MEETING angry shareholders is an experience few company bosses savour. Yet on June 26th Dave Lewis, the new chief executive of Tesco, Britain’s largest supermarket chain, will have to do exactly that. The firm will hold its first annual meeting since revealing that it had inflated its profits by £263m ($421m) through wrongly booking rebates from suppliers—prompting his predecessor’s departure. Since then little has gone right for Tesco: sales have continued to slide, and the falling value of its property has forced it to declare a pre-tax loss of £6.4 billion for the year to February. Worse still, a Serious Fraud Office inquiry has been opened into the accounting scandal, which could cost the firm more than the error itself.
Some have asked whether Tesco’s 32-year relationship with its former auditor, PwC, was among the root causes of the crisis. The Financial Reporting Council (FRC) has launched an inquiry into PwC’s audits of Tesco, and last month Tesco replaced PwC with another auditing firm. But the large and undisclosed rebates that Tesco, like many other grocery chains, gets from...
from The Economist: Business http://ift.tt/1G7a50z
No comments:
Post a Comment