Jessica Fino 5 Jun 2017 10:16am

FRC closes probe into PwC’s audit of Tesco

The accounting watchdog has announced it is ending its investigation into the conduct of the Big Four firm and certain members of ICAEW in their capacity as auditors of the supermarket giant, arguing there was insufficient evidence to prove wrongdoing
Caption: Tesco ended its 32-year relationship with PwC in 2015.

The Financial Reporting Council (FRC) said, “The executive counsel to the FRC has concluded that there is not a realistic prospect that a tribunal would make an adverse finding against PwC and certain members in respect of the matters within the scope of the investigation.”

It added that it is still investigating other members of the accountancy bodies but did not name them.

In 2014, the FRC opened a probe into the roles of PwC and various members of the accountancy profession involved in the preparation, approval and audit of Tesco’s accounts.

It followed a scandal in October 2014 when the supermarket giant revealed it had overstated its profits by £250m. It suspended four senior members of staff and called in Deloitte to investigate.

The subsequent investigation revealed 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.

A PwC spokesperson said, “We cooperated fully during the FRC 's thorough investigation and are pleased that the FRC has closed it without any further action.”

Tesco ended its 32-year relationship with PwC following the scandal in May 2015 and appointed Deloitte as its new auditor.

SFO’s criminal investigation into the accounting practices at Tesco is still ongoing, with a trial set to start on 14 September.