1.

Audited Financial Statements of Cebu Pacific Airline

https://www.studocu.com/ph/document/university-of-rizal-system/bachelor-of-science-in-
accountancy/cebu-pacific-2019-official-annual-report/11520709
2.

A. What make an Airline Industry consider a specialized industry

An airline can be defined as a company that offers regular services for transporting
passengers or goods via the air. These companies are said to make up the airline
industry, which is also regarded as a sub-sector of the aviation sector and the wider
travel industry. 

Airlines may offer scheduled and chartered services providing customers with the ability to
purchase seats on flights and travel to different parts of the world. These air transport
services are provided for both human travelers and cargo, and are most commonly offered
via jets, although some airlines also use helicopters.

B. Based on its Financial statements, can you identify what accounts in the
Income statement and Statement of Financial Position that might be unique and
differ from an ordinary industry.

Based on the financial statement of Cebu pacific air, among the accounts presented in the
financial position and income statement. What I have noticed among all was the hedging
gains (losses) in note 8 under comprehensive income that intercorrelate financial assets
and liabilities at (FVOCI) presented in financial position.

In addition, it says here that the airline company group enters into fuel derivative to manage
its exposure to fuel price fluctuation. Therefore, the gains or losses on these instruments
are accounted for directly as charges against or credit to profit or loss and as of December
31, 2018 and 2017, the Group has outstanding fuel hedging transactions such collars have
various maturity dates through 2019 until 2020.

For the years ended December 31, 2019, 2018 and 2017, the Group recognized net changes
in fair value of derivatives amounting to P=289.0 million loss and P=135.9 million loss,
respectively. These are recognized in Hedging gains (losses) - net account under the
consolidated statements of comprehensive income.

C. Identity specific accounting standards or relevant PAS/PFRS

Based on Cebu Pacific Air Inc, and subsidiaries audited financial report the management
prepares the fair presentation of the consolidated financial statement in accordance with
PFRS to enable the preparation of consolidated financial statements that are free from
material misstatement.

And the auditor conducted the audit of the consolidated financial statements with
accordance to PSAs to provide high level of reasonable assurance. As, part of an audit in
accordance with PSAs, we exercise professional judgment and maintain professional
skepticism throughout the audit.

D. Identify certain rules and regulations an airline industry needs to comply with. 

Businesses in the travel industry must comply with many regulations and laws. In
addition to legal compliance in the location where they operate, travel businesses must
also be familiar with laws in host locations. Every state and country have different
regulations that companies must comply with if they offer services within their borders.

Seller of Travel Laws

Certain states have enacted registration programs and financial security requirements
for travel companies, travel agencies, tour operators, and others. If you sell travel to
residents of those states, you must comply with specific laws prior to selling or offering
to sell travel services to consumers.

Financial Security Requirements in the Travel Industry

Many states, including seller of travel states, require businesses in the travel industry to
prove financial security. This may include purchasing liability insurance or a bond to
cover certain situations with consumers.

DOT Advertising Rules

The U.S. Department of Transportation (DOT) enforces advertising rules on airlines and
other businesses in the tourism industry. Their goal is to help travelers understand
advertising and encourage fair and honest communication between travel businesses
and customers.

DOT Baggage Rules

Whether you directly assist customers during their travel or provide services before or
after their trips, it’s important to be familiar with DOT baggage rules. You must comply
with these regulations or help your customers understand the requirements as they
travel.
References:

Ment L. et al (2018). Travel industry regulation and compliance. https://www.mentlaw.co

m/travel-industry/compliance/

(2021). Airline Industry: All You Need to Know About the Airline Sector https://www.revfi
ne.com/airline-industry/

Cebu pacific annual report. https://www.studocu.com/ph/document/university-of-rizal-sy

stem/bachelor-of-science-in-accountancy/cebu-pacific-2019-official-annual-report/11520
709/download/cebu-pacific-2019-official-annual-report.pdf