Accounting regulators are focusing their attentions on Tesco employees after dropping a probe into the actions of PwC.
The Financial Reporting Council (FRC) yesterday closed a misconduct investigation into PwC’s role as auditor after a £263m accounting black hole was found in Tesco’s financial statements in 2014.
But the FRC said: “The investigation into certain other members of the accountancy bodies is ongoing.”
Opened in December 2014, the accounting watchdog probe was into the “preparation, approval and audit” of Tesco's accounts. As PwC’s actions are no longer under the microscope, the audit element of the review has been halted.
However, with the investigation continuing into the “preparation and approval” of the accounts, the spotlight shifts to Tesco employees.
The FRC will review how those staff holding chartered or certified accountancy qualifications conducted themselves in the preparation of Tesco’s books.
Tesco declined to comment on the ongoing enquiries by the FRC into certain individuals, simply reasserting the fact that the corporate entity is not under investigation by accounting regulators.
The auditors’ report in Tesco’s 2014 annual financial statements highlights the distinction between the roles of company staff and external auditors. It said:
[T]he directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view.
“Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and [international standards on auditing] ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.”