UK Financial Reporting Council (FRC) Fines EY $6.4 Million (£4.9 Million) for Serious Breaches of Standards in Audits of Collapsed World Oldest Travel Agency Thomas Cook in 2017 & 2018 Including Not Questioning £2.6 Billion Goodwill Balance Representing 40% of Assets, Thomas Cook Collapsed in 2019 with £1.7 Billion Debt, Placed 9,000 Jobs at Risk & 150,000 Holidaymakers Stranded Overseas, Thomas Cook Sold to China Conglomerate Fosun & Resold to Poland Travel Platform eSky Group
12th April 2025 | Hong Kong
The UK Financial Reporting Council (FRC) has fined EY $6.4 million (£4.9 million) for serious breaches of standards in audits of collapsed world’s oldest travel agency Thomas Cook in 2017 & 2018, including not questioning £2.6 billion goodwill balance representing 40% of assets. Thomas Cook collapsed in 2019 with £1.7 billion debt, and placed around 9,000 jobs at risk & 150,000 holidaymakers stranded overseas. Thomas Cook company was sold to China conglomerate Fosun, and resold to Poland travel platform eSky Group. UK FRC (11/4/25): “The Financial Reporting Council (FRC) has fined EY nearly £5m for “serious breaches of standards” in its audits of Thomas Cook’s financial statements for the years 2017 and 2018, which led to the travel company’s collapse in 2019. EY and one of its partners, Richard Wilson, admitted to failings related to their audit work, including the failure to adequately assess Thomas Cook’s financial health and its going concern status. The FRC found that EY’s work in relation to Thomas Cook’s financial position was insufficient, particularly given the heightened risks surrounding the travel firm at the time. Thomas Cook, once the world’s oldest travel agency, collapsed in 2019 under the strain of a £1.7bn debt burden. The company’s failure put 9,000 jobs at risk and left 150,000 holidaymakers stranded overseas. The brand was eventually acquired by the Chinese company Fosun and later sold to the Polish travel platform eSky Group. Mortimore highlighted the severity of the failures in the 2018 audit, given Thomas Cook’s worsening financial condition. The breaches primarily concerned EY’s failure to challenge Thomas Cook’s going concern status, which is critical in determining a company’s ability to continue operations. The FRC found that EY and Wilson did not adequately question the company’s financial situation, which could have uncovered material uncertainties. The FRC also flagged the lack of professional scepticism when EY assessed Thomas Cook’s goodwill balance, which represented about 40% of the company’s assets and was valued at £2.6bn. Given the company’s poor trading performance, the FRC stated, the goodwill balance should have been questioned more rigorously. Further compounding the issue, the FRC noted that EY had failed to adequately assess potential conflicts of interest. The close relationship between the restructuring partner and Thomas Cook’s CFO raised concerns about EY’s independence in the audit process, leading to a “familiarity threat” that could have impacted the objectivity of the assessment. Although the FRC found the breaches were not intentional or reckless, it noted that EY’s audit work fell short of the professional standards expected. As a result, EY was fined £6.5m, which was discounted to £4.9m due to the firm’s cooperation and admission of fault. Wilson received a fine of £140,000, reduced to £105,000 for the same reasons. EY also agreed to cover the costs of the FRC’s investigation. EY further stated that it has made significant investments in new technology and processes to improve its audit practices and reinforce a culture of professional scepticism among its teams.
“ UK Financial Reporting Council (FRC) Fines EY $6.4 Million (£4.9 Million) for Serious Breaches of Standards in Audits of Collapsed World Oldest Travel Agency Thomas Cook in 2017 & 2018 Including Not Questioning £2.6 Billion Goodwill Balance Representing 40% of Assets, Thomas Cook Collapsed in 2019 with £1.7 Billion Debt, Placed 9,000 Jobs at Risk & 150,000 Holidaymakers Stranded Overseas, Thomas Cook Sold to China Conglomerate Fosun & Resold to Poland Travel Platform eSky Group “
EY: “The delivery of 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. We are committed to learning from these mistakes and have strengthened our procedures, training and guidance, as well as our global audit methodology, to address the issues identified.”
UK Financial Reporting Council (FRC) Fines EY $6.4 Million (£4.9 Million) for Serious Breaches of Standards in Audits of Collapsed World Oldest Travel Agency Thomas Cook in 2017 & 2018 Including Not Questioning £2.6 Billion Goodwill Balance Representing 40% of Assets, Thomas Cook Collapsed in 2019 with £1.7 Billion Debt, Placed 9,000 Jobs at Risk & 150,000 Holidaymakers Stranded Overseas, Thomas Cook Sold to China Conglomerate Fosun & Resold to Poland Travel Platform eSky Group
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