The accounting regulator said today it will examine the preparation, approval, and audit of Tesco financial statements for the financial years ending February 2012, 2013, and 2014.
It will also investigate Tesco’s conduct in relation to the £263m interim profit overstatement first disclosed in September of this year.
The body has the power to force a company to restate results and impose other sanctions.
Tesco shares slumped as a result of the announcement, bringing to an end their recent rally off a decade-low. The stock was down 2% to 181.6p by mid-morning and is 46% lower year to date.
The FRC had previously said it was “monitoring the situation”, but now joins the Serious Fraud Office in conducting a full investigation into the supermarket’s practices.
Tesco has said the overstatement related to the way in which it booked rebate payers from suppliers. It subsequently suspended eight senior employees in relation to the matter.
The company, which has issued a string of profit warnings this year and cut its dividend as a result, has also seen a shake-up of its top personnel.
New CEO Dave Lewis and finance director Alan Stewart both began their roles ahead of schedule this autumn following the error, while chairman Sir Richard Broadbent is to step down shortly.
