By Ian Walker
LONDON--U.K.-based supermarket chain Tesco PLC (TSCO.LN) said
Wednesday it has started a full investigation following the
overstatement of expected profit for the half year, and is
cooperating fully with the U.K. Financial Reporting Council and
other relevant authorities considering this matter.
On Sept. 22 the grocer suspended four senior executives and
called in outside auditors and legal counsel to investigate the 250
million pound ($405.7 million) overstatement of the supermarket
operator's forecast first-half profit. The issue involved the early
booking of commercial income and delayed booking of costs, the
company said, triggering a third profit warning in three
months.
The FCA confirmed on Sept. 24 that it's monitoring Tesco's
situation following its discovery of the accounting error. However,
the regulator said while it doesn't have powers to monitor or
require the restatement of unaudited trading statements, the
Financial Reporting Review Panel can require a company to restate
its financial statements. The FRC also has the power to discipline
accountants for misconduct.
The FRC said it "will consider the outcome of the investigation
announced by the company and determine whether it should take
regulatory action."
Shares have fallen over 40% so far this year, reaching lows of
186 pence on Tuesday.
Write to Ian Walker at ian.walker@wsj.com
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