Financial Reporting Council Monitoring Tesco After Accounting Error

By Ian Walker

LONDON--The U.K. Financial Reporting Council said Wednesday it is monitoring Tesco PLC's (TSCO.LN) situation following its discovery of an accounting error earlier in the week.

While the FRC itself 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.".

On Monday the U.K. supermarket suspended four senior executives and called in outside auditors and legal counsel to investigate a 250 million pound ($407.12 million) overstatement of its 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. Tesco, which has done a preliminary investigation into its U.K. food business, said it hasn't ruled out illegal activity but would wait until the results of the investigation are known.

The Financial Reporting Council is the U.K.'s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.

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