Importance of Audit in Business Aviation by Evgenii Bakhtin

BakhtinThe Russian United Business Aviation Association has recently received a number of requests, both from RUBAA members and other Russian business aviation companies, from companies and organisations that carry out reviews, or audit, the activities of business aviation operators.

Evgenii Iurievich Bakhtin, RUBAA President, has issued the following statement on the matter.

“The business aviation market involves not only operators, brokers, maintenance companies… but also entities that evaluate the efficiency and performance of business aviation operators and management companies using various indicators.  Such activities can be referred to as an audit, or technical review. It is important what is audited and when the results are published whose best interests are represented.

A key factor is the auditor’s business practice including such aspects as professionalism, competence, experience, an understanding of processes.  In addition to that, an auditor must be independent and have no affiliation with any entity that has an interest in a certain outcome of the audit.

It is important to evaluate the efficiency of an audit by ensuring that it includes a clear and transparent system and understanding of the principles of the audit organization. They should provide a clear definition of the goals and outcome of the audit.

Unfortunately, I have to note that there are a number of persons and companies currently operating in the market and claiming to do so in the capacity of auditors. However, most of these “specialists” have originated from business-related entities operating in business aviation. They have picked up odds and ends of knowledge and gained access to client databases in order to aggressively market their services by offering themselves to aircraft owners as “experienced experts”. They claim they can improve operating performance of the owner’s business aircraft. RUBAA recommends a thorough check of the reputation and experience of the person claiming to be an auditor and the company they represent as well as the audit and scores-awarding methodology (that the auditor should provide). Obtaining recommendations from industry peers with prior experience with the company in question is recommended as well. One should also carefully verify letters and references provided by the auditor, either by verbal or written contact with the people that signed such letters or references.

Of course, in a business such as aircraft management, we find it impossible to utilize a universal automated data analysis system, no matter how data-rich it is. Even developers of such systems offer customizable software to their clients, who use purchased software for their own analysis/monitoring of aircraft operation without disclosing the outcomes to third parties.   There are numerous subtleties associated with the special features and preferences of an aircraft owner and making managerial decisions and selecting maintenance companies based on a formal criterion of “best price” does not always mean “better”, to say nothing of “safer”. The Internet abounds with most alluring offers from aviation fuel suppliers, airports and other services that do not exist in reality, while the evaluation of aircraft operating performance, based on such data simply misleads the aircraft owner.

It is critical to remember this, especially when an audit is being conducted for the benefit of an aircraft owner: an operator’s objective is to make clear that flight safety is a priority, and financial “economy” in this regard can not only cause a loss of property but also potentially lead to severe consequences. It is also vital to maintain confidentiality of details of the aircraft owner’s activities that the auditor has access to during the audit of performance of the operator or management company, which operates the owner’s aircraft. Confidentiality of such details is usually secured by a special agreement between the aircraft operator (owner) and the auditor. If the auditor refuses to sign the agreement or such data is stored on servers or in databases not controlled by the aircraft operator (owner), this may result in damage to the business, company reputation and other losses, including a reduction in operating safely.

When dealing with this subject, RUBAA has set out to achieve two goals at a time: 1- to emphasize again that safety should be the top priority in the operations of an airline (a business aviation aircraft operator) and 2 – to warn companies and aircraft owners against working with questionable partners offering dubious and unprofessional services under the guise of an “innovative” product.

Back in 2011, RUBAA adopted a series of regulations on the procedure of accreditation of personnel carrying out production and financial audits of aircraft operators, including those involved in the commercial operation of aircraft.

Accreditation is conducted to verify the qualifications of auditors carrying out production and financial audit of aircraft operators, including those involved in the commercial operation of aircraft, for the benefit of aircraft owners (proprietors). This improves the quality and reliability of audit service providers and to make business aviation entities aware of the features and opportunities delivered by a quality audit of operators.

The main documents that the applicant should provide (during accreditation) are the methodology and criteria used by the applicant in its work, and an independent expert’s opinion on this methodology.

The accreditation is voluntary, but availability of the respective certificate issued by RUBAA can assist the audit customer in selecting the service provider.

Of course, “auditors do not come on their own initiative”. If this happens, there must be somebody with a vested interest, maybe, a competitor.

On behalf of RUBAA, I urge everyone to be on guard and rely on facts, documents and the auditor’s reputation when selecting an audit firm. Unfortunately, mistakes in this regard can have lamentable consequences”.

By Evgenii Iurievich

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