2014年经济学人 乐购财务危机（在线收听）

Tesco's accounting problems

Not so funny

Booking revenues, like comedy, is all about timing

IT IS too soon to say whether the accounting misstatement at Tesco was cock-up or conspiracy. The source of the discrepancy is already clear, however, and it is as old as book-keeping itself: the premature recognition of revenue.

Suppliers make payments to supermarkets that meet certain sales targets for their products, run promotions or place the goods in eye-catching places, such as at the end of aisles. Tesco managers appear to have been too ambitious in forecasting these “rebates”. They may also have underreported the costs of stolen and out-of-date produce.

In a study of accounting scandals at American companies by the Committee of Sponsoring Organisations, a business-ethics body, the misrecording of revenues was to blame in 60% of cases. Manipulation generally falls into one of two categories. In the first, involving “timing differences”, the revenue is genuine but, say, sales at the start of a quarter are booked as having been struck in the previous one. The flipside of this is “cookie jar” accounting: pushing today's revenue into tomorrow so it can be dipped into to shore up weak quarters.

In the second, more serious category, the sales are fake: often, a related party poses as a customer to generate phoney invoices. Examples include Gowex, a Spanish technology firm that folded earlier this year, and Satyam Computer of India, whose boss compared the escalation of the $1.5 billion fraud to riding a tiger that was ever harder to dismount without being eaten.

Working out how much revenue to book and when can be a matter of fine judgment. It is especially tricky in long-term contracts, such as in construction, or when the sale of goods is bundled with a service agreement, as with photocopiers. In a sign of how complex an area this is, only this year—after more than a decade of talks—did European and American standard-setters agree on a common approach to revenue recognition.

The complexity of Tesco's promotional deals with suppliers may also have left much room for discretion, and honest mistakes, as well as deliberate distortions. But the risks around accounting for such payments are hardly new. The auditors of several big retailers have amplified their warnings in recent years as rebates have taken up more space on balance-sheets. In its most recent report, in May, Tesco's auditor, PwC, warned of the “risk of manipulation”.

If Tesco's books turn out to have been deliberately cooked, it would be the biggest fraud of its type in retailing since the scandal at US Foodservice in 2000-03. Several executives were fined or jailed for creating bogus rebates to boost profits and bonuses—complete with secret side agreements, in which suppliers agreed not to collect the exaggerated rebates. The Dutch parent company, Royal Ahold, settled with shareholders for $1.1 billion. Even if there was no fraudulent intent and the problems stem from a misunderstanding of the rules rather than knowing misapplication, the apparent scale of the error suggests that, at the very least, Tesco's internal controls need a thorough overhaul.