligible for qualified health plans (QHPs) and insurance affordability programs. Further, since 2014, additional eligibility verification requirements have become effective. The results of our prior audits and these additional requirements led us to review the marketplace's eligibility determinations for the 2018 coverage year.