PwC has been Tesco’s auditor for the past 31 years, but it looks as though Tesco may be close to parting ways with the auditing company after its failure to identify the accounting problem.
Tesco asked PwC to look into ‘shrink and waste’ before the £260m overstatement of profits was revealed.
‘Initially, Tesco said the overstated profits only related to the first six months of the financial year, accounts that would have been unaudited – but it was later revealed that the misreporting had been taking place for more than three years, as buyers booked profits into the wrong accounting period.’ The Independent reported.
The examination is assumed to be similar to the ‘deep-dive’ review of commercial income PwC carried out in March. The exercise is understood to have begun before the discovery of the £260 million of misreported profits in its first-half forecasts, which sparked a Serious Fraud Office investigation, and comes as Tesco struggles to regain control of its finances after its latest profit warning, announced last week.
A source said: “To say the board is not happy with PwC is putting it mildly. When board members saw reports that PwC auditors claimed the problems had been really well hidden by Tesco employees, it felt to them that they were being thrown under a bus.”
Tesco has worked with PwC since 1983.
It seems as though 2014 hasn’t been a great year for Tesco, just last week Retail Gazette reported that the supermarket had issued yet another profit warning, the fourth this year.
Tesco and PwC have both declined to comment.