Financial Reporting Council to investigate relationships between suppliers and retailers

29th May 2015 11:39

The relationship between suppliers and retailers is set to be scrutinised by the Financial Reporting Council following Tesco's accounting scandal.The accountancy watchdog unveiled plans to focus audit inspections on the food retailing sector this year, after the FTSE 100 group overstated last year's expected interim profits by approximately £250m.The FRC said it will "pay particular attention to the audit of revenue recognition and complex supplier arrangements" at retail and food, drink and consumer goods manufacturers.Tesco is currently under investigation from the Serious Fraud Office, the Groceries Code Adjudicator - the grocery market watchdog - and the FRC after admitting to artificially inflating profits by over £263m because of misstated payments from suppliers."Events at Tesco did raise awareness of this issue but [the new regulatory focus] wasn't only as a result of Tesco," said Paul George, the FRC's executive director of conduct."We have been seeing over a period of time the complexity in arrangements between suppliers and their customers increasing."