As part of the Airline Agreement between the City and the ORD Airlines, the City is required to calculate the amount of deferred revenue due to the ORD Airlines on an annual basis. This calculation is done after year-end financial statements are completed and based on audited financial activity. Once this calculation is completed and to the extent a deferred revenue amount results, the City then determines the amount owed to each airline as part of its Long Form Audit process.

In the last few years, the City has calculated deferred revenue amounts, but then has encountered cash flow issues preventing a timely disbursement of the amounts owed to the ORD Airlines. To help resolve this problem, the ORD Airlines retained AvAirPros to determine why the City does not have sufficient cash flow to pay the refunds due the airlines.

To analyze the cash flow, a prior year was selected that had the most recently complete financial documents. Various documents were compared and a large gap was noted between the revenue earned per the audited financial statements and the amount deposited into the Revenue Fund. Discussions were held by AAP with Airport staff and the City Comptroller's Office regarding this disparity, in which it was disclosed that the City while reconciling the amounts found that some of the monies deposited into the Special Facility Revenue Bond (SFRB) Revenue Fund dating back to 1993 should have been ultimately transferred to the Revenue Fund.

AAP reported these findings to the ORD air carriers and kept them informed of the transfers made by the City to correct this error. AAP also made recommendations as to how this mistake could be avoided in the future or at least caught in a more timely manner.

For additional information, please contact Paul B. Demkovich at p.demkovich@avairpros.com
Based in Naples office

Updated: Wed Aug 10 11:49:08 2005

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