Investigations into the audit of the financial statements of Thomas Cook Group plc
19 December 2019
The matters being investigated by the Financial Reporting Council (FRC) concerning EY’s audit of the financial statements of Thomas Cook Group Plc (Thomas Cook) for the year ended 30 September 2018 will now include an investigation into EY’s audit of Thomas Cook’s financial statements for the year ended 30 September 2017.
The FRC’s investigations are being conducted by the FRC’s Enforcement Division under the Audit Enforcement Procedure.
The FRC will continue to keep the scope of the investigations under close review.
Notes to editors:
1. On 1 October 2019 the FRC announced the opening of an investigation into the audit of the financial statements of Thomas Cook Group Plc (Thomas Cook) for the year ended 30 September 2018. As required by the Audit Enforcement Procedure the expansion of the FRC’s investigation to cover the audit of the financial statements for the year ended 30 September 2017 has been effected by opening a second investigation approved by the Conduct Committee.
2. The FRC’s mission is to promote transparency and integrity in business. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate reporting; and operates independent enforcement arrangements for accountants and actuaries. As the competent authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit quality.
3. Past FRC Enforcement Outcomes can be found here.
4. To meet its responsibility as the competent authority in respect of audit enforcement, the FRC operates the Audit Enforcement Procedure. This procedure applies to the investigation and sanctioning of breaches of the various requirements of the statutory auditors of Public Interest Entities (PIEs) and any other cases retained by the FRC including AIM companies with a market capitalisation in excess of €200m.
In brief, the stages of the Audit Enforcement Procedure are:
- Initial case examination and decision to investigate
- Decision by Executive Counsel as to whether to issue a Decision Notice (a notice with the findings and recommended sanction);
- Referral to Enforcement Committee and decision by the Enforcement Committee whether to issue a Decision Notice; and
- Referral to a Tribunal
- In order for a matter to be referred for investigation by the FRC’s Executive Counsel under the Audit Enforcement Procedure, the FRC’s Conduct Committee is required to decide whether there is good reason to investigate an Allegation in relation to a Statutory Auditor and/or a Statutory Audit Firm.
Investigations are usually conducted by Executive Counsel and the Enforcement division. The FRC’s Conduct Committee may direct that the investigation is delegated to a Recognised Supervisory Body (RSB) which will provide an investigation report to the Executive Counsel so that (s)he may decide whether to issue a Decision Notice.