Tesco is Britains leading food retailer and the third largest in the world.

The Tesco accounting

scandal is a classic case of what appears to be the result of cooking the books
to show inflated incomes and understated costs. The object of this report is to
provide an analysis of financial performance and to explain the ways of how
Tesco manipulated profit, its consequence and reasons. Furthermore, it suggests
which regulation and other safeguards can prevent companies from committing
accounting fraud. The report is intended to analyse and interpret Tescos financial
report, and go through which method Tesco used to manipulate profit with following
reasons. All calculations can be found in the appendices. Tesco overstated its

annual profit by 263 million. Its profit estimates already fell from 1.6bn in 2013
to 1.1bn in 2014. It needed to report sufficient profit to pay dividends to its
shareholders. Tesco changed the way it measured ROCE 8 times prior to the
scandal. The reason why Tesco used this policy was that it did not want to lose
face being the retail giant. The possible motivations to adopt aggressive
accounting policies can be explained in terms of the time period. Long term
answer could be various reasons and short term answers could be in order to
conceal the bad news, keep shareholders happy and attract new investors and
for executive bonuses. There is no exact answer to stop the fraud but it can be
reduced or prevented by a few regulations;
1. Putting in place an anti-fraud Policy
2. Educating responsible parties on the opportunities and consequences of
fraud
3. Introduce a whistle-blow policy
4. Introduce a reporting hotline

Minutes of group meetings

YAO, YUCHENG: 4hours 25mins
SHUSHPANOV, ANDREI: 4hours 25mins
GOEL, SRISHTI: 4hours 25mins
DU, JIAXUAN: 4hours 25mins
ANN, SO YOUNG: 4hours 25mins