Posted on September 28, 2019  
by Noel Guilford

After my father died I found among his papers a booklet detailing the history of his mother’s family, the Goodliffes, over several generations during the 19th century, during which they built a thriving wholesale grocery business in the Midlands.

In one passage it describes how Thomas Goodliffe, my great-grandfather, went on the first escorted tour to Italy organised by his good boyhood friend and namesake Thomas Cook. As the Goodliffes built a food wholesaling business, Thomas Cook built his travel agency business.

I was reminded of this on reading that his eponymous business had gone into administration this week. The 178-year-old company left around 600,000 people stranded, including around 150,000 Britons currently being repatriated. It employed more than 22,000 staff around the world including its 9,000 UK-based staff who now face having to apply to the Insolvency Service for their wages after being informed they would not be paid their September salaries.

Customers, staff and, of course, creditors left with nothing but pain after a failure that was evident to many and should have been avoided.

As one commentator said: “It is obvious there has been no financial control in that company for some time. Looking at the books, you can see a litany of accounting failures.”

While much of the blame must lie at the hands of management who should have migrated the business away from retail several years ago – as one travel and tourism expert Dr Neil Robinson, of the University of Salford Business School said: “Their price, promotion and how people actually booked Thomas Cook holidays did not keep pace with changing technology and demand” – the debacle ultimately highlights a big problem with financial reporting in the UK and that it is too easy for companies to bury bad news in their reporting.

Thomas Cook’s Group accounts for the year-end September 30 contains a 194-page set of accounts, which presents positive earnings several pages before the losses are made clear.

Only on page 118 do you see the profit and loss account, and not until page 122 do you see the weak balance sheet. This shows a big shortfall in financial reporting eloquently summed up by Professor Richard Murphy of City University:

The problem we have with audit is not that there are only four large auditors (although that is an issue). It is instead that the accounts that we have do not meet the needs of stakeholders and they are audited in accordance with a framework that does not require the expression of a true and fair view, but does instead require confirmation that a particular set of inappropriate rules have been applied in the production of those accounts. Until such time as the whole conceptual framework [of] accounting is reformed, audit is re-established so that it requires the expression of a subjective opinion on the part of the auditor on the truth, fairness or otherwise of the accounts that they have reviewed nothing will change the quality of the audits that society currently suffers.

Sadly, it is not just big businesses that fail due to accounting and financial reporting failures. Too many entrepreneurial business owners still fail to get accurate monthly numbers showing the performance of their businesses and – more importantly – highlighting the warning signs where they are at risk.

It is easy and inexpensive to produce a detailed monthly management report, including the all-important cash flow statement, using the accounting software available these days to businesses.

If you aren’t getting this information – or don’t know how – isn’t it about time you did? And if you need help drop me an email to or call 07768 350762.

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Noel Guilford

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