In our monthly roundup of accounting essentials, Tesco profits halve as investigations gather pace, PwC settles £1.6bn Cattles’ negligence case, FRC changes to digital taxonomy for charities, plans to defer IFRS 9 adoption for insurers and US regulators consult on amendments to revenue recognition standard, IFRS 15
Tesco has reported a 56% drop in operating profits for the first half of its financial year at £354m – compared with £779m for the same period last year – underlining the accounting irregularities identified last year which are now compounded by a fraud investigation in the UK and pending class action in the US hanging over the group.
The supermarket giant says the Serious Fraud Office (SFO) investigation and a US class action relating to its former profit overstatements remain possible causes for concern.
Pre-tax profit was £74m, compared with a loss of £19m for the same period a year ago.
In its 2014/15 annual report Tesco said it had identified a £263m hole in its accounts due to aggressive accounting policies concerning commercial income recognition. In a note to the 2015 interim results, Tesco makes clear that it is likely to face future costs for settling two actions related to this.
