PRIC Protests Tui’s Planned Reappointment of PwC Auditors
Investor advisory group PIRC expressed its dissenting voice against the impending reappointment of PwC as auditor for travel firm Tui following the uncovered accounting error that had allegedly taken place during the time when it served as the firm’s outside auditor.
After its marred relationship with KPMG auditors who blew the whistle on the accounting error October 2010, Tui mulls reappointing PwC at its annual general meeting come February 3. PwC offered to replace KPMG after it parted Tui, according to PRIC, which opposes the reinstatement and urges shareholders of the travel firm to vote against it as the uncovered accounting error found in the financials of Tui strongly relates to the audit tasks performed by PwC prior to KPMG.
KPMG has opted not to seek another term as Tui’s auditor and eventually left the company early this month following the discovery of an erroneous accounting report in October 2010 that forced the travel agency’s UK division to write off £117 million of its shares.
Prior to this, Tui said in August 2010 that it found “small receivable balances” amounting to £29 million which were impossible to recover.
Tui’s board of directors even gave credit to KPMG for unraveling the errors in its accounting reports. But KPMG said discussions with Tui directors resulted in a resolution to put an end to its service to the travel operator owing to the way the travel operator treated its financial statements that have raised concerns for the future of its relationship with the company.
Added to this discovery was another accounting error for the financial years 2009 that forced the company to write off another £88 million and made Paul Bowtell, Tui’s chief financial officer, to resign.
The accounting errors were linked to the integration of two IT systems used by Tui when it merged with First Choice in 2007.
The two IT systems were used by both firms for its retail division and tour operations to document prices during holidays. The accounting error that emerged last year pointed to the discounts given by Tui to its customers that were not accounted by its acquired firm.