THE UK's accounting watchdog is extending its investigation into the collapse of travel operator Thomas Cook. The Financial Reporting Council (FRC) announced a probe into EY's audit of Thomas Cook's financial statements for the year ended 30 September 2018 following the company's collapse earlier this year.

The regulator will now also investigate the audit of the firm's financial filings for the year ended 30 September 2017.

Thomas Cook appointed EY as auditor in 2017, replacing Big Four rival PWC. The following year EY "strongly recommended" that the company strengthened its accounting practices.

The FRC said it will continue to keep the scope of the investigation under close review, but did not provide an update into the work done as part of the probe so far.

It was revealed earlier this month that Thomas Cook entered insolvency in September with total liabilities of £9bn, owing £585m to customers and £45m to employees.

Around 50,000 customers are still waiting to be refunded, despite the fact that the Civil Aviation Authority has already paid out £160m.

The Insolvency Service said £5.7bn was owed to other group companies and £1.7bn was owed to banks and other lenders.

The government's business select committee also launched its own investigation into the firm's collapse.

Company bosses were hauled in front of the committee of MPs in October to explain their part in Thomas Cook's downfall.

Chairman Frank Meysman pointed the finger at the government, insisting that the company had put "a lot of effort" into trying to turn it around.

Thomas Cook's lenders and lead shareholder, Chinese conglomerate Fosun, had committed to a £900m rescue deal, he said. But their condition was that the government provide an extra £200m for security over the winter months, where trading is flat for holiday firms, he said.

Chief executive Peter Fankhauser added that a deal had been possible until the dying hours before Thomas Cook failed on Sunday 23 September.

He said he would not "dare criticise the government," but said the plan would have made the firm "the best funded travel company in Europe".

However, business secretary Andrea Leadsom said a government bailout would have been throwing "good money after bad".

(c) 2019 City A.M., source Newspaper