Accounting Policies' Impact on TESCO PLC's Profit Disclosure

This report examines the impact of inappropriate accounting policies on the disclosure of profits and revenues at TESCO PLC. It begins with an introduction to corporate governance and the rationale for the research, focusing on the importance of accurate financial reporting for stakeholders. The report outlines the research aim, objectives, and questions, followed by a conceptual framework. A literature review explores the concept of accounting policies, the significance of profit and revenue disclosure, and the influence of inappropriate policies on TESCO PLC. The methodology includes both primary and secondary research, with results presented and discussed. The report concludes with recommendations and an action plan to help TESCO PLC overcome the negative impacts of inappropriate accounting policies, ensuring transparency and accurate financial representation to stakeholders. The analysis covers topics like going concern, consistency, accrual, prudence, and materiality, which are crucial for stakeholders' decision-making.

Corporate Strategy and
Governance

Table of Contents
TITLE:.............................................................................................................................................1
INTRODUCTION...........................................................................................................................1
Background of research..........................................................................................................1
Overview of organisation.......................................................................................................1
Rationale of research..............................................................................................................2
Research Aim.........................................................................................................................2
Research objectives................................................................................................................2
Research questions.................................................................................................................3
Conceptual framework...........................................................................................................3
LITERATURE REVIEW................................................................................................................5
The concept of accounting policies........................................................................................5
The importance of disclosure profit and revenue of association...........................................6
The influence of inappropriate accounting policies on revenues and profits of TESCO PLC7
The different ways through which TESCO PLC can easily overcome impact of inappropriate
accounting policies.................................................................................................................8
DISCUSSION OF PRIMARY AND SECONDARY RESEARCH................................................9
RESULTS OF SECONDARY AND PRIMARY RESEARCH....................................................13
Results of primary research..................................................................................................13
Results of Secondary research..............................................................................................21
RECOMMENDATIONS AND ACTION PLAN..........................................................................23
CONCLUSION..............................................................................................................................27
REFERENCES..............................................................................................................................28

TITLE:
“To identify the impact of inappropriate accounting policies on disclosure of profits
and revenues of association.” A case on TESCO.
INTRODUCTION
Background of research
Corporate governance refers to the process, mechanism, relations under which
organisation can be controlled, managed. This is the framework through which management
within an organisation can perform business activities in effective and reliable manner. Under
corporate governance, there are some strategies through which transparency, fairness,
accountability, etc. are the maintained (Albu, Lupu and Sandu, 2014). This helps to provide
complete and relevant information to stakeholders. Corporate governance framework has
following aspects-
 Explicit and implicit contracts between organisation and stakeholders in order to
distribute roles, responsibilities and powers.
 Reconciliation in case of conflict of interest of stakeholders in compilation to their duties,
roles, etc.
 Procedure for supervision, manage flow of information, control, etc. within organisation.
With maintaining business operations according to these framework, it is easy to
maintain long term relations with stakeholders because true and fair representation of operations
and accounts provides satisfaction.
This research is based on TESCO is the organisation which is one of the leading
organisation in British this organisation has head quarter in Welwyn Garden City, Hertfordshire,
England, United Kingdom. In terms of revenue, this is the third largest organisation in world.
TESCO PLC deals in grocery, clothing, mobile, banking sector, etc.
Overview of organisation
TESCO PLC is the largest British retail store in UK. This organisation serves in different
parts of world such as Hungary, India, China, Europe, etc. These days there are some rules and
regulations which has to be followed by organisation. This helps to maintain safe and secure
environment and maintain loyalty with stakeholders (Aoyagi and Ganelli, 2014). Stakeholders
are the individuals or group of individuals or organisation who are concern about organisation's
1

actions and activities. It is important and relevant to analyse consumer demand which helps to
make long term relations with workers. These days, there is requirement of performing business
operations in authentic form. There are many stakeholders of TESCO PLC such as consumers,
suppliers, debtors, bank, competitors, employees, shareholders, etc. Hence it is important to
communicate them plans and policies of organisation. In this research, there is discussion about
accounting policies of TESCO PLC and its impact on disclosure of profits.
Rationale of research
In this research, there is discussion about corporate governance policies. Corporate
governance policies sets some framework which are relevant in current market because it
provides complete information about working style of organisation, change in plans and policies,
etc. Reason behind conducting this research is to analyse impact on inappropriate accounting
policies on disclosure of profits. There are issues in disclosing half yearly profits of TESCO PLC
which affects ran image of TESCO PLC. Stakeholders wants to analyse actual performance of
TESCO PLC because they have interest in operations of organisation. Hence with the help of this
research, it is easy to understand reason of inappropriate counting policies and its impact on
disclosing of profits (ArAs and et. al., 2016).
With the help of this research, it is easy to provide ways through which correct measures
can be provided to TESCO PLC. This also helps reader to provide knowledge about importance
of accounting policies in decision making of stakeholders. With the help of this research, it is
easy to recommend changes which has to be made by manager while changing their accounting
policies.
Research Aim
“To identify the impact of inappropriate accounting policies on disclosure of profits
and revenues of association.” A case on TESCO.
Research objectives
 To understand the concept of accounting policies.
 To evaluate the importance of disclosure profit and revenue of association.
 To analyse the influence of inappropriate accounting policies on revenues and profits of
TESCO.
2

