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Audit of SFO Enterprises finds about $1.4—6$1.5 million loss; airport director accepts recommendations
Summary
A controller audit of SFO Enterprises found recorded and unrecorded liabilities leading to an estimated aggregate loss of about $1.4 million; the audit flagged weak controls, late agreements and an improper $40,000 travel advance; Airport Director John Martin said he accepts the recommendations and the airport has set up a reserve for the loss.
The committee heard a controller audit of SFO Enterprises (SFOE), the city-owned, for-profit corporation created by a 1997 resolution to market airport services. Controller staff described recorded and unrecorded liabilities and concluded, after accounting adjustments, that the operation produced an aggregate loss of about $1.4 million. The airport projects the ultimate loss at about $1.5 million.
Audit staff said the office found weak controls when the airport operated the separate corporate entity, including delayed formal agreements between SFO and SFOE, inconsistent accounting of expenses incurred before and after incorporation, and several violations of city travel and expense rules. The audit cited a $40,000 travel advance that was used to pay for things such as a car, furniture and an apartment while staff were assigned to Honduras; controller staff said the advance should not have been approved in that form.
Alisa Sullivan and other controller auditors presented recommendations to retain liabilities on the airport books until uncollectibility is resolved, tighten agreements for future ventures, and adhere to city travel policies. Airport Director John Martin told the committee the airport accepts the recommendations, has recorded a reserve for the loss, believes further recoveries are unlikely and said the airport will follow controller guidance. Public commenters called for stronger transparency and for rules to prevent city departments from creating outside corporate entities without clearer oversight.
The committee filed this item and the meeting adjourned.
