FRC watchdog probes EY audit of Thomas Cook accounts
The UK’s financial watchdog has launched an investigation into EY’s audit of Thomas Cook’s last set of financial results.
The Financial Reporting Council (FRC) has started its probe into EY’s audit of the collapsed tour operator’s financial year ending 30 September 2018.
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“The FRC will keep under close review both the scope of this investigation and the question of whether to open any other investigation in relation to Thomas Cook, liaising with other relevant regulators to the fullest extent permissible,” the watchdog said.
“We can confirm that EY has been notified of the FRC’s intention to conduct an investigation into the audit of Thomas Cook Group plc for the year ended 30 September 2018,” an EY spokesperson said.
“We will be fully cooperating with FRC during their enquiries. It would be inappropriate to comment further at this time.”
Thomas Cook collapsed last week with a £1.7bn debt pile, forcing the UK government to spend millions in taxpayers’ money to repatriate 150,000 Brits stranded abroad.
Questions have arisen around Thomas Cook’s use of so-called exceptional items in its accounts, which can bolster firms’ profits.
EY recently flagged “material uncertainty” in Thomas Cook’s half-year results to the end of March 2019.
It pointed out that conditions attached to Thomas Cook’s financing arrangements “may cast significant doubt on the company’s ability to continue as a going concern”.
The government’s Insolvency Service is already conducting an investigation into the 178-year-old British company’s liquidation.
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Business secretary Andrea Leadsom wrote to the Insolvency Service immediately after the holiday company’s collapse, urging it to fast track its investigation.
The scope of the investigation included scrutinising the role of the company’s directors.