After reading Michael Zhong’s blog about “Tesco’s 250 Million Mistake”, I think that Tesco’s pivotal error on reporting their latest profit is not just a careless mistake; in fact, it is I think, a fraud. 10, 20 or even 30 million still make a tiny sense. A ridiculous 250 millions? Seriously? Did the accounting division use a potato to calculate their profit? With an already awful accusation of “aggressive accounting” back in 2010, I strongly believe that they are using the same method again in an attempt to attract new investors. Knowing that Blackrock, their second largest stakeholder, is departing, and their stock price is dropping faster than a roller coaster every day; their only legitimate hope to revive the company is to get support from new stockholders. However, they realize that no one would like to invest money on a dying stock. Therefore, the quickest way to gain new shareholders is by raising profits up to a sky high number, where it will show investors that Tesco still has a huge market value .
In order to prevent these kinds of “mistake” happening again, government should penalize Tesco massively this time as a warning to other corporations. In that way, it ensures that no one would ever use a potato next time when computing their profits.
Original blog post :https://blogs.ubc.ca/mzhongdingdong/2014/09/29/tescos-250-million-dollar-mistake/