KPMG is to undertake a forensic and diagnostic audit of the finances of Arik Air as appointed by the new management to ascertain the true status of its finances.
According to the statement, the review will among other objectives cover the position of assets and liabilities, and their utilization; recording and utilization of loans, propriety of third-party transactions; fraud controls over Procure to Pay (‘PtP’), Agents and Business Partners and Financial Reporting and Arik Airline’s financial position as at January 31, 2017. The report is expected to be delivered within 12 weeks.
The statement in part read, “We have hired KPMG to look into the financials of Arik with a tooth comb and advise us with verifiable facts on what went wrong with the airline. We need to do that because the outcome will help us plug the loopholes and stabilize the airline,” the statement added. The whole intention is to identify what went wrong with Arik to enable the new management to bring it back to full operations.
The federal government intervened last Thursday February 9, 2017 in the airline following daunting complaints of huge indebtedness of the airline to various creditors and the frequent interruptions in its operations, and the concern to safety and security
Already, the new management has discovered that it the airline cannot sustain the magnitude of its operations owing to the rot uncovered in the system, according to revelations; the situation is so bad that only nine aircraft out of the 30 in the fleet of the airlines are operational.
The airline’s remaining 21 aircraft have either been grounded, gone for C-check in Europe among other forms of challenges. As if these problems are not enough, the airline does not have money to procure aviation fuel for the nine operational aircraft because no dealer wants to sell aviation fuel to Arik if it is not on cash-and-carry basis.
The airline also owes its technical partners and also in perpetual default in its lease payments and insurance premium, leading to regular and embarrassing squabbles with different business partners, which accounts for why 21 aircraft is off the fleet for different reasons.
All these problems in addition to huge staff salaries, which have remained unpaid for 11 months; vendors that supply different items to Arik Airlines that are also owed meant that Nigerians may have to tarry-a-while to allow the new management clean up the huge mess at the airline before Arik would finally resume uninterrupted flight.