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FRC launches probe into Tesco’s audit and accounting scandal

AN INVESTIGATION into the auditing and accounting at Tesco has been launched by the Financial Reporting Council (FRC).

Britain’s accounting and audit watchdog has now formally kick-started its probe into the troubled supermarket giant’s accounting black hole, and audit work undertaken by PwC.

The FRC said its probe would explore the ‘preparation, approval and audit of the financial statements of Tesco plc for the financial years ended 25 February 2012, 23 February 2013 and 22 February 2014 and their conduct in relation to the matters reported in the company’s interim results for the 26 weeks ended 23 August 2014′.

Tesco overstated its profits for the first half of the year by £263m.

A PwC spokesman said: “We take our responsibilities very seriously and remain committed to delivering work to the highest professional standards. We will cooperate fully with the FRC in its enquiries.”

A Tesco spokesperson said it had noted the investigation and that it “will provide support to the FRC’s investigation”.

The Serious Fraud Office has already launched a formal criminal probe into the accounting practices at the UK biggest supermarket group.

Last week US brokers JP Morgan claimed that the hole in Tesco’s accounts could be even worse than expected.

In August, Tesco announced that its half-year dividend would be cut by 75% and full-year profits would be in the region of £2.4bn to £2.5bn, less than its previous estimate of £2.8bn, and already £500,000 down on last year’s £3.3bn reported profits.

The FRC is also investigating PwC’s work as auditors of Barclays Bank in relation to its role in reporting to the FSA on the bank’s compliance with the FSA’s client asset rules for the years ended 31 December 2007 to 31 December 2011.

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