Worthing Book keeping investigate Tesco accounting scandal that misled auditors
 

It’s been revealed that the ongoing investigation into Tesco and the £250m accounting scandal is the result of a “small group” of people within the company who went out of their way to intentionally deceive accountants and auditors in an attempt to compliment the company’s finances, according to a senior source.

The Telegraph reports that deceptive practices supposedly took place for over a year but on a lesser scale. It’s said that the practices were increased substantially over the course of the last six months as pressure mounted on company sales, with revenue recognition irregularities noticed in its half year results.

Tesco, one of the world’s biggest retail groups and the largest private employer in the UK, are expected to reveal details of its £250m scandal on Thursday 23 October. It’s believed said irregularities relate to the company booking sales-conditional suppler contributions it couldn’t hit.

Recognising that targets wouldn’t be met, a “small group” of Tesco employees went out of their way to make deals with a number of suppliers, tempting them to make the aforementioned payments by promising future financial reward.

Rather than being an accounting issue, the scandal is the result of “inappropriate behaviour” according to the source, who added that there was a “deliberate intention not to be upfront with auditors.”

The global supermarket giant has been put on notice by the Financial Conduct Authority (FCA), the UK’s accountancy watchdog, who is currently investigating them after admissions made in September.

Since the scandal, Tesco have been roundly criticised and their share prices have fall by 48%, with the investigation having played a major role in the decline.

Adrian Bailey, the select committee chairman, recently said that that the overstatement was a “stratospheric error”, claiming that the committee could look into the issue.

“We may well as a committee want to look at this. Not just at Tesco but at what is going on in the retail industry and in the relationship with the suppliers to see if the issues we came across two years ago are still there.”

Worthing Book keeping, an accounting firm based in Worthing, regularly responds to industry news. A spokesman for the company says that Tesco got too far ahead of themselves.

“Lots of companies out there will try to recognise revenue early, recording costs at some later date, and this happens regularly to a degree and is in some circumstances acceptable if kept within certain limits,” explained a Worthing Book keeping spokesman. “However, it’s clear that Tesco weren’t acting within those limits and have instead made the mistake of going too far, leading to them having revenue that they hadn’t actually earned by that time. They should have booked the costs sooner.”

Adding that, “This is a textbook example of what we call an ‘earnings management’ issue. Tesco has been far too aggressive in juggling expenses and revenues and it’s come back to bite them.”

For professional, experienced and affordable book keeping in Worthing, visit www.worthingbookkeeping.co.uk .