 To recommend the different ways through which TESCO can easily overcome impact of
inappropriate accounting policies.
Research questions
 Do you understand the concept of accounting policies?
 What is the importance of disclosure profit and revenue of association?
 What is the influence of inappropriate accounting policies on revenues and profits of
TESCO?
 What are the different ways through which TESCO can easily overcome impact of
inappropriate accounting policies?
Conceptual framework
Conceptual framework is the way through which all the activities which are conducted
while conducting research is analysed. With the help of this framework, it is easy to understand
description which is taking place in various research activities. Research is process through
which in- depth analysis can be done on some specific topic. Hence research is conducted under
different chapters. Under conceptual framework it is easy to understand aspects which are
covered under various chapters of research.
 Introduction is prime chapter which covers overview of research, background of
company, research aims and objectives, etc. With this section, it is easy to understand
about topic of research topic and organisation. Hence it is easy to make blue print related
to research in mind of reader with this section.
 Second section is about literature review (Bain and Band, 2016). This is the concept
which talks about objectives discussed in introduction. In literature review, opinion is
authentic as per view of some specific author. This makes complete research authentic
and reliable.
 Section third is about discussion about primary and secondary. This is the concept which
helps to collect information from respondents to give complete and relevant information.
Research is conducted with different activities such as introduction, literature review,
data collect and analysis, etc. which jointly known as research methodology.
 Section four is about discussing results. With collecting data with the help of primary
and secondary method, then outcomes are discussed in this section. In this section,
3

interpretation on the basis of primary data is discussed and gist is discussed of secondary
data collected discussed under literature review.
 Last section is about recommendations and action plan. After discussing research
outcomes, there are recommendations through which issues faced by organisation can be
overcome. Action plan is the way through which actions can be taken by managers of
organisation to overcome issues (Bell, 2014).
4

LITERATURE REVIEW
Literature review is the section in which objectives of research are discussed with some
authentic source. This is part of secondary data because information is collected from books,
online sources, journals, etc. In this research, there is discussion about impact of inappropriate
accounting policies on disclosing profits and revenue. Hence in this literature review, there is
discussion about author's view over the research objectives.
The concept of accounting policies
Accounting policies refers to the specific principles and methods which are implemented
while managing financial statement of organisation. These are the measurement system,
procedures for preparing books and accounts of TESCO PLC. According to Breitbarth and et. al.,
2015 accounting policies is different from accounting principles. Accounting principles are legal
laws and revelations which has to be considered while framing accounts for specific
organisation. TESCO PLC are legally bind towards these principles. For instance: depreciation
method, recognition of goodwill, research and development cost, valuation of stock, etc. are
accounting policies. While accounting principles are going concern principle, matching concept,
revenue recognition, etc. For instance: there is specific method through which stock within
organisation can be valued. There are different methods for valuation of stock such as LIFO,
FIFO, Weighted average, etc. There is specific method which is used by TESCO PLC for
showing their balance of stock. In order to make consistency in books of accounts and provide
complete and relevant information to stakeholders, specific method is used to year after year.
There is difference in accounting policies as per difference in organisation. But there are
some assumptions which has to be followed by managers of TESCO PLC which helps to get
appropriate and relevant outcome. In order to understand fundamental accounting policies, these
assumption are considered-
 Going concern. As per this assumption, it is assumed that business will operate for longer
period of time in industry. Hence there is no assumptions related to closing down of
business after specific period of time.
 Consistency. As per this assumption, it is assumed that accounting policies which are
used by managers of TESCO PLC is consistent in next year as well. This helps to
disclose profits and revenue appropriate and significant.
5

