Air Partner review of £4m accounting hole gives all clear

Private jet operator Air Partner has closed an internal review into a £4m overstatement of corporation tax in its accounts, saying the issues have been ‘contained and resolved’ and there is no evidence of any cash or other assets being misappropriated nor of any customer, operator or supplier being impacted

In early April the company announced that, as part of its year end closing process, it had identified an issue relating to its accounting for deferred income in previous Air Partner financial results. The problems were identified by a new finance team who were implementing an update to the IT systems.

Subsequently the company called in PwC and Rosenblatts Solicitors to conduct an independent review. This has concluded that certain journals had been processed incorrectly to the wrong general ledger accounts over this extended period and further journals were used to conceal the resulting accounting issues, which most notably included unreconciled balance sheet accounts and non-recoverability of debt on a major account dating back to 2010.

Furthermore, supporting accounting records were inappropriately and repeatedly created and manipulated to minimise the chance of detection of these accounting issues.

The review concluded that there was no conceivable pattern or logic to the manifestation of the accounting Issue and no clear motivation or evidence of personal gain. No employee with the company as at 1 February 2018 was identified as being responsible for, connected to, or had exerted influence over this matter. 

Air Partner said weaknesses were identified as a result of the review, and a course of corrective actions is underway, including future financial control enhancements to be rolled out across the group. The board has committed to producing audited interim results for the next two years, in addition to the audited full year results.

In the current financial year ended 31 January 2019, the company will recognise total non-recurring costs of £1.3m incurred as a direct impact of the review, made up of £800,00 in professional fees plus £500,00 lost as a result of abandoning a specific acquisition project to focus on this activity.

Mark Briffa, CEO of Air Partner, said: ‘The review has been thorough - even the petty cash was interrogated - to ensure our review objectives were met, while completing the year-end financial audit took far more time than ever first envisaged.

‘We now move forward with confidence, business as usual serving our customers, focussed on executing our long-term strategy.  We will also take the first steps on the long journey of rebuilding our shareholders and stakeholders trust and confidence, while recognising and appreciating the patience they have shown us during this period.’

The PwC/ Rosenblatts review included interrogation and reconciliation of all balance sheet accounts as at 31 January 2018, an extensive review of individual journal postings from 2010/11 to date, an investigation of credit notes and bank payments from 2010/11 to date, plus a range of employee and ex-employee interviews. Over 430,000 journals were individually analysed and tested and specific bank accounts were investigated to analyse all payment transactions posted, including a detailed audit of every payment processed from these accounts in the 12 months to 31 January 2018.  

Report by Pat Sweet

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