Accountancy giant PwC won’t face any further action over its handling of Tesco’s finances during the supermarket’s accounting scandal as the industry watchdog has dropped the investigation it initiated two and a half years ago.
The Financial Reporting Council justified its decision by saying ‘there is not a realistic prospect’ of a tribunal making an adverse finding against accountants at PwC and other members of the Institute of Chartered Accountants in England and Wales.
However, it said it was continuing to investigate other accountancy firms.
Probe ends: PwC was Tesco’s auditor when the supermarket admitted to inflating its accounts
PwC was the supermarket’s auditor when Tesco admitted to inflating its accounts by £250million – a figure which was then revised up to £326million. Tesco was allegedly manipulating the timing of payments from suppliers – pulling some forward in order to paint a more flattering picture of its finances.
The FRC launched an investigation in December 2014 into the ‘the preparation, approval and audit’ of Tesco’s accounts for the financial years ending in February 2012, 2013 and 2014. PwC was the company responsible for the ‘audit’ during those years.
But today the watchdog said: ‘The Financial Reporting Council announces the closure of its investigation into the conduct of PricewaterhouseCoopers (PwC) and certain Members of the Institute of Chartered Accountants in England and Wales in their capacity as auditors of Tesco.’
‘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.’
The announcement comes as PwC was slapped with a record fine of £5million for ‘misconduct’ in relation to its audit of social housing firm Connaught, which collapsed seven years ago.
Last week it was also revealed PwC faced a ban in Ukraine after its auditors waved through the accounts of a bank allegedly bled dry by two oligarchs.
The nation’s authorities are investigating claims that £4.2billion was taken from lender Privat by Gennadiy Bogolyubov and Igor Kolomoisky.
PwC is also facing a £4.5billion US court case over mortgage fraud by a client.
Tesco ditched PwC as auditor in 2015, replacing it with rival accountancy giant Deloitte.
Tesco announced in March that it will take a £235million hit after reaching an agreement with authorities over the scandal, which will see it make a hefty compensation payout to investors.
A court case against the three Tesco executives – Carl Rogberg, Chris Bush and John Scouler – is ongoing.