 Accural. Third assumption is that income or cost which are incurred whether received or
not, it must be recorded in period to which they are related. This helps to get actual
knowledge about expenses and incomes.
Hence accounting policies are different as per company. There is no specific policies with
which organisations are bind. There are some considerations which has to be followed by
TESCO PLC while farming financial statement. These are discussed as under-
 Prudence. In organisation, future is uncertain, hence there are many activities which are
estimated for future. As per this accounting concept, in case of losses and expenses when
they are estimates are recorded (even if hey are not paid). While in case of profits and
revenues, it must be recorded only when it is received. Hence it is clear that in accounting
policies, risk is secured when it is identified, while in case of profits they are recorded on
received basis.
 Substance over form. As per this principle, it is important to record financial data as per
governed principles (Chen and et. al., 2015).
 Materiality. As per this principle, it is identified that only material things has to be
considered by managers of TESCO PLC. These are the factors which affects decisions of
stakeholders.
The importance of disclosure profit and revenue of association
There are many parties which deals with TESCO PLC in direct or indirect manner such
as consumers, suppliers, management, employees, etc. These are the people who have interest in
organisation's operations hence organisation has to disclose their books of accounts in
appropriate manner. It is important for TESCO PLC to disclose their profits and revenues
because stakeholders analyse performance and financial condition of company in appropriate and
relevant manner. There are many people whoo wants to analyse financial performance of
TESCO PLC due to different reasons. For instance: for shareholders books of accounts provides
complete and relevant information whether to invest or withdrawal. Hence books of accounts
plays crucial role in affecting decision making of individuals.
Financial position such as revenue, debt equity ration, pay back period, etc. are important
for suppliers as they give credit to TESCO PLC. Hence financial books of accounts are important
for analysing whether to give debt or not. According to Ciampi, 2015 in order to provide
complete and relevant information to stakeholders disclosure of profits and revenues is
6

important. Employees must be aware about gains and profits because personal objectives of
employees can be achieved with progress of TESCO PLC. So in case of good profits, there must
be sharing to employees. This helps to maintain long term relations with workers and they give
their best. Accounting policies are used, so books of accounts give correct and authentic
information to external and internal parties of TESCO PLC.
As per case of TESCO PLC, there is inappropriate accounting policies. Hence in this
case, this gives wrong information to stakeholders because revenues and profits are not disclosed
correctly. There is issue in profits of half year after composition of composition of board of
directors and inappropriate accounting policies. With the help of constant accounting policies, it
is easy to give complete and relevant information to stakeholders. With providing complete
information regarding financial process of company, it is easy to get donations, sponsorship, etc.
because with sponsors wants to invest with big brands having good financial position for the
purpose of marketing.
The influence of inappropriate accounting policies on revenues and profits of TESCO PLC
There is direct impact of accounting policies on profits and revenues of company. When
accounts department of TESCO PLC is changing accounting policies frequently, then there is
effect on profits and revenues. Due to change in policies, there are possibilities that profits can be
under value or overvalued. Books of accounts does not give true and fair information. For
instance: manager of TESCO PLC is using FIFO method for valuation of stock. But in
subsequent year, they are using LIFO. As per FIFO method, while realising stock, old stock is
sold out first. While in case of LIFO, stock with collected later is realised first. According to
Clarke, 2015 there is difference in cost of stock, hence this affects overall profits and revenues of
both the year. Due to this difference, it is tough for stakeholders to analyse actual outcome for
analysis.
With change in accounting policies, actual position may gets misguide. In case of
TESCO PLC, they are using inappropriate accounting policies which affects results shown by
books of accounts. This issue arise because of change in board of directors. As per change in
accounting policies, financial position of TESCO PLC mislead which affects decisions of
stakeholders. There is issue in books of accounts but inappropriate accounting policies are
accepted by audit committee and profits are signed by board of directors. When books of
accounts does not have appropriate accounting policies of change in accounting technique, then
7

it is responsibility of managers of TESCO PLC to disclose reason of changing accounting policy.
It is important to communicate with stakeholders regarding impact of change in accounting
policies. Hence with considering inappropriate accounting policies, profits and revenues gets
may be over or under valued.
The different ways through which TESCO PLC can easily overcome impact of inappropriate
accounting policies
In case of TESCO PLC, there is negative impact on brand image because books of
accounts does not give true and fair information. There is requirement of some changes in
disclosing accounting policies. There must be working notes which gives information to
stakeholders regarding impact of inappropriate accounting techniques. There are some basic
norms of accounting which has to be followed in order to make balance in asset, liability,
expenses and revenues. There must be complete information in books of accounts elated to any
assumption.
According to Coffee and Palia, 2015 there must be hiring of expertise personnel in
accounts department of TESCO PLC. There must be time to time audit which shows the
relevance of books of accounts. Board of Directors must frame policies which are free from
biasness. In case of any suspect, in- depth analysis of books of accounts must be done. In order
to overcome issues related to inappropriate accounting policies, difference in actual results and
outcome must be shown in working working with their impact.
8

