Tesco to be investigated by FCA over accounting scandal

The Financial Conduct Authority (FCA) has launched a full-scale investigation into the accounting scandal that has plunged Tesco into crisis.

In a statement to the stock exchange, the UK’s biggest retailer said: “The Financial Conduct Authority has notified Tesco that it has commenced a full investigation following the overstatement of expected profit for the half year which was described in our announcement of 22 September 2014 and which is currently the subject of an independent review by Deloitte. Tesco will continue to cooperate fully with the FCA and other relevant authorities considering this matter.”

The City regulator has the power to prosecute people who make deliberately or recklessly misleading statements to the stock exchange.

Last week, Tesco stunned investors by announcing that a whistleblower had alerted it to over-optimistic accounting for payments from suppliers and business costs, adding up to a £250m overestimate of its first-half profits. The statement came three weeks after a trading update that predicted first-half profit would be £1.1bn, down from £1.6bn a year earlier. Tesco said then that it was in contact with the FCA.

The Financial Reporting Council, the accountancy watchdog, and the Serious Fraud Office are also monitoring events at the group.

Tesco’s new chief executive, Dave Lewis, suspended four senior managers, including the head of Tesco’s UK food business, after the accounting shambles was discovered.

Tesco has called in Deloitte, the accountants, and the law firm Freshfields to carry out an independent review.

Powered by Guardian.co.ukThis article was written by Sean Farrell, for The Guardian on Wednesday 1st October 2014 08.14 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010


JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts