Thomas Cook's auditors will be investigated on their role in signing off the last set of accounts for the travel firm prior to its collapse, the accounting regulator has announced.
Financial Reporting Council (FRC) said it would look at whether EY acted properly in scrutinising the numbers last year and could censure the individual accountants or the financial services giant itself.
It follows a similar inquiry launched by Parliament's Business, Energy and Industrial Strategy (BEIS) select committee, which is looking at the collapse and has demanded the appearance of executives and auditors for a hearing.
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Eye on bonuses
MPs on the committee are particularly keen to look at the bonuses awarded to bosses and EY's role in auditing.
EY replaced PwC as auditors in 2017 and told Thomas Cook accountants they should stop claiming regular costs on the balance sheet as "one-off" items.
A common practices for businesses is to strip out "one-off" costs from certain profit measures, but critics argue this could be seen as a route to flattering the numbers.
If the FRC's investigation finds any wrongdoing, it could lead to a severe reprimand and a fine for those involved.
The audit sector has faced a barrage of criticism in recent years, with the UK Government vowing to tighten up the industry.
Conflict of interest for Big Four
One of the problems is the Big Four accounting giants - PwC, EY, Deloitte and KPMG - offer numerous financial services to businesses, in addition to auditing.
This runs the risk of creating conflicts of interest and independence questions, but the Big Four are keen to promote other services and advice, which tend to generate higher revenues.
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Business secretary Andrea Leadsom has also set up a Thomas Cook taskforce to ensure lessons are learned and to deal with the company's liquidation, which is being run by the Government's official receiver.
The cost to taxpayers
Questions remain over how much the taxpayer will pick up in unpaid wages and redundancy payments to the 9,500 UK-based Thomas Cook staff.
It was also reported Ms Leadsom failed to meet with any senior directors from Thomas Cook prior to its collapse when the company was seeking reassurances from ministers.
The business was directed to the Department for Transport instead.
On Monday, it was also revealed that some customers may have to wait up to two months to receive a refund on cancelled holidays.
Previous investigations by the FRC have included a £6.5 million fine for PwC over its audit of BHS prior to its collapse, and a £4 million fine for KPMG over its auditing of Co-op Bank's purchase of Britannia Building Society.