BRITAIN’S AUDIT and accounting watchdog has announced it is “closely monitoring the situation” following Tesco’s shock revelations that it overstated its profits by £250m causing its share price to plummet and four senior executives to be suspended.
The Financial Reporting Council (FRC) has now stepped into the fray after the Serious Fraud Office announced it too was keeping a close eye on the unfolding supermarket drama.
Tesco has already tasked Deloitte and its lawyers Freshfields to probe the accounting scandal, which slashed expected half-year profits and caused its share price to freefall to its lowest point in a generation and become the UK’s worst-performing supermarket over the last quarter.
The FRC said it is “monitoring the situation following Tesco’s announcement closely”. The FRC has disciplinary powers in relation to misconduct by accountants and, through the Financial Reporting Review Panel, can also require a company to restate its financial statements.
“The FRC does not have powers to monitor or require restatement of unaudited trading statements. It will consider the outcome of the investigation announced by the company and determine whether it should take regulatory action.”
The watchdog’s announcement was made after news emerged that new finance chief Alan Stewart being parachuted in three months early from M&S and serious questions being raised over the company’s corporate governance credibility.
Reports have also suggested that its former group FD Laurie McIlwee, who handed in his notice and left the board in April, hasn’t set foot in the group’s Hertfordshire headquarters since that date, despite technically remaining a consultant.
Further evidence of Tesco’s deepening crisis are that it has now delayed the opening of a new store in Immingham, Lincolnshire, as well as boarding up a new £22m store in Chatteris, near Ely in Cambridgeshire, scheduled to open in November.
Tesco shares have now almost halved in value (48%) over the past 12 months.