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Supermarket Sweep February 25, 2015

Posted by Audit Monkey in The State of the British Nation, Working Life in Britain.
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As many of my readers will know, Tesco (the supermarket chain) has been in the news due to a rather large unexpected accounting error in the bagging area, sorry, annual accounts. Of course, there has been the usual chorus from every man and his dog shouting for more regulation of the big supermarket chains due some dubious business practices, e.g. squeezing suppliers to obtain better terms, with-holding payment. The argument is that if the supermarkets are regulated, and the Regulator has some teeth to impose fines (as it is toothless at present) the supermarkets would behave.

But I wasn’t going to comment on the proposed strengthening of the supermarket Regulator. I was reading an article in ‘The Times’ on Monday (23 Feb 2015) and the FRC (Financial Reporting Council) has got on in the act and they would like the supermarkets to disclose more detail on their miscellaneous income, e.g. supplier rebates. Seriously, who really cares about this when they are doing the weekly shop at Tesco? I don’t as I’m at Waitrose (!) but I suspect ethical shoppers are in the minority.

What made me fall off my chair was this. The Auditor for Tesco is (for the time being at least) PWC. The Auditor for Sainsbury’s (until it is replaced by EY), is PWC. The author of The Times article comments that investors aren’t getting the information they require. But the Auditor for Morrisons is also PWC. Hold on, whatever happened to Auditor independence? The Auditor is acting for three out of the four major supermarkets in the UK? Hello? Didn’t anyone ever say what about ‘conflicts of interest’? How about this scenario; laxed Chinese walls, PWC trainees gossiping over lunch at More Place, insider dealing. And the FRC avoids the obvious. Now there’s a toothless Regulator.

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