EY Slapped With Nearly 5-Million-Pound Penalty Over Thomas Cook Audits

UK auditors Ernst & Young were Thursday hit with a £4.9 million fine (6.3 million euros) for "serious breaches" in its audits of collapsed travel firm Thomas Cook.

The UK watchdog, the Financial Reporting Council, slapped the fine on the company while one of its partners Richard Wilson, who was in charge of the 2017 and 2018 audits, was fined £105,000.

Debt-plagued Thomas Cook, which struggled against fierce online competition for years and blamed Brexit uncertainty for a drop in bookings, abruptly declared bankruptcy in September 2019 after failing to secure £250 million from private investors.

The failure of the 178-year-old doyen of the travel industry followed a lengthy period of chronic financial turmoil after a disastrous series of mergers left it burdened with soaring debt, a large branch network and high costs.

Its sudden demise led to 22,000 job losses worldwide and forced the UK government to embark upon the nation's biggest repatriation effort since World War II to fly home about 150,000 Britons.

Many disappointed holiday-makers struggled to be reimbursed.

"Both audits failed in their principal objective: that of obtaining reasonable assurance that the financial statements were free from material misstatement," the watchdog said in a statement.

It noted that "the deficiencies" in the 2018 audit "were particularly serious" given Thomas Cook's "deterioration in performance compared with expectations".

However, the watchdog stressed that it was "not suggested that the breaches were intentional, dishonest, deliberate or reckless".

In a statement, EY said 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".

Chinese conglomerate Fosun bought Thomas Cook in late 2019 for £11 million and relaunched it as an online travel agency the following year.

It was then resold in 2024 to the Polish group eSky.
 

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