The Financial Conduct Authority (FCA) is to investigate Tesco, which admitted last week that issues with revenue recognition had resulted in the supermarket giant overstating its half year profits by £250m.
In its announcement to the Stock Exchange this morning Tesco said: ‘The 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.
‘Tesco will continue to co-operate fully with the FCA and other relevant authorities considering this matter.’
Last week the Financial Reporting Council (FRC) announced that it was ‘monitoring the situation closely’, but would not be taking any action until Tesco’s own investigation was completed.
Tesco was due to release its interim results on 1 October, but has said these will now be announced on 23 October, when the company is promising a further update on what has happened. The retailer has already released two profits warnings earlier this year.
The accounting shortfall was identified shortly after new boss Dave Lewis took the helm at the retailer, and was said to relate to the accelerated recognition of commercial income and delayed accrual of costs.
Tesco has suspended four executives in connection with its accounting problems, including its UK managing director, Chris Bush, and UK finance director Carl Rogberg, pending the results of the Deloitte investigation.
It has also brought on board its new chief financial officer, Alan Stewart, several weeks earlier than planned. He started work in September, rather than on 1 December, as was arranged when he left his post at Marks & Spencer.