FRC closes investigation into PwC over Tesco accounts

The Financial Reporting Council (FRC) has announced the closure of an investigation into PwC’s auditing and accounting of Tesco.

The independent watchdog launched a probe in 2014 to examine the “‘preparation, approval and audit of the financial statements of Tesco plc” in the financial years of 2012-2014. The investigation followed Tesco overstating its profits for the first half of 2014 by £263m. This figure was later raised to £326m.

The executive council to the FRC said that there was “not a realistic prospect that a tribunal would make an adverse finding against PwC”. The council has therefore decided to close the investigation.

There is still an investigation ongoing into “other members of the accountancy bodies”, the FRC said.

The Serious Fraud Office (SFO) launched a criminal probe into Tesco in 2014, eventually charging three former Tesco executives with fraud in September 2016. In April this year, the supermarket giant reached a deferred prosecution agreement with the SFO, resulting in a financial penalty of £129m, and a separate settlement of £85m as compensation to investors, plus costs.

Deloitte replaced PwC as Tesco’s auditor in 2015.