Tesco, the giant UK-based food retailer, reported a large accounting error that cost several of its executives their jobs. The question posed at RetailWire was whether this sort of event (shifting vendor income from quarter to quarter) is more commonplace than it seems. Here’s my take:
It’s startling that a large, high-profile public company like Tesco would mismanage its quarterly accounting to this degree. I don’t know whether the underlying regulatory policies in the U.K. make it easy or difficult for this to happen, compared to the U.S. where there has been close scrutiny of quarterly reporting for at least a decade. Call me naive, but it’s still surprising today that any company with presumably tight internal controls — and the oversight of an outside auditor — would try to manipulate its way around standard accounting practices, whether it’s in the retail business or not.