Cayman AW ‘susceptible to losses’ on credit transactions

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Cayman AW ‘susceptible to losses’ on credit transactions

Unread post by bimjim » Mon Jan 08, 2018

https://www.caymancompass.com/2018/01/0 ... nsactions/

Cayman Airways ‘susceptible to losses’ on credit transactions
Brent Fuller -
January 7, 2018

Incomplete documentation for certain customer accounts and a lack of demand letters sent to credit customers that did not repay Cayman Airways for services has left the national airline open for financial losses, a government report has noted.

Precisely how much money might have been lost, or how many credit customer accounts with Cayman Airways are operating at the moment, was not known by the Internal Audit Service staff when the Cayman Compass questioned them about the matter late last year.

Detailed questions sent to airline officials in September, October, November and December were never answered.

Internal Audit Service Director Andy Bonner said in November that auditors who reviewed Cayman Airway’s business practices in mid-2017 understood that the airline only extends credit arrangements to “pre-approved businesses and trade entities,” including government entities.

“It’s nothing available to individual private customers,” Mr. Bonner said, adding that to be considered for a credit account, an application form must be completed along with business and bank references.
Tortuga

The audit team noted a number of “deficiencies” in the way the airline handled credit accounts, including that some customer accounts did not have completed documentation the airline said it required.

“There was no evidence that the credit applications were verified or that credit limits were set and approved by the [redacted],” according to an internal audit passenger revenue review done in May 2017. The review also noted reminder or payment demand letters were not prepared nor sent to delinquent customers.

“As a result of the above weaknesses, CAL is susceptible to future losses,” the report stated. Responding to Compass questions about the audit in November, Mr. Bonner said, “In terms of actual volumes and specific dollar amounts, I’d refer you to Cayman Airways.”

Although they did not respond to the Compass, airline officials told auditors that they would agree to establish an effective credit management policy, including measures to address potential losses. These changes were supposed to be done by October, but the airline did not respond to Compass questions about what, if anything, had been changed.

The issue of credit customers is separate to free flights provided to airline staff and board members as part of Cayman Airway’s compensation package. In 2016, Tourism Ministry officials said an average of 3,000 free tickets are taken on Cayman Airways flights by staff members, their dependents and retired staff, who also get a 25 percent discount on confirmed airline seats.

Fare changes

Internal auditors also flagged up the process Cayman Airways used to change airline fares for certain routes. “Three significant fare changes for the [redacted] routes do not have any evidence of … approval prior to filing with the Airline Tariff Publishing Company,” the audit noted. “The lack of evidence of review and approval impairs CAL’s ability to demonstrate that appropriate steps are being taken to ensure proper authorization of significant fare changes.”

The Airline Tariff Publishing Company (ATPCO) is a privately held company that collects and distributes airline fare-related information for use around the globe. Cayman Airways officials agreed to properly document all fare changes in the future, before sending that information to ATPCO.

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