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Click to edit Master title style,Click to edit Master text styles,Second Level,Third Level,Fourth Level,Fifth Level,*,_,P,assenger,R,evenue,A,ccounting,PRA 101S,Prepared by:Goss&Associates,LLC,Return to Home Page,1,Table of Contents,Introduction to,P,assenger,R,evenue,A,ccounting(PRA),Recording/Auditing Revenue-Pending Delivery,Recognizing/Verifying Revenue-Delivered,Risk from Poor Accounting Control,Prepared by:Goss&Associates,LLC,Return to Home Page,2,Introduction to,P,assenger,R,evenue,A,ccounting,The airline industry has developed a sophisticated distribution system that integrates worldwide airline sales and reservations to provide a standard travel document,the airline ticket.When a transaction is recorded,a contract or ticket is created between passenger and airline:,This ticket provides a wealth of information and services including:,A promise to provide airline services,Airline reservation information,Travel documentation,“One price regardless of the number of airlines involved in the itinerary,Prepared by:Goss&Associates,LLC,Return to Home Page,3,Introduction to,P,assenger,R,evenue,A,ccounting,Revenue,is the financial term used to describe the accounting event that occurs when a promised service is either,Pending delivery revenue,Unearned Passenger Revenue-Money collected or a receivable established at the time of ticketing(contract)is recorded as an unearned passenger revenue liability on the balance sheet.The AUDIT COUPON is used to record these transactions.,or,Delivered revenue,Earned Revenue,Reclassified Revenue,Other Airline Payable,Prepared by:Goss&Associates,LLC,Return to Home Page,4,Risk from Poor Accounting Control,Passenger revenue accounting provides the required controls to identify improper accounting transactions,which if they go undetected,an airline risks loss of significant revenue and cash,.,Effective policies and procedures can identify the following transaction risks:,Inaccurate profits/loss statement from misstated earned revenue,Out of period revenue recognition.As an example,electronic ticket files,VCRs,are mishandled.Earned revenue would not be recognized until the ticketing time limit expires,normally 12 months.,Incomplete or inaccurate procedures are used to calculate earned revenue,Procedures to validate and correct unearned revenue are missing,Fare structure and rules are complex,Fares are not published,Overstated profits from understated unearned passenger revenue when there was not enough unearned revenue to cover unused tickets.,Prepared by:Goss&Associates,LLC,Return to Home Page,5,Risk from Poor Accounting Control,Lost cash and overstated profits when:,Over billings from other airline are not rejected or rebilled,When you do not bill a lifted other airline flight coupon,When you under bill an other airline flight coupon,Your BSP/ISC/ASP payment is given to another airline and you do not recover it,Lost cash and overstated profits when travel agencies,GSAs or other agents use improper business practices such as:,Slow reporting of sales transactions to take advantage of cash flow,Under collecting from passenger,Changing the information on a ticket-“Card Boarding,Not reporting sales,Taking excessive commission,Improperly applying tariff fares and rules,Honest processing errors by agents under-charging passengers for premium services,Honest processing errors by other airlines under-charging passengers for premium services,Agents taking advantage of the process complexity to make money at the expense of an airline,Other airlines taking advantage of the process complexity to make money at the expense of an airline,Prepared by:Goss&Associates,LLC,Return to Home Page,6,_,P,assenger,R,evenue,A,ccounting,PRA 101S,Prepared by:Goss&Associates,LLC,Return to Home Page,For more information,email:,7,
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