The Webjet Limited (ASX: WEB) share price could hit turbulence today after the online travel business advised the market that its auditor BDO Audit will offer a qualified FY 2017 audit opinion as a result of an accounting dispute.
The dispute is over the recognition of amortisation, expenses, revenue, and volume-based fees relevant to Webjet's recent agreement to act as preferred supplier to travel agent Thomas Cook's hotel business in Europe.
Webjet reported that two of the Big-4 accounting firms have confirmed its desired accounting treatment of the deal is correct, but its auditor apparently does not accept this view, despite signing off the half-year accounts by applying the same accounting method that it now has a difference of opinion on.
The potential accounting impact as a result of the dispute is significant, as if BDO's methodology were applied it would reduce FY 2017 EBITDA by $11.5 million. However, the total cash flows and economics of the Thomas Cook agreement over its course would not not be changed.
Accounting disputes are almost always bad news for companies, however, Webjet did confirm that it expects full-year EBITDA to land at $80 million before one-off costs associated with the launch of its new FIT Ruums business.
Webjet reports its results on August 31.
