This page has been archived and commenting is disabled.
Retailer Tesco Explains How Companies Are "Solidly Beating" Expectations In One Sentence
UK supermarket operator Tesco has suspended four executives after discovering a $408 million "serious accounting issue" in its latest financial statements. In a reflection of Walgreen's earlier 'forecassting errors', it appears everyone's optimism is now costing them their jobs as Tesco admits the executives were "early booking commercial income and delayed booking costs." And that - in one simple sentence - is the optimistic, we-are-sure-the-income-will-be-there, way to "solidly beat" expectations quarter-after-quarter.
Tesco suspended four senior executives and called in outside auditors and legal counsel to investigate a £250 million ($408.8 million) overstatement of the U.K. supermarket operator's forecast first-half profit.
Tesco's newly installed chief executive, Dave Lewis, said on Monday that the company has uncovered a "serious" accounting issue.
The issue involved the early booking of commercial income and delayed booking of costs, the company said, triggering a third profit warning in three months.
...
The accounting error puts in the line of fire a board of directors long criticized for lacking retail experience, and exposes the extent to which previous CEO Philip Clarke had lost control of Tesco before the company announced his dismissal in July.
* * *
What is perhaps most stunning here is: 4 people were actually held accountable for their mistake.
* * *
The question is - how many other firms have over-optimistically accounted for futures earnings in the latest quarter?
»
- 7194 reads
- Printer-friendly version
- Send to friend
- advertisements -
Oops
Who does GAAP anymore?
There you go! From GAAP to OOPS (Overly Optimistic Profit Statement). I just solved all of the world's economic ills. You're welcome.
Not with direct respent to Tesco, given its domicile...
BUT, has anyone ever been prosecuted under the Sarbanes-Oxley law, or was that just another government quid pro quo handing out freebies to the accounting and legal special interests in exchange for more power over the private sector?
It was a handout-freeby. Actually, they propopsed it as a job stimulus....added millions of jobs that are not really relavant. What should be the ultimate factor? Determining if the leaders are ethical. If not, then you are putting your capital at risk, plain and simple. This is also known as personal responsiblity. Sure, invest in Company A, the one with the CEO who cheats on his wife, lies repeatedly, and has already cooked the books at another firm....yep, go ahead, take the risk dummy.
What would we expect from a country that can't even rig an election without getting caught?
Any of that ISIS funding???
Who needs GAAP when everything and anything is GAAP?
They now use GAP. As in filling the gap between reality and fantasy.
An American, not US subject.
I'm certainly not a CPA; but that sounds a lot like accounting fraud, to me.
In Mafia accounting it works perfectly....
Couldn't happen to a nicer company....
"The question is - how many other firms have over-optimistically accounted for futures earnings in the latest quarter?"
All of them.
That is how it's taught these days in the coursework for CPA's and MBA's. I can't blame them for only knowing what they were taught.
I can blame them for knowing only what they were taught and knowing as students that understanding the material and what certain things actually meant though. They obviously failed in understanding that they were essentially committing fraud.
It's ok though, it's all that they are taught to do, and they are either too lazy to understand what it means they are doing, or they are too self-interested to care that it's essentially fraud.
Peak fraud.
Even old man Cohen who started Tesco's from a market stall, must be spinning in his
grave, and his bookkeeping was a trifle shady.
Like how WCOM would sell long distance at deep discounts by charging you $100/month and refunding you $80 of that? The $100 would go on current year revenue and the $80 was put on the books to be uncovered in the future. It's 2000 all over again.
Enron's playbook.
Step 1: Book future revenue of a powerplant under construction
Step 2: Defer the costs until they can no longer be deferred.
Step 3: ?????
Step 4: Profit and GTFO before the pitchforks and torches arrive.
...all the while playing up the company stock to shareholders while liquidating their own shares...
The operative word is "before," which is entirely a function of current LIQUIDITY.
When the liquidity runs dry... Game Over.
It's all about collecting underpants.
http://upload.wikimedia.org/wikipedia/en/d/dd/Gnomes_plan.png
This is a surprise? If companies aren't doing mark to fantasy accounting their missing out and the CEO should be fired.
Infinite quarterly increases in profits is the goal.
Even the Federal Resereve has plenty off-balance sheet junk. It's the role model for ever more fraudulent books and accounting.
