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Travel, Tourism & Hospitality Community

ISA 600 (Revised) – A timely IAASB initiative for Financial Reporting in the Tourism Industry

Author: Zayd Maniar

Published: 16 Sep 2020

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There is no doubt that the pandemic has created unprecedented challenges for the Travel, Tourism and Hospitality industry. However, with challenges come opportunities. Several regional airlines and hotel chains are backed by Sovereign Wealth Funds. It’s no surprise that they are keen to acquire trophy assets globally, whilst valuations are low.

What this means for those of us dealing with the Financial Reporting aspects is that there will be a greater number of entities to consolidate, as more global assets come under the umbrella of these burgeoning Investment Funds.

The IAASB has been working diligently with global professional bodies such as the ICAEW. The aim is to update the International Standards on Audit to help deal with recent and upcoming changes to the International Financial Reporting Standards, which are moving away from a Rules based and more towards a Principles based approach.

Whilst still at an Exposure Draft stage, the revised standard aims to make growing between the Group and Component Auditors fair more cohesive. Hence, financial controllers may expect the teams to work closely on areas such as performance materiality, a refreshed approach to aggregation risk and a consistent approach to documentation.

This does make for quicker reporting at a group level, which will be welcome by stakeholders and investors who are keen to deal with the aftereffects of the pandemic. Earlier this week, the International Air Transport Association said global air passenger traffic is unlikely to recover to pre-Covid-19 levels before 2024, a year later than previously expected. We can hence expect to continue dealing with Audit issues pertinent to valuations, going concern as well as business combinations.

The views expressed are the author’s and not ICAEW’s.