A formal inquiry is to be launched into how Tui Travel ended up having to restate its accounts last October after the discovery of a £117 million black hole, according to a weekend report.
The Financial Reporting Council (FRC), the City body tasked with monitoring corporate governance, is to demand that Tui explain how the cash disappeared, according to The Sunday Telegraph.
Tui Travel has denied any knowledge of the investigation and the FRC also refused to comment, but the travel sector is one of five it has stated it is investigating this year as it looks for improvements in the way company results are reported.
The weekend report said the FRC is also likely to examine the circumstances surrounding the resignation of KPMG as Tui’s auditors soon after it blew the whistle on the missing £117 million.
The disclosure came in the wake of a corporate governance row surrounding the holiday giant which led to the resignation of the finance director and two independent directors and warnings from shareholder groups, the Association of British Insurers and Pirc.
In its resignation letter in December KPMG said it could no longer work with Tui due to a “strained relationship” with some of its directors and raised questions about the company’s “disclosure and accounting treatment in the financial statements”.
Tui’s investors grew concerned when the company, which operates the Thomson and First Choice brands, reinstated PwC, the auditors who had missed the £117 million black hole.
Tui said at its annual meeting last week that it would soon appoint a new chairman of its audit committee who would review the decision.
A spokeswoman for Tui described the Sunday Telegraph story as innacurate and added: “We have not been contacted by the FRC”.