Auditing Assigment Qantas Case

Topics: Airline, Financial statements, International Financial Reporting Standards Pages: 12 (3591 words) Published: August 23, 2013

Executive summary

1. 0 Business operation of REX
1.1 Nature of revenue sources
1.2Conduct of operation
1.3 Products and services
1.4 Market conditions and competition
1.5 Regulatory environment

2.0 PEST analysis
2.1 Political
2.2 Economics
2.3 Social
2.4 Technical

3.0 Audit risks
3.1 Measurement risk of aircraft
3.2 Revenue manipulate risk
3.3 Derivative financial instruments risk
3.4 Employee benefit risk

4.0 Internal control


Executive summary
Regional Express Holdings Limited (Rex) is an Australia-based airlines. The Company operates through three segments: regular public transport revenue, charter revenue and training revenue.

This report contains Four major parts.

In first part, it analyze business operation of REX by elaborate the sources of revenue, conduct of operation ,products and services, etc.

And then we use PEST model to evaluate external environment influences that have been particularly important in the past of the company.

Furthermore, this part explained that Four key audit risks which would impact on the financial report. It includes Measurement risk of aircraft, Revenue manipulate risk, Derivative financial instruments risk, Employee benefit risk.

At the end, it provides practical internal control respectively which could mitigate the risk.

1.0 Business operation
1.1 Nature of revenue sources

Source: Annual report for the financial year ended 30 June 2011 Regional Express Holdings Limited Revenue from providing air passenger and freight services is recognized when the relevant flights are made. 1.2 Conduct of operations

Regional Express Holdings Limited was incorporated on 12 February 2002, and is listed on the ASX. It is the holding company of the following subsidiaries. Regional Express (Rex) is Australia’s largest independent regional airline. It services various regional routes. It is the sole provider in the majority of its routes which are too small to be profitably serviced by Qantas, Virgin Blue, or Jetstar. It holds the Air Operator’s Certificate to conduct the company’s airline and charter activities as well as the Certificate of Approval to undertake aircraft and aircraft component maintenance and overhaul. Air Link Pty Limited is an aircraft charter operation based in Dubbo, NSW. Air Link focuses on providing the highest level of service through charter operations all over Australia with this level of service extending to the aircraft engineering and maintenance services within the company. Pel-Air Aviation is an aircraft charter operator specializing in the market segments such as defence and government related aviation support operations. The Australian Airline Pilot Academy was established to offer an intensive training program that enables students to graduate with a Commercial Pilots License. 1.3. Products and services

* Regional airline services
* Aircraft charter services for business and leisure
* Ad-hoc Fly-in / Fly-out activity, Air Ambulance, Freight and Defence * Airline pilot training programs
1.4. market conditions and competitions
On time performance for the year ended June 2011
| Sectors| Departures On Time| Arrivals On Time| Cancellations| | Scheduled| Flown| No.| %| No.| %| No.| %|
REX| 64 940| 64 677| 55 750| 86.2| 52 588| 81.3| 263| 0.4| QantasLink| 101 259| 99 309 | 77 986| 78.5| 74 311| 74.8| 1 950| 1.9| Regional airline services are services within regional areas of Australia and between regional centers and the capital cities. The main regional airlines include: • Qantaslink – a trading name under which a group of Qantas owned subsidiary regional airlines operate being Airlink, Eastern Australia Airlines and Sunstate Airlines; • Rex – Australia’s largest independent regional airline, operating services to 27 regional destinations with hubs in Sydney, Melbourne and Adelaide REX holds monopoly positions on most of its routes. There is...
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