You are working for a large international accounting firm who are evaluating the
quality of the voluntary disclosure that accompanies the audited financial statements
of their clients. In light of the provisions of the UK Corporate Governance Code 2018
the need for fair and balanced assessment of a company’s position and prospects is
an explicit principle.
In September 2019 Thomas Cook Plc collapsed and on 1st October 2019 the FRC
announced an investigation into the EY audit of the company. Recent FRC
investigations have highlighted serious concerns in the conduct of the accounting
profession in discharging their duty to ensure that information provided in the audited
financial statements shows a true and fair view.
Your firm is aware of the concerns that have been raised by regulators including the
Financial Reporting Council (FRC) in the UK about narrative disclosure. To improve
the firm’s ability to evaluate the quality of voluntary disclosure you have been asked
to explore whether poor quality voluntary narrative disclosure and presentation of the
annual accounts could have been a contributory factor in failing to alert readers
about the state of affairs at Thomas Cook plc. From this, you are to conclude
whether there are flags in such disclosure which your firm could use to signal risks in
the objectivity of client annual reports.

Required
You must present a professional report for your firm with supporting references from
academic research, professional sources and examples from your company.
For Thomas Cook Plc:
Critically evaluate the quality of the VOLUNTARY NARRATIVE disclosure for ONE
aspect of the company’s 2018 report contrasting these with another company of your
choice AND the half year results for 2019 published on 16th May 2019. You may
consider historic disclosure patterns in Thomas Cook Plc to support your findings.
OR
Critically evaluate the quality of the overall presentation of the 2018 financial report
and the impact this may have upon the messages received by users regarding
corporate performance in 2018 and contrast this with the messages communicated
in the half year results for 2019 published on 16th May 2019 and those
communicated by another company of your choice. You may consider historic
presentation patterns in Thomas Cook Plc to support your findings
In each case explore whether there is evidence of impression management being
used more extensively by Thomas Cook plc, exploring whether this may have
contributed to hiding the crisis within the company. From this analysis conclude and
justify whether there are key flags which your firm could use as markers to indicate
increased risk of bias in the financial statements of your audit clients
Overall Word Limit: 2000 words