Sep 24, 2019

Accounting regulator looks at Thomas Cook investigation

The UK accounting regulator looks likely to consider an investigation into the collapse of Thomas Cook that would focus on two Big Four audit firms - EY and PwC. The Financial Reporting Council said it was working with the Insolvency Service, which put the travel group into compulsory liquidation on Monday, "As a matter of urgency" to decide whether there was a case for investigation and enforcement action. EY took over in 2017 from PwC, which had audited Thomas Cook since 2008. Thomas Cook's accounts have been scrutinised over the use of exceptional items, through which a company can strip out one-off charges or payments to show underlying performance. Thomas Cook's chief finance officer Sten Daugaard, who took over the role in December, reviewed the way the company disclosed exceptional items, which increased from £104m to £150m last year. At its interim results this year, Thomas Cook wrote down a final £1.1bn of goodwill from that deal, at the same time as revealing a debt pile of £1.2bn. Thomas Cook's debt came under heavy pressure this summer as concerns deepened about its future.

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