The revised EU directive on package travel came into force in 2015 and the UK is required to implement and bring into force UK regulations to give effect to the Directive by 1 July 2018. The Civil Aviation Authority has finally released their detail on how they plan to implement the Package Travel Directive “PTD” into ATOL at the end of February 2018. The responses to the consultation have to be by 23 March 2018, so leaves very little time. Within this consultation there are proposals that are pertinent to the ATOL Reporting Accountants “ARA” regime.
In the consultation there is a proposed disclosure to professional bodies, which are responsible for appointing ARA’s, which provide the end of year AARs to the CAA. It is proposed that the wording of the standard consent of the ATOL application form is adjusted, to enable the CAA to share AARs with the relevant professional body, as already happens in respect of the Air Travel Trust “ATT” and ATT’s insurers. The purposes of this is to enable the professional bodies to use actual case studies as part of their assessment of the continuing designation of ARA’s.
Because we are a travel specialist firm we have regular and detailed conversations with the ATOL department and it is plainly evident that some ARA’s are signing off confirmations to the CAA that are incorrect. It is possible for the CAA to glean from returns, their financial monitoring department and other ancillary financial information when an ATOL holder might be reporting incorrectly. The proposal will extend the CAA’s powers to share this information with an accountancy body where a member has signed off such reports.
When the ARA regime was originally suggested other major travel industry bodies, like AITO and ABTA indicated concerns as to the extra burden of compliance that was to be placed on smaller members. Specifically ones that had used historic accountants and auditors, perhaps family accountants, who might not have the resource nor capacity to bear the burden of extra compliance costs. They actively lobbied specialist firms like ours to undertake the ARA work while existing accountants and auditors remained engaged.
The AAR end of year forms not only require reporting on turnover and passengers, but also the AAR2 requires independent confirmation of certain headings on the annual accounts. It is not a matter of reproducing those figures on an AAR2 and signing off as an ARA, but there is a need to know what you are signing off is fundamentally correct.
There are some firms which are registered ARA’s which appear to be doing large volumes of this type of work, which we believe is causing the CAA some level of concern, even though this is what other trade associations wanted. Being an ARA comes with it responsibility and a necessity of maintained competency. An ARA signing off their own firms prepared financial information requires less interrogation as you know what expertise and rationale has been applied in their preparation. You will also have done detailed sampling and review work when it involves an audit. An ARA signing off another firms prepared financial information, who has decided not to register as an ARA, is a completely different engagement. It requires a different level of technical competency to be able to ascertain whether what you are signing off is correct.