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Very strange
"In its latest statement, Tesco said the profits overstatement was "principally due to the accelerated recognition of commercial income and delayed accrual of costs".
It also said some of the error - which referred to its expected profits for the six months to 23 August - was due to the timing of the accounting of payments between suppliers and Tesco.
Mr Lewis said this meant "an element of" expected revenue from its suppliers had been "reported in the wrong time period".
"It's about revenue received versus when the activity took place," he added."
Normally, you would expect it to be payments to suppliers, so are we to understand that Tesco's suppliers have to pay their customer £250m every half-year for some sort of over-riding volume discount which had not yet been earned in the first 6 months or for price discounts on promotions which were not going to occur until the second half-year?
And why ask Deloittes (and the Tesco solicitors, Freshfields) to investigate when their auditor is PwC?
Conflict of interest
And why ask Deloittes (and the Tesco solicitors, Freshfields) to investigate when their auditor is PwC?
Presumably to avoid potential for auditors' conflict of interest
Was there not in the past
Seem to remember some accounting adjustment that was needed by a quoted company in the building supplies line of business a number of years ago, if memory serves correctly that resolved around supplier rebates and their recognition but can't now remember which company.
You are probably thinking about Wickes
Seem to remember some accounting adjustment that was needed by a quoted company in the building supplies line of business a number of years ago, if memory serves correctly that resolved around supplier rebates and their recognition but can't now remember which company.
The trouble with this sort of accounting "adjustment" is that once you start it is very difficult to stop without utilising a year with very good profits to stop in. My understanding is that rather than wait for the "override" to be received they have accrued it on a day by day basis, which will then be offset when the payment is actually received (hopefully).It really iso nly effective in the first period that you use it