The Business, Energy and Industrial Strategy (BEIS) Committee has today announced the launch of an inquiry into Thomas Cook, focussing on issues around the stewardship of the company, executive remuneration, accounting practices and the role of auditors. The inquiry is also likely to examine the impact on small businesses and suppliers of the collapse of Thomas Cook.
In the light of news reports highlighting “aggressive” accounting practices at Thomas Cook, Rachel Reeves MP, Chair of the BEIS Committee has also written today to Andrea Leadsom MP, Secretary of State for Business, Energy & Industrial Strategy, to raise concerns about the slow progress of audit reform. The BEIS Committee’s inquiry on the Future of Audit concluded in April and made a series of recommendations to toughen the regulatory regime and to improve audit quality.
The Committee’s inquiry will be seeking to question Thomas Cook executives including the CEO, Finance Director, and Chairman, as well as Thomas Cook auditors PwC and EY, the Financial Reporting Council, and the Insolvency Service. The Committee will also be approaching the Chairs of the company’s Remuneration and Audit Committees to give evidence and will take the opportunity to question Andrea Leadsom, the BEIS Secretary of State, on the Government’s approach to the collapse of Thomas Cook and to corporate governance and audit reforms.
Rachel Reeves MP, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said:
“Amid the frustration of holidaymakers and the misery of thousands of staff losing their jobs, the collapse of Thomas Cook has uncovered what appears to be a sorry tale of corporate greed, raising serious questions about the actions of Thomas Cook’s bosses and their stewardship of the business. This latest corporate failure has shone a light once again on the use of aggressive accounting methods to aid bumper pay-outs to company executives and the apparent inability of auditors and regulators to curb these practices in the wider interests of shareholders, investors, and the public.
“The BEIS Committee has a long-standing interest in corporate governance, executive pay, and audit reform which we are keen to follow up in this inquiry. The main players in the sad demise of Britain’s oldest travel firm should face public scrutiny and be held to account for their actions before the company collapsed.”
The Committee expects evidence hearings to begin in mid-to-late October. Specific dates and timings for the inquiry evidence hearings will be announced in due course.
Evidence submissions can be made on the Committee’s website. The deadline is 10th October.
Thomas Cook inquiry - terms of reference:
- The management, governance and stewardship of Thomas Cook Group plc;
- The remuneration policy and practice of Thomas Cook Group plc;
- The accounting practices of Thomas Cook Group plc and the audits conducted by PwC and EY;
- The role of regulators such as the Financial Reporting Council and Insolvency Service following Thomas Cook Group plc’s collapse;
- The impact of the collapse of Thomas Cook Group plc on small businesses and suppliers, and the support available