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Ernst & Young (EY) is facing the consequences of its mishandling of Thomas Cook’s financial audits, with the UK accounting giant fined £4.9 million by the Financial Reporting Council (FRC).
The regulator announced the penalty on Thursday, stating there were “serious breaches” in the audits conducted for the travel company in 2017 and 2018.
Richard Wilson, the EY partner responsible for those audits, was personally fined £105,000.
Audit Shortcomings Amid Thomas Cook’s Downfall
Thomas Cook, once a cornerstone of the global travel industry, collapsed in September 2019 after failing to secure a crucial £250 million investment.
The travel group had struggled for years under the weight of mounting debt, tough online competition, and uncertainties surrounding Brexit that affected bookings.
After years of mergers that increased its financial burden, the company was left with high operating costs and an unwieldy network of physical branches.
Its sudden bankruptcy triggered the loss of 22,000 jobs around the world and forced the UK government to carry out its largest peacetime repatriation, flying home around 150,000 stranded travellers.
Many affected holidaymakers had trouble recovering their money.
The FRC noted the audits failed to fulfill their essential role: “Both audits failed in their principal objective: that of obtaining reasonable assurance that the financial statements were free from material misstatement.”
It added that “the deficiencies” in the 2018 audit “were particularly serious” considering the company’s “deterioration in performance compared with expectations”.
However, the FRC clarified that the failings were not due to dishonesty or deliberate misconduct: “It was not suggested that the breaches were intentional, dishonest, deliberate or reckless.”
EY Responds, Ownership Changes Hands Again
EY responded by acknowledging its shortfalls, stating, “Providing high-quality audits remains our priority and we deeply regret that the 2017 and 2018 audits of Thomas Cook fell below the standards that we expect.”
Following its collapse, Thomas Cook was bought by Chinese conglomerate Fosun in late 2019 for £11 million and relaunched as an online travel agency.
In 2024, the brand changed ownership again when it was acquired by Polish travel firm eSky.
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