In yet another business scandal, Tesco, the UK based multinational grocery and merchandise retailer has been accused of overstating its profits for the half year (250 Million Pounds) and has come under investigation by the Financial Conduct Authority. Intervention of the FCA can impose criminal charges and punishment , which increases the issues that Tesco has to face. This event just goes to show how hard companies are trying to satisfy their shareholders in order to stay in business. As mentioned in my previous Blog, Ethics are the fine line that prevents this sort of behavior, but in today’s competitive business world, a brand needs to make sure it has a positive reputation in contrast to the competition. What Tesco did was count money in its income statement which it had not earned yet. While this may show the brands confidence in its ability to sell, it still does not conform to ethics to include such transactions in the income statement. The income statement is an important tool which shows shareholders and other key members how their brand is performing, tampering with that is an utmost breach of trust and in my opinion is a very distasteful thing to do.
Source:
http://www.telegraph.co.uk/finance/newsbysector/epic/tsco/11132545/Tesco-accounting-questioned-by-Sainsburys.html