Off my recent posts, I am following the Tesco accounting scandal in my Twitter feed. The scandal hit right at the same time I was teaching Chapter 22 in Kieso “Intermediate Accounting”, and needed my scandal/example of the month.
So now I am hitting the various links, and Harpers UK is very popular, and active. In a piece yesterday, they talk about the “wine bloggers”, of which I am not one. But it seems there are many—too many. Especially for Louise Hurren and Robert Joseph. In the article, Joseph asks:
Robert Joseph, the wine commentator and critic who also runs his own blog, said too many bloggers were essentially covering the same ground, and not standing out from each other to be worth reading. He questioned, for example, how many bloggers had even written about the recent accounting scandal at Tesco and the implications on the wider wine industry after the suspension of Tesco’s head of wine Dan Jago.
“Had EVEN written!!!” “Had even WRITTEN!!!” And how many are there among us politics and accounting teacher bloggers and wine bloggers collectively? Apparently, there are a ton of wine bloggers, but few if any got their butts in gear and decided to analyze what Tesco’s situation says about the reed thin margins that the wine industry is supposed to sit peacefully and suck up while the likes of Dan Jago sit there and tweet as “the wine bloke” (ex bloke) for Tesco throughout the day.
Meanwhile, I’m there trying to figure out how anyone knowing what the product is flying off the shelves of Tesco for, versus what they are paying, net, to the various suppliers, could conceivably NOT see that something was amiss. If your margins are reed thin, and your volume, is, say, “x”, then the only way you can have a fantastic quarter is to suddenly do some multiple higher “x”. Or have a quarter where your suppliers are squeezed into starvation payments.
Do you folks see this? If Tesco has a margin of 25 cents a bottle—-I guess you’d be using pence, but same idea—-and you know that you are selling “x” bottles, then you kind-of have your margin on sales for beer, wine and spirits. Yes, there may be relatively high margin products, bringing in a pound or two. But you’d be getting reports saying that the good stuff is really selling, and the one-up-from rubbing alcohol isn’t moving. You’d be getting basic information. If there had to be rebate payments to suppliers because Tesco didn’t sell what it promised it would, that would probably be a Powerpoint generated off some Excel spreadsheet. You’d know this stuff.
It is good that the UK government opened up a formal criminal investigation to the alleged fraud surrounding the books at Tesco. There has to be more there than what the initial reports, and the way some of aspects of the 263 million pound misstatement were presented, in both traditional and social media. Big companies tend to create their own worlds, their own realities, and the ones we all live in become some degrees different than that. The very bigness of the big roles and the big duties tempt the people caught up in the titles and the shiny bright lights to leave the solid trappings for the glamorous (sorry, glamourous) fantasy of Big.