Thomas Cook paid consultants £21m in fees

THOMAS COOK’S former auditor, PwC, was paid £21m for providing consultancy and non-audit work for the travel firm between 2007 and 2016, MPs have been told.

Rival accountancy firm EY, which replaced PwC in 2017, also pocketed £2.4m in non-audit work on top of £7.6m paid for auditing.

The revelation to MPs on the Commons Business, Energy and Industrial Strategy Committee (BEIS) led to its chair Rachel Reeves calling the firms “complicit” in Thomas Cook’s downfall by not pushing back against the company’s over-confident assessment of the business’s future.

She said: “How many more company failures, how many more egregious cases of accounting do we need? We’ve had BHS, Carllion and Patisserie Valerie, and now we’ve had Thomas Cook.

“How many more do we need before your industry opens its eyes and recognises that you’re complicit in all of this and you need to reform?

“I think the conclusion policy makers will take from today that we can’t rely on you to do the right thing and legislation is needed to have a tougher regulator.

“We need tougher regulation because your industry is not willing to make the changes needed. Reform is long overdue and the evidence today makes it clear that that moment has got to come and got to come soon otherwise we’ll have more business failures and you will be complicit in those.”

The criticism came after PwC’s head of audit, Hemione Hudson, said it also provided the travel company with advice on pay levels for executives at the same time as auditing the accounts between 2007 and 2012, earning £4m.

She told the committee that there are now “significant restrictions” on the additional services that can be provided by a firm’s auditor, but insisted that PwC’s work in relation to Thomas Cook was “in accordance with the rules that were in place at the time”.

Ms Hudson said earlier this year PwC voluntarily announced that it will phase out selling non-essential consulting services to its FTSE 350 audit clients.

She said: “I don’t think doing those non-audit services would have impacted the quality of the audit work, but I do think it’s very important that we do have a trusted audit profession.”