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Tesco & Quindell, accruals and dealing with dissenting analysts

Tom Winnifrith
Wednesday 24 September 2014

Both companies have engaged in aggressive accounting with regard to accruals. One has already been shown to have overstated profits, managers have been fired, the forensic accountants are in and the Serious Fraud Office is now said to be looking into the matter. The other is Quindell (QPP).

There are two big differences between the two. One is that Tesco (TSCO) has admitted that it has overstated profits. Quindell is yet to fess up. The other is the scale of the overstatement. In the case of Tesco £250 million reduces profits forecasts by c23%. Quindell will book almost 40% of its revenues this year on an accrual basis. This has the scope to wipe out its stated profits completely.

But there are similarities too and most striking to me is how both companies have dealt with difficult analysts and also hard questions from the press.

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About Tom Winnifrith
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Tom Winnifrith is the editor of TomWinnifrith.com. When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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