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PwC grilled by MPs over its dual role at failed Thomas Cook

Joanna Bourke
The CAA has stepped in to manage the refund process on behalf of Thomas Cook: REUTERS

Accountancy giant PwC was on Tuesday blasted by MPs for a “conflict of interest” on its work with Thomas Cook ahead of the tour operator collapsing under a £1.7 billion debt mountain.

Senior figures at Thomas Cook’s former auditors PwC and EY were grilled as they gave evidence to the Business, Energy and Industrial Strategy Committee’s inquiry into the travel firm failing.

PwC audited the company from 2007 to 2016, and EY took over a year later.

The committee chair, Labour MP Rachel Reeves, hit out at PwC for its dual role for part of that period in advising Thomas Cook’s remuneration committee, which earned it around £4 million, alongside being the firm’s external auditor.

Reeves suggested the dual work only stopped amid public pressure and accountancy rule changes.

She told PwC representatives: “The behaviour of your firm and the other big audit firms only changes because the rules change.”

Reeves asked Hemione Hudson, head of audit at PwC, if she thought this dual role was right or wrong, and said there looked to be conflicts of interest.

PWC’s Hudson said: “I do understand how people are concerned about the conflicts of interest.”

Hudson added: “I understand we need to move further than the rules.”

Reeves also asked Richard Wilson, an audit partner at EY, if he had concerns about Thomas Cook’s accounts. Wilson said “yes we did”, particularly with the 17/18 numbers.

Thomas Cook failed last month after it was unable to secure a rescue deal. That left 9000 UK jobs at risk and triggered the biggest peacetime repatriation by the Civil Aviation Authority to return home some 150,000 UK holidaymakers that were stranded.

Separately today, package holidays firm On The Beach said the failure of rival Thomas Cook has given it “an unprecedented opportunity to take additional market share at an increased rate”.

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