Question 4: In 2014, Tesco has been found to have overstated its profits by 263m after revenue recognition irregularities were spotted in its half-year results, with regulators including the Financial Conduct Authority (FCA) set to decide on a suitable punishment. The supermarket originally predicted its half-year trading profit would be around 1.1bn, but this figure has now been cut back by 263m - originally 250m. Tesco has subsequently launched a review of the figures to find out why its first half profit prediction was so inflated. Discuss the incentives and reasons why Tesco manipulated earnings (40%) 1 b. You are given Tesco's past ten years financial statements and you want to know if Tesco's earnings have been manipulated over time. Discuss how you would detect earnings (60%) management using time-series Jones (1991) accruals model. a