Multinational grocery and general merchandise retailer Tesco is facing an investigation by the Financial Conduct Authority on reportedly overstating its profits.
Tesco had a major blow last Sept. after the company stated that it got its reports wrong by "overstating income and understating costs." The miscalculation was also brought about by the company not recording its payments as soon as it placed orders with suppliers, according to Reuters.
Tesco reportedly cut its first-half profit outlook by 250 million pounds ($408.50 million).
Also, Tesco reportedly suspended four of its employees following the major accounting issue facing the company.
Furthermore, the major accounting blunder caused Tesco's stocks to drop down dramatically 2.2 percent to 182.70 pence as of 8:26 a.m. in London trading, reporting its lowest since 2003.
Domestic market shares of Tesco dropped 28.8 percent in the past 12 weeks starting July this year from 30.2 percent last year, according to Kantar Worldpanel.
Meanwhile, U.K.'s biggest retailer is reported to fully cooperate with the FCA and other authorities investigating the issue, according to a statement released by Cheshunt, England-based Tesco.
The U.K. Financial Reporting Council, an organization able to fix and restate their financial accounts, is also currently investigating on the matter.
The probing went underway as Chief Executive Officer Dave Lewis leaves Tesco and hires Alan Stewart as its new Chief Financial Officer.
Stewart is stepping as CFO earlier than expected. He was supposed to take up post on Dec. 1.
The England-based businessman and former WH Smith Plc finance chief resigned from Marks & Spencer in July to fix the build-up of financial issues in the second largest retailer in the world.
Meanwhile, several other companies will provide independent studies of the Tesco's overstatement of profits like Deloitte LLP and FreshFields Bruckhaus Deringer LLP.
Tesco is the second largest retailer in the world has stores across the globe including countries like Asia, Europe and North America. It has been included in the FTSE-100 organizations, a share index consisting of 100 companies listed in the London Stock Exchange with the highest market capitalization.
