UK Watchdog Begins Investigating Tesco's Books
International Business Times
Published Oct 01, 2014 04:56AM ET
Updated Oct 01, 2014 05:15AM ET
UK Watchdog Begins Investigating Tesco's Books
By Sneha Shankar - The UK's Financial Conduct Authority, or FCA, has launched an in-depth investigation into last month's accounting error at Tesco (LONDON:TSCO), which led to an overstatement of expected profits for the world’s third-largest retailer. The mistake, which has been dubbed a scandal, wiped off more than $3 billion off the company’s market value after it was announced.
The company had announced on Sept. 22 that it had overstated its profit expectation for the first half of the year by 250 million pounds ($404 million). The retailer also announced that it will call in forensic accountants and lawyers to conduct an internal investigation into the matter, according to Reuters. The company has suspended four senior executives, including UK managing director Chris Bush.
“The Financial Conduct Authority (FCA) 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,” the company said, in a statement Wednesday, adding: “Tesco will continue to co-operate fully with the FCA and other relevant authorities considering this matter.”
The country's Serious Fraud Office had also stated that it is prepared to intervene if necessary while the Financial Reporting Council, the British accountancy regulator, had said that it was "monitoring the situation closely," but is waiting for Tesco to finish its internal investigation before beginning its own inquiry, BBC reported.
"It seems unbelievable that a retailing colossus like Tesco should not have a full-time finance director overseeing everything,” Adrian Bailey, chairman of the UK parliament, had said last month, reacting to the news of Tesco’s overstatement of its profits.
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Written By: International Business Times
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