| Pub. Date | : October, 2021 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP301021 |
| Author Name | : Pranati Mohapatra* and Nagendra Kumar M V** |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 22 |
The voluntary disclosure of misrepresentation of financial statements by the management of the UK-based retailer Tesco plc (Tesco) in September 2014 impacted the market price of its share, affecting the investment value of its shareholders. The shareholders expressed resentment over the negligence of Tesco's management and filed legal suits against it, demanding compensation for the losses they had suffered as a result of the misrepresentation. The case focuses on the events that led to the misrepresentation of financial statements - the market position, process of determining the revenue streams, relationship with suppliers, and related issues. The case focuses on the steps initiated by the management of Tesco to overcome the crisis situation, and the role of regulatory authorities in handling the situation. Further, it provides scope for a discussion on the importance of accounting principles and their role in determining the investment objectives of various stakeholders. It also provides scope for a discussion on the importance of ethics in the auditing profession and the challenges faced by the auditors.
In June 2017, the Financial Reporting Council (FRC), UK's financial watchdog, dropped investigations into internationally reputed auditing firm PricewaterhouseCoopers LLC (PwC)1 in connection with the accounting scandal at the UK-based retailer Tesco Plc (Tesco), PwC's long-time client. FRC said in a statement that there was no formal evidence against PwC to accuse the firm of ignoring basic auditing practices while auditing Tesco's financial statements. It 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."2