Sunday 23 October 2016

Tesco drops auditor PwC for Deloitte after accounting scandal

Published 17/05/2015 | 02:30

Tesco has dropped its auditor PwC after 32 years. The company has awarded its audit contract to bitter rival Deloitte.

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PwC and the country's biggest grocery retailer "mutually agreed" that the accounting firm would not take part in the tender process for the audit contract, a Tesco spokesperson said.

"Following the conclusion of a formal tender process for its statutory audit contract, the board have approved the proposed appointment of Deloitte LLP as the Company's new statutory auditors, subject to approval by shareholders at the 2015 AGM. We and PricewaterhouseCoopers LLP mutually agreed that they would not take part in the tender process.

"PwC will therefore stand down as the company's auditors at the conclusion of the 2015 AGM," Tesco said in a statement.

PwC has audited Tesco since 1983. It is standing down as auditor for the entire Tesco group.

Tesco was hit by a major accounting scandal this year that sent its share price plummeting. In September the company said it had overstated profits for the first half of the year by £250m (€346m) as a result of incorrectly booking payments from suppliers, a figure it later raised to £263m.

The scandal led to the suspension, then exit, of several senior executives, and sparked investigations by several watchdogs, including Britain's Serious Fraud Office.

The company is not under investigation by the Central Bank of Ireland because it is not a financial institution.

The Chartered Accountants Regulatory Board, meanwhile, said it "is continuing to monitor the situation with regard to Tesco and specifically whether there are any issues relating to this jurisdiction which may warrant investigation."

PwC had flagged commercial income as a concern in Tesco's annual report, but failed to uncover the problems with how it was being recorded until a whistleblower alerted new chief executive Dave Lewis to the problem. He has since changed the retailer's relationship with suppliers.

The company's overhaul has also included the appointment of a new chairman, chief executive, and finance director.

Chairman John Allan said: "On behalf of the board, I would like to thank PricewaterhouseCoopers LLP for their significant contribution over the past 32 years, and we look forward to working with Deloitte LLP going forward."

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