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The Thomas Cook collapse. What is Internal Audit’s involvement?

On Monday 23 September 2019, news spread that the 178 year old business had collapsed. This has been a long time coming for the company. As mentioned by Dominic O’Connell, BBC Business Correspondent, the business was buried in an approximate £2bn debt (including the pension). Capital raising occurred in 2013, however by 2017, the business was back in the red to the sum of £1.6bn. Despite the inability to repay debt, decreasing profit and goodwill making up almost 40% of total assets, the Board still made an assessment for FY18 that the accounts can be prepared on a going concern basis. Whilst I am not here to challenge management’s going concern assessment, or the external auditor for accepting it, I will question the extent to which Internal Audit should have been involved in identifying, and possibly, preventing, the collapse of such a legacy business.

The UK business scene has been in a bit of trouble for a number of years now. Debenhams, HMV, Homebase, Patisserie Valerie, House of Fraser, Toys ‘R’ Us, Maplin and Carillion, are jus