Webjet accounting dispute
WEBJET has warned of a major disagreement with its auditors, with the difference of opinion potentially impacting 2016/17 earnings by more than $11 million and the removal of $32.7 million in intangible assets from the OTA’s balance sheet.
The dispute relates to the treatment of transactions associated with Webjet’s agreement with UK travel giant Thomas Cook ( TD 18 Aug 2016).
Webjet described the issue as a “technical accounting matter,” saying it had obtained advice from two ‘Big Four’ accounting firms contrary to the opinion of auditor BDO Pty Ltd.
BDO reviewed and signed off the company’s accounts for the six months to 31 Dec, but now “no longer agrees with the accounting treatment adopted by the company in respect of recognition of the [Thomas Cook] agreement as an intangible asset and recognition of the fixed management fee payable to Webjet under the agreement as income,” the company said.
Despite the BDO disagreement, the Webjet board said it intends to continue to apply the same accounting treatment of the Thomas Cook deal for the full year accounts - meaning BDO will “qualify” its audit report.
Webjet said the dispute does not in any way change the cash flows or economics of the Thomas Cook deal, which has commenced successfully and “is expected to deliver significant benefits to both parties”.