By Ian Walker
LONDON--The U.K. Financial Reporting Council said Wednesday it
is monitoring Tesco PLC's (TSCO.LN) situation following its
discovery of an accounting error earlier in the week.
While the FRC itself doesn't have powers to monitor or require
the restatement of unaudited trading statements, the Financial
Reporting Review Panel can require a company to restate its
financial statements. The FRC also has the power to discipline
accountants for misconduct.
The FRC said it "will consider the outcome of the investigation
announced by the company and determine whether it should take
regulatory action.".
On Monday the U.K. supermarket suspended four senior executives
and called in outside auditors and legal counsel to investigate a
250 million pound ($407.12 million) overstatement of its forecast
first-half profit.
The issue involved the early booking of commercial income and
delayed booking of costs, the company said, triggering a third
profit warning in three months. Tesco, which has done a preliminary
investigation into its U.K. food business, said it hasn't ruled out
illegal activity but would wait until the results of the
investigation are known.
The Financial Reporting Council is the U.K.'s independent
regulator responsible for promoting high quality corporate
governance and reporting to foster investment.
-Write to Ian Walker at ian.walker@wsj.com
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