TÜRK HAVA YOLLARI ANONİM
ORTAKLIĞI AND ITS SUBSIDIARIES
Consolidated Financial Statements as at and
for The Year Ended 31 December 2021
with Independent Auditor's Report
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Türk Hava Yolları Anonim Ortaklığı
Our opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Türk Hava Yolları Anonim Ortaklığı (the "Company") and its subsidiaries (together the "Group") as at 31 December 2021, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards ("IFRS").
What we have audited
The Group's consolidated financial statements comprise:
- the consolidated balance sheet as at 31 December 2021;
- the consolidated statement of comprehensive income for the year then ended;
- the consolidated statement of changes in equity for the year then ended;
- the consolidated statement of cash flows for the year then ended and
- the notes to the consolidated financial statements, which include a summary of significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing ("ISA"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter
Impacts of Covid-19 pandemic
Negative impacts of COVID-19 over aviation industry have continued in 2021. We draw attention to Note
2.8 to the consolidated financial statements, which describes the Group's assessments regarding the effects of the Covid-19 pandemic. Our opinion is not qualified in respect of this matter.
Independence
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
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BJK Plaza, Süleyman Seba Caddesi No:48 B Blok Kat:9 Akaretler Beşiktaş 34357 İstanbul-Turkey
T: +90 212 326 6060, F: +90 212 326 6050, www.pwc.com.tr | Mersis Numaramız: 0-1460-0224-0500015 |
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. Key audit matters were addressed in the context of our independent audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters | How our audit addressed the key audit | ||
matter | |||
The recognition of the revenue, passenger | |||
flight liabilities and the frequent flyer | |||
program liabilities | |||
Revenue and passenger flight liabilities | The following procedures were performed to | ||
(Please refer to Note 2.3.1, 14 and 26) | audit of the revenue and passenger flight | ||
liabilities: | |||
The major part of the Group's revenue consists of | |||
the passenger revenue. The passenger revenue is | - | Through involvement of our IT experts, | |
recognized when the transportation service is | we have tested the effectiveness of | ||
completed. Total passenger revenue recognized in | internal controls on IT systems that are | ||
the consolidated financial statements of the Group | designed to account passenger revenue. | ||
amounted to USD6,390 million for the year ended | Additionally, we have tested accuracy and | ||
31 December 2021. Unused tickets are recognized | completeness of the reconciliations | ||
as passenger flight liabilities, until the flights are | among IT systems which have been | ||
completed. Total passenger flight liabilities | determined as key systems by us. | ||
amounted to USD1,018 million as of 31 December | |||
2021. | - | We have understood the business | |
processes and controls over accounting of | |||
We focused on this area in our audit due to the | the passenger revenue. | ||
following reasons: | |||
- | We have tested key controls over | ||
- | Significant estimates and judgments based | accounting of the passenger revenue | |
on historical data and trends are used in | processes. | ||
calculation of revenue from unused tickets | |||
which are accounted for passenger revenue | - | We have tested unredeemed tickets | |
in the consolidated financial statements, | through sampling method. | ||
- | Recognition of passenger revenue upon | - | We have tested consistency and |
completion of the services includes complex | mathematical accuracy of the methods | ||
and different integrated information | used in calculation of unused ticket | ||
technology ("IT") systems which processes | revenue which are estimated based on | ||
high volume of transactions and data, | historical data. |
- The necessity for our IT experts to be involved in the audit process due to the complexity of the systems.
Key audit matters | How our audit addressed the key audit | ||
matter | |||
The recognition of the revenue, passenger | |||
flight liabilities and the frequent flyer | |||
program liabilities | |||
Frequent flyer program liabilities | The following procedures were performed to | ||
(Please refer to Note 2.3.19 and 14) | audit of the frequent flyer program liabilities: | ||
The Group provides a frequent flyer program | - | We have understood the business | |
named "Miles and Smiles" in the form of free | processes and controls over accounting of | ||
travel award to its members on accumulated | the frequent flyer program liabilities. | ||
mileage earned from flights. Miles are recognized | |||
as a separately identifiable component of each | - | Through involvement of our IT experts, | |
sales transactions. Frequent flyer program | we have tested the effectiveness of | ||
liabilities amounted to USD198 million in the | internal controls on IT systems and | ||
consolidated financial statements as of | internal controls that are designed to | ||
31 December 2021. | account frequent flyer program liabilities. | ||
The amount deferred as a liability is measured | - | We have tested consistency and | |
based on the fair value of the awarded miles. The | mathematical accuracy of the methods | ||
fair value is measured on the basis of the value of | used in calculation of frequent flyer | ||
the awards for which they could be redeemed. The | liabilities which are estimated based on | ||
amount deferred is recognized as revenue when | historical data. | ||
Miles and Smiles members fly using their miles or | |||
when the Group does not expect that the miles to | - | We have controlled consistency of | |
be redeemed by its customers ("breakage"). | frequent flyer program liabilities | ||
calculated at the end of the reporting | |||
We focused on this area in our audit due to the | period with frequent flyer program. | ||
following reasons: | |||
- | We have controlled breakage estimates | ||
- | Breakage estimate ("the estimate of miles | through comparing the ratio with the | |
earned that will not be redeemed") are | historical usage data. | ||
complex and highly judgmental due to the | |||
significant assumptions used in the | |||
estimate, |
- Complex calculations are performed in determination of the value of the awards for which they could be redeemed,
- The necessity for our IT experts to be involved in the audit process due to the complexity of the systems.
Key audit matters | How our audit addressed the key audit | |||
matter | ||||
The Component accounting of aircrafts | ||||
(Please refer to Note 2.3.3, 2.3.4 and 15) | ||||
The carrying values of aircrafts' components | - | The following procedures were performed | ||
accounted for property, plant and equipment and | to audit of the component accounting of | |||
right of use assets amounted to USD16,455 million | aircrafts: | |||
in the consolidated financial statements as of | ||||
31 December 2021. | - | We have inquired with the management | ||
to understand the accounting policies | ||||
The Group accounts for the cost of aircrafts which | applied and how they meet the provisions | |||
of IAS 16, "Property, plant and | ||||
are acquired directly or through leases separating | ||||
equipment". | ||||
into the components (fuselage, engine, fuselage | ||||
overhaul and engine overhaul). Useful lives of | - | The useful life and residual value | ||
these components are determined separately and | ||||
estimates were controlled by comparing | ||||
each components are amortized during their | ||||
the fleet plan of the Group and the | ||||
useful lives. | ||||
contracts of the aircraft purchases and | ||||
We focused on this area in our audit due to the | leasing transactions recently made. | |||
following reasons: | - | We have compared the consistency of the | ||
- | The impacts to the consolidated financial | components and their useful lives with | ||
the sectoral applications. | ||||
statements as of 31 December 2021 is | ||||
significant, | - | We have recalculated current year's | ||
depreciation expenses. |
- The assessment of determination of components involves significant level of management's estimates,
- The assessment of determination of useful lives of each components and residual values involves managements' significant estimates.
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Turkish Airlines AO published this content on 01 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2022 05:57:03 UTC.