SHARES in travel site Webjet Limited (ASX: WEB) have dropped over seven per cent after the company announced it was quarrelling with its accounting firm BDO.
Webjet announced to the ASX this morning that it is involved in a "disagreement" with auditor BDO regarding the treatment of transactions associated with Webjet's agreement with tour operator Thomas Cook.
Webjet partnered with the London-based Thomas Cook tour operator in August 2016, giving its hotel business access to 3,000 hotels across Europe.
Accounting firm BDO has told Webjet that it no longer agrees with the accounting treatment adopted by Webjet in respect of recognising the Thomas Cook agreement as an intangible asset.
Webjet has rejected the advice of BDO, claiming BDO's position on the agreement is contrary to the advice obtained by Webjet from two other Big 4 accounting firms on the same issue.
Using BDO's proposed accounting treatment, Webjet says it would lose $11.5 million in earnings and would have to reduce the carrying value of intangible assets by $32.7 million.
At around 2pm (AEST), Webjet's shares dropped seven per cent to $11.76.
The company maintains it expects to report consistent with its previous earnings guidance of $80 million provided in February 2017 which was based on the accounting treatment adopted and reviewed by BDO.
Webjet is currently finalising its full year results and is due to report on 31 August 2017.
Business News Australia
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