Audit watchdog ends probe into Tesco’s £326m accounting scandal

The Financial Reporting Council’s (FRC) probe into accountants at the supermarket giant was launched following Tesco’s shock revelation in September 2014 that it had overstated profits by £263m. The figure was later revised up to £326m following an independent audit, leaving Tesco in crisis.

The FRC had already closed its investigations into Tesco’s ex-finance boss Laurie McIlwee back in 2016 and the grocer’s former auditors PwC.

The separate probe into the accountants working within the Tesco team at the time had been paused pending the outcome of the Serious Fraud Office (SFO) trial of three former Tesco executives.

Ex-UK finance director Carl Rogberg, former UK managing director Chris Bush and former UK food commercial director John Scouler all stood trial, accused of knowing that income was being wrongly accounted for in order to make the company look healthier financially.

That case dramatically collapsed in 2018.

The FRC and SFO separately reached deals with Tesco back in 2017, which saw the supermarket giant shell out combined fines of £214m, including one sum through a deferred prosecution agreement (DPA).

The grocer slumped to a £6.4bn loss in the wake of the accounting scandal as its public reputation was left in tatters and business performance spiralled.

But Tesco has been transformed under chief executive Dave Lewis and finance boss Alan Stewart, both of whom are leaving the business in October and next April respectively.

A Tesco spokeswoman said: “There has been no FRC investigation of Tesco as a company and we have never commented on the position of any individual in relation to these issues.

“Since 2014, we have fundamentally transformed our business. Our turnaround journey is now complete and we have fully satisfied the terms of the DPA we entered into with the SFO in 2017.”