Accountancy Regulator investigates

Thomas Cook Auditor

In the immediate aftermath of the collapse of Thomas Cook, the 178th year old Travel Firm which led to the redundancy of 9,000 directly employed staff and stranded 150,000 holidays makers overseas, the Financial Reporting Counsel (FRC) has launched an enquiry into the audit of the Company carried out by Ernest & Young for the financial year ending 30th September 2018.

The FRC has power to impose unlimited finds and suspend individual Accountants if their investigation makes a finding of malpractice. The media has reported extensively on the multimillion £ packages paid to Senior Executives in Thomas Cook over the last number of years.

The Company had three Chief Financial Officers within the past two years alone and questions had been raised in relation to its accounting methods. The FRC said that it would continuously review the scope of it's enquiry and whether there is a need to liaise with other regulatory bodies.

Ernest & Young became auditors of Thomas Cook in 2017, taking over at that time from PWC.

Among other enquiries into the collapse the UK Insolvency Service has commenced an investigation into the circumstances leading to the demise of the Company and in particular the behaviour of the Board and Senior Executives.

In May 2019 the Company reported a loss of STG£1.5bn for the first half of its financial year, £1.1bn of which was as a result of its decision to eventually write down the value of My Travel with which Thomas Cook merged in 2007.

At that time Ernest & Young stated that there was a significant doubt as to the viability of Thomas Cook and whether it could continue as a going concern.

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This document is for information purposes only and does not purport to represent legal advice.  
© O’Rourke Reid 2019