The Financial Reporting Council did not make a public announcement that it had written to Sainsbury’s following allegations that the supermarket giant had failed to disclose income for its suppliers in its annual report, Peter Timberlake has said.
The communications manager at the regulator said a recent newspaper report was the result of a leak, but “conclusions could be drawn” after Sainsbury’s confirmed it had received a letter.
“It should not come as a surprise, as in December we said we wanted companies to give greater clarity over how they accounted for their complex supplier arrangements in order to give investors better line of sight. Then in March we noted that supermarkets would be an area of focus for our monitoring activities,” he said.
The FRC said it reviews up to 250 accounts a year, as part of its stated obligations, and in a third of areas it seeks clarification from companies to assure that there have been no material issues effecting investor’s judgements and that all accounts were fair and true, a spokesman said.
Background
Last December, the FRC investigated Tesco following revelations the supermarket had overstated profits earlier in 2014.
The regulator said it would examine Tesco’s financial statements for the financial years ending February 2012, 2013, and 2014.
The accounts were prepared and audited by PricewaterhouseCoopers, which co-operated fully with the investigation, as did Tesco.
The FRC investigated Tesco’s conduct in relation to the £263m interim profit overstatement disclosed in September 2014.
