Britain’s accounting watchdog has begun an investigation into EY’s audit of Thomas Cook’s accounts, just over a week after the world’s oldest travel firm collapsed.

The Financial Reporting Council said its enforcement division was investigating EY’s audit of the financial statements of Thomas Cook for the year to 30 September 2018.

“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,” it said.

EY took over from PwC as Thomas Cook’s auditors in 2017. Both are among the UK’s big four accountancy firms.

Five months before its collapse, Thomas Cook reported a £1.5bn first-half loss in May and issued its third profit warning in less than a year. In that set of accounts, EY warned there was “significant doubt” whether Thomas Cook could continue as a going concern.

On Monday, the FRC said it had issued a revised going concern standard following a spate of corporate failures in which auditors failed to flag up concerns about the company’s viability.

The collapsed tour operator had three different finance chiefs in two years as its financial problems deepened, and has faced questions about its accounting methods. #casansaar (Source - The Guardian)