Review of Asha Kaila’s Blog Post: Tesco Accounting Scandal: Numbers gone wrong

After reading Asha Kaila’s blog post, it exposed me to the link between human behavior and financial accounting. Although many people might think accounting is all about numbers, it is interconnected with different issues, such as marketing.

Photo Courtesy To: http://www.telegraph.co.uk/finance/comment/11214948/Unanswered-questions-in-Tescos-accounting-scandal.html

For this specific example, Tesco falsely declared 2.5 million pounds more than they actually made in profits. I can confidently state that if Tesco did this intentionally, it is because they hoped that declaring high profits would attract consumers to use their grocery store. To begin with, I completely agree with Asha’s point that Tesco was under immense pressure to steer away from being the underdog. However, my perspective is a twist from what we learned in class 3 about marketing meeting accounting. Tesco is apart of the 4 largest stores in the UK, and in the last couple of years, it has been ranking fourth. Now if they give consumers the illusion that they are making a ton of money, then most consumers will buy more from that store and MOST IMPORTANTLY, buy some of their shares. In a somewhat malicious way, the accountants studied human behavior, through marketing, and had an epiphany that lying would increase their income. Regardless of the fact that this idea was a great method to connect to aspects of business, it was an unethical and wrong move, which led to a national investigation. Good luck Tesco.

http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11193968/Tesco-suppliers-call-in-audit-teams-over-accounting-scandal.html