Just lie and burn any paper trail. The dumb ones get caught.
Cooking the books? This is unpossible!
You mean the fraud starts with accounting? Of course!
Death, by law, to Banksters and their stooges.(Attorneys and accountants)
No wonder we can't audit the Fed.
It seems that some US internet companies count free subscriptions as revenue and then expense the same amount as a marketing expense. That way they get growth but somehow never get the profits.
If you want more income, then just give away more of your services for free.
My one and only prayer
is that someday you'll care
my HOPES and Dreams come true
. . . .
BUT IT ALL ONLY MAKE BELIEVE.
. . . .
"The accounting error puts...."
Error? Isn't this standard practice?
I'm getting so tired of WSJ, et al., helping to whitewash blatant crime. Too bad they can't be held accountable as an accessory to the crime.
Why did I sober up from the weekend, again?
Give me $10 today and I will give you $5 dollars next week.
Corporate fraud, the next logical step in response to the shareholder question...."What have you done for me lately?"
LOL, coporate code of conduct. What a joke.
Once your at the top it's the code of thieves/criminals.
"I will promise to lie, cheat and steal to enhance shareholder value".
Accountants, they slice it, they dice it, they'll give you the most delicious cooked book stew you order. Problem is when the runs arrive you'll be stuck to the shitter of life.
Eron accounting is normal now. Anyone honest on the top is fired and blackballed.
Try going to your bank and telling them you deserve the loan because your Apple shares are going up 10% next year.
It's what Tesco just did...
Shattered my left bum cheek at a SHITATHON last week.
The new normal
That's normal business.
Customers pays first, suppliers get payed later (and later, and later..).
Their mistake is they should have been a bank...
They did go into banking...learnt the tricks of the trade I suppose.
http://www.tescobank.com/creditcards/?atlassource=paid&cmpid=search/goog...
Could one imagine the calamity that would occur should a bank be held to the same accounting standards....
But the 4 men all got their bonuses, deferred stock options, accrued vacation time. Just had to sign a document not to reveal anything about what has been acceptable practice the last decade.
.... but I thought everyone did this? I mean that's what they told us at college...
gov do it to self employed over here in the uk, tax taken upfront based upon last return's declared income. Arrh! don't get a big job and then no work.
when I was a student my bank fined me for being over drawn, even though I had credited my a/c. they processed all the debits and then credits in that order to purposely make me over drawn. had they simply taken them in date/time order, i wouldn't have been.
"... in the uk, tax taken upfront based upon last return's declared income."
When I received my last Tax Coding from the HMRC there was a strange income item on it described in words that were incoherent to me. When I called them up, the woman said "oh, that's estimated untaxed interest income for the current tax year." When I said "are you now taxing interest - not based on what is paid - but on what you think will be paid." She said "oh well, if you want me to delete that item I can do that. You will then pay the tax when the interest is paid."
I consider this to be utterly outrageous and extremely devious of the HMRC. Hiding it behind gobbledegook is disgraceful.
But it's rather typical of the dirty scams that government are pulling off nowadays. There are no ethics in government any more.
1) So...I made $100,000 in the future let's say till Feb 2015...a prediction.
2) Place credit on books...TODAY!
3) Pay bills ..debits...invoices let's sat in August 2015 but these were due...yesterday?
4) Success???
Quick! We need to restore trust and honesty! Send in Tony Blair!
Naa....The Blair cunt just fucked obomba, telling people to "expect" boots in the ME bunker.
Nothing is honest and true anymore
its just deception, corruption and lies
No one can believe ANYTHING anymore
There was a time long ago when Tesco built their business based on competitive pricing. This affected the likes of Sainburys who were always overpriced (and still are). Once Tesco had become Britain's biggest supermarket chain, their prices began rising bit by bit. It was always noticeable to see prices rise substantially in the period leading up to Xmas. Today, their prices are higher than ASDA (Walmarts), Morrisons and of course the cut-price Aldi and Lidl. Only Sainsburys and Waitrose are higher.
Tesco are paying the price for losing the plot and getting greedy.
And of course Lady Porter is the heir to the Tesco fortune. She used to run Westminster Council but had to bunk off to Israel rather quickly when she was exposed for a "homes-for-votes" corruption scandal in Westminster. tch tch.
anyone remember cyberrebate ?