Audit and Accounting of Airline Industry

AUDIT AND ACCOUNTING OF AIRLINE INDUSTRY
ASSIGNMENT
The accounting and auditing in an airline industry is quiet different from the usual business since the
activities of airline are unique therefore the implemented internal controls are peculiar to the industry these includes
the revenue cycle, its inventories, fixed assets, subsidies, overhaul, the revenue recognition, flight compensation,
decentralized operations, and potential problems.
In the Cebu Air, Inc. and Subsidiaries or Cebu Pacific Airlines which is one of the known airline companies
in the Philippines, it is a low-cost carrier airline company which flies to thirty-four (34) domestic destinations and thirty
(30) international destinations in nineteen (19) countries, the airline is a member of the Value Alliance network which
is a pan regional low-cost carrier alliance. In their audited financial statement you can observed that majority of the
asset of the company is allocated in the noncurrent asset which 89% of the total asset and the 11% is in the current
asset, this is acceptable since in the airline it is very common to have a major portion of an airline’s fixed assets that
comprises aircraft and other flight equipment, because such asset are constantly changing locations, the
responsibility for physical custody and control of aircraft is substantially different from that nonmobile fixed assets. It
also shown in the consolidated statements of comprehensive income the different account titles use due to the nature
of the business. The accounting policies adopted by the company are consistent with those of the previous financial
year except for adoption of new amended PFRS these includes investment entities such investment should account
at fair value through profit or loss and must be applied retrospectively, another is offsetting financial assets and
financial liabilities clarifying the meaning of currently has a legally enforceable right to set-off, impairment of assets
where it requires the disclosure of the recoverable amount for the assets or cash generating units, and lastly the
levies where it clarifies that an entity recognizes a liability for a levy when the activity that trigger payment occurs.
The audited financial statements also present and explain each account in the notes to financial statements. The
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Another is that the auditor was able to emphasizes the comparison of financial information with
anticipated and prior-year results.
As I compare the audited financial statement of Cebu Air, Inc. and Subsidiaries and the AirAsia Behard the
presentation and disclosure of the account has used the same accounting policies. The only difference is that the
numerical figures since Cebu Air, Inc and Subsidiaries is more profitable or has a better financial performance than
AirAsia, since Cebu Air, Inc is way bigger company than Air Asia. The statement of financial position also shows how
a big difference the asset of both companies especially in the property, plant and equipment section or fixed assets.
Both audit report also presents a comparison of the company’s performance from the prior years. Since these
companies are aligned in the foreign transactions, they both also define and explain in the financial statements the
different foreign transaction made by them. Also, both audited financial statements present the regulatory matters of
the companies. Another is that both audit report includes evaluation of the appropriateness of accounting policies
used and the overall presentation of the financial statements. Then, both audited financial statements in line with their
notes also includes the appropriate disclosures, such as information concerning related-party transactions and
subsequent events. And lastly, both audited financial statements have presents fairly in all material respects which is
given by the auditor.

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AUDIT AND ACCOUNTING OF AIRLINE INDUSTRY

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