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11 May 2015 11:27am

Tesco drops PwC for Deloitte

The embattled supermarket giant has ended its long-standing audit relationship with PwC following a difficult year

Tesco said today it approved the appointment of Deloitte, subject to approval by shareholders.

Tesco “mutually agreed” with PwC that it would not seek reappointment after 32 years as auditor. PwC will stand down following the Tesco AGM.

John Allan, Tesco chairman said, "On behalf of the board, I would like to thank PricewaterhouseCoopers LLP for their significant contribution over the past 32 years, and we look forward to working with Deloitte LLP going forward."

In a statement PwC referred to the incoming EU and UK audit regulations, and the “unprecendented” levels of tendering in the audit market.

The supermarket chain announced last week that the chair of its audit committee, Ken Hanna, will be stepping down this June.

In September Tesco suspended four senior members of staff and called in Deloitte to investigate after admitting that profits were overstated by £250m. The subsequent investigation found its accounting irregularities were worse than first feared.

It found that Tesco had overstated its profits by £263m for at least two years, not six months as was previously thought, and by £13m more than the initial estimate. The issue concerns when payments received from suppliers who pay to run in-store promotions on their behalf are booked.

Last month Tesco posted the biggest ever loss by a UK retailer - £6.38bn in the year to the end of February.

The Financial Reporting Council opened an investigation into the roles of PwC and various members of the accountancy profession involved in the preparation, approval and audit of Tesco’s accounts. So far eight executives have been suspended and chairman Sir Richard Broadbent resigned while the Serious Fraud Office has opened a criminal investigation.

Last month a group of shareholders launched a suit over its accounting black hole. Tesco Shareholder Claims Limited (TSC), announced it would seek to bring an action on behalf of institutional shareholders, similar to class action launched in the US last year.

Ellie Clayton

 

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