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1.1 The following principles are to be applied as guidelines in the development of Agents' financial criteria. 1.2 Agents will be required to provide financial accounts to demonstrate a financially sound status and the ability to remain solvent and settle any bills. In the first two years of trading an applicant will also be required to provide a financial guarantee as detailed below. 1.3 After two years of trading as an Accredited Agent, Accredited Agent standing will be assessed against audited financial statements which will be evaluated as. That evaluation will determine the amount (if any) of a guarantee that must continue to be supplied.


4.1 General Principle:
4.1(a) There must be Net Equity. 4.1(b) The Net Equity must exceed the sum of Long Term Debt and other Long Term Liabilities. 4.1(c) The amount of Net Current Assets must exceed the Amount at Risk.

4.2 Net Equity:

4.2(a) There must be Net Equity in the business. The most recent audited (signed/certificated, where locally required) financial statements, to be received no later than 6 months following the latest accounting year-end of the Agent concerned, must show a positive balance on shareholders'/owners' funds. In computing the Net Equity, adjustments must be made to write down to zero the following: 4.2(a)(i) The balance of all intangible assets, including goodwill, 4.2(a)(ii) All unamortised research and development costs, 4.2(a)(iii) The value of all unquoted investments, 4.2(a)(iv) All encumbered Assets, 4.2(a)(v) All trading losses for the current financial period. 4.2(b) Net Equity must be greater than the sum of Long Term Debt and other Long-Term Liabilities. Long term is defined to be where repayment is due more than twelve months after the end of the financial period.


2.1 Bank Guarantee or Insurance Guarantee 2.1(a) To be provided by all Accredited Agents during the first two years of trading as an Accredited Agent. Guarantee should not be for a limited period; it must be open-ended and subject to a minimum notice period of cancellation of ninety (90) days. 2.2 Amount of Guarantee Required 2.2(a) The amount should be calculated on the basis of the estimation, as provided by the applicant, of the agent's BSP cash turnover in his first year as an IATA accredited agent, adjusted for the numbers of Days' the Sales at Risk. 2.2(b) The number of Days' Sales at Risk is to be counted from the beginning of the reporting period to the remittance date in respect of that reporting period or periods, plus a margin of five days. The result is to be divided by 360 days, and then applied to the annual cash turnover estimation to calculate the estimated Amount at Risk and the amount of guarantee required. 2.2(c) The local IATA manager will review the level of the guarantee after the first six months based on the Amount at Risk computed with reference to the average net cash sales of the Agent during that six month period. The amount of guarantee required will be increased if it is found to be insufficient to cover the Amount at Risk. 2.2(d) Thereafter, the Amount at Risk will be computed using the average annual net cash sales of the previous 12 months or for a lesser period as determined by local market conditions that may apply and the amount of guarantee required as adjusted by the IATA manager, if necessary.

4.3 Net Current Assets

4.3.1 Current Assets must exceed Current Liabilities. The following are to be excluded from Current Assets in making the calculation: 4.3.1(a) Stocks and work in progress, 4.3.1(b) Deposits or guarantees given to third parties other than IATA, 4.3.1(c) Loans to Directors, Associate Companies, 4.3.1(d) Payments in advance, 4.3.1(e) Deferred Expenses, 4.3.1(f) Doubtful debtors, 4.3.1(g) Blocked funds. 4.3.2 Current Liabilities are to be increased for the amount of Long Term Liabilities which exceed Net Equity. 4.3.3 Current Assets less Current Liabilities (the Net Current Assets) must be greater than the Amount at Risk (average annual net cash sales multiplied by the number of Days' Sales at Risk). The amount by which the Net Current Assets fall short of the Amount at Risk must be covered by a guarantee from the Agent, to be furnished by the Agent within thirty (30) days of being notified to do so.