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    Tesco Scandal Rijul Rana

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    Rijul Rana

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    Tesco Scandal Rijul Rana

    Uploaded by

    Rijul Rana
    12 views1 page

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    tesco scandal rijul rana

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    12 views1 page

    Tesco Scandal Rijul Rana

    Uploaded by

    Rijul Rana

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    What went wrong?

    Hidden agreements with suppliers- As key personnel realized that sales targets weren’t
    going to be met hidden agreements were made with suppliers.
    Offered suppliers in store promotion, bonus payments etc. - These agreements offered
    to suppliers benefits such as in store promotions, bonus payments etc. if Tesco hits the
    sales targets.
    Revenue recognized in the wrong accounting period- The payments that Tesco received
    from the suppliers were purposefully recognized in the wrong accounting period. In
    some cases Tesco even ended up paying back the supplier in the subsequent period.
    Commercial income seemed steady despite declining sales- This false recognition of
    future revenue meant that commercial income seemed steady despite sales declining
    Withholding money due to suppliers- It was later found that Tesco was also
    withholding money due to suppliers in order to boost performance
    Manipulation over business costs- They were also thought to be manipulating business
    cost. This centered on the booking of out of date food and stock theft.

    About the scam


    The challenges faced by Tesco which is arguably the biggest retailer in the United
    Kingdom all started during the first half of their financial year. The issue at hand
    involved Tesco overstating their profits by 250 million pounds. This arose both due to
    internal management pressures and external pressures from the retail industry. Tesco
    had been facing increased competition from competitors such as ALDI and LIDL. These
    supermarkets stocked fewer products and could therefore price them cheaper which
    consumers appeared to be reacting well to. In 2014 Tesco’s market share reduced by 3
    percent whilst ALDI and LIDL increased by approximately 4 percent each. These factors
    along with management pushing for higher profits increased the incentive for the
    perpetrators to commit fraud. According to Deloitte, a leading company auditor across
    the globe; the company had been overstating its profits for a number of years. The
    overstatement of profits amounted to fraudulent actions against the suppliers which
    further worsened the company’s situation despite the high financial standing which it
    claimed to be in.

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