EY probed by watchdog over unauthorised auditor studies

Ernst & Young and two of its member firms are being investigated for due process failures that led to the unauthorised issuance of auditor reports.

The reports were issued to unnamed entities without proper approval from a senior statutory auditor, a spokesperson for Britain’s accounting regulator, the Financial Reporting Council, said.

EY, one of the world’s ‘Big Four’ accounting and consulting firms, said it had informed the companies involved, checked the audit files and found that no financial adjustments or changes to audit opinions were required.

The decision to open the investigation was made at a meeting of the FRC’s Conduct Committee on 22 July 2025. The investigation will be conducted by the FRC’s Executive Counsel.

A spokesperson for EY told This is Money: ‘We self-reported this matter to the FRC and will continue to fully co-operate with the investigation.’

In April 2025, the FRC fined EY nearly £5million for ‘serious breaches of standards’ over its audits of Thomas Cook in the years before the travel firm’s collapse in 2019.

Probe: Ernst & Young and two of its member firms are being investigated for due process failures that led to the unauthorised issuance of auditor reports

In its decision in April, the FRC said EY and one of its then partners, Richard Wilson, had admitted to failings related to their assessment of Thomas Cook’s financial statements from 2017 to 2018. 

The breaches related to assessing Thomas Cook’s goodwill impairment level and going concern status, as well as adequately considering the risk to EY’s independence during the 2018 audit, the FRC said. 

Thomas Cook, the world’s oldest travel company, collapsed in 2019 after it failed to finalise a restructuring plan that would help it tackle a £1.7billion debt burden.

EY was officially fined £6.5million over the Thomas Cook debacle, discounted to £4.9million, given its willingness to admit wrongdoing. 

Mr Wilson was fined £140,000, a sum that was reduced to £105,000 for the same reason. EY also paid the costs of the FRC’s investigation. 

In 2024, PwC and EY were hit with multimillion-pound fines by the sector’s watchdog over their audits of failed minibonds firm London Capital and Finance.

LCF collapsed in early 2019 after it was unable to meet the payments it had promised to bondholders on high-risk, unregulated investments, owing around £237million to nearly 12,000 people, many of them elderly.

In 2024, EY, which was responsible for auditing LC&F’s 2017 accounts, the last before it collapsed, was fined £4.4million, with its audit engagement partner Neil Parker paying a £47,250 sanction. 

At the time, the FRC said EY and Mr Parker admitted six breaches, with failures including ‘multiple breaches of fundamental requirements in several key areas’. 

In 2021 EY was fined more than £2.2million by the FRC for failing to properly challenge Stagecoach bosses when auditing their accounts for 2017.

The FRC, again in 2021, also sanctioned Mark Harvey, EY’s former auditing engagement partner, fining him £100,000 for his role reviewing Stagecoach’s financial statements.