DISCUSSION OF PRIMARY AND SECONDARY RESEARCH
Research is the way through which investigation is done by individual on some specific
research topic. There are different techniques which has to be considered in order to get
appropriate outcome as recommendations and conclusions. These aspects are covered in research
methodology. Research methodology is the framework which covers different aspects of
research such as philosophy, approach, time, cost, method, sources, etc. There are two sources of
collecting data i.e. primary and secondary method. These methods are discussed as under-
PRIMARY RESEARCH
Primary research refers to the method in which individual collect data on their own
through different sources such as personal interview, questionnaire, etc. In this method, there is
personal interaction among researcher and respondents in case of personal interview. Hence in
this method, actual data is collected which is effective for giving recommendations and
conclusions. Data collection with the help of primary research is new and specific according to
research topic. Under this method, it is easy to get answer of issues, questions related to research
topic. While collecting data related to inappropriate accounting policies, it is easy to analyse
reactions of respondents over this issue (Cook and Glass, 2015). There are different methods
which are collecting primary data from respondents which is discussed as under-
Interview- Interview is the process in which some questions are asked with respondents
related to research topic. In this method, focus of researcher is on list of questions and this is
usually with some specific individuals. Interview can be conducted through face to face or
telephone media. In interview researcher has to record opinion to give some specific view. It is
ability of researcher to engage respondents to give clear and appropriate results.
Focus Group- Focus group refers to the method in which number of individuals are
observed when they re discussing about research topic. This helps to get knowledge about view
of majority of people on specific topic. Moderator analyse views of individuals and motivate
everyone to take part in discussion. Sometimes, there are possibilities that views are irrelevant
which affects decision of researcher (Crowther and Seifi, 2018).
Questionnaire- Questionnaire is also form of primary source which helps to collect
information about research topic. There are some set of questions framed by researcher related to
research issue. It is important for researcher to collect questionnaire from respondents. This is the
best method to collect primary sources from respondents because this method helps to get
9

authentic return in written form. In this research questionnaire is used to collect primary data.
There are 10 questions related to research topic. There are 30 employees and 20 consumers from
whom information about research topic is collected.
QUESTIONNAIRE
Name:
Age:
Gender:
Q1) Do you understand the concept of accounting policies?
a) Yes
b) No
Q2) Does accounting policies affects information of books of accounts?
a) Yes
b) No
Q3) What is the impact of inappropriate accounting policies on performance of TESCO
PLC?
a) Negative impact on brand image
b) Lower down the value of shares
c) Increment in expenses
Q4) What is the role of accounting policies for stakeholders of TESCO PLC?
a) Better decision making
b) Interpretation of financial information
c) True and fair information about financial performance
Q5) What are the reasons of inappropriate accounting policies at TESCO PLC?
a) Composition of board of directors
b) Lack of knowledge about accounting
c) Focus on short term objectives
Q6) What are the challenges faced by managers of TESCO PLC in abiding corporate
governance policies?
a) Disclosure of off-balance sheet transactions
b) Diversity
10

c) Accountability issue
Q7) What are the measures through which TESCO PLC can reduce negative impact of
inappropriate accounting policies?
a) Proper disclosure of working notes
b) Disclosure of impact of inappropriate accounting policies
c) Hiring of expertise personnel
Q8) Which party majorly gets affected with inappropriate accounting policy of TESCO
PLC?
a) Internal parties
b) External parties
Q9) Does there any impact due to inappropriate accounting policies of TESCO PLC on
decision making of stakeholders?
a) Yes
b) No
Q10) Provide some effective recommendation to TESCO PLC to reduce impact of
inappropriate accounting policies?
SECONDARY RESEARCH
Secondary research is the form through which information is collected from different
sources such as online, books, journals, etc. Secondary research can be conducted with collecting
information from government agencies, libraries, etc. This method is cheap than primary data.
Under this method, data is already collected by other person and s used by researcher for
conducting research in relevant manner.
In this research, there is use of secondary data as well. In this information is collected
with the help of internet sources, books. There are some authors which provides complete
information about research topic (Dai, 2018). There are some sources which are discussed as
under through which researcher collect secondary data-
Internet source- Internet is the best method to understand concept of corporate
governance policies. Issue if TESCO PLC is analyse with use of internet sources. While
collecting information from internet sources, it is analysed that information is collected from
authentic source.
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Public libraries- Corporate governance is the legal aspect which has to be considered by
managers of TESCO PLC while they are operating in industry. Hence in order to understand
concept of accounting policies, books, journals, newspaper, etc. are analysed. Various public
libraries are analysed in order to conduct research in more appropriate and relevant manner.
From the above discussion, it is clear that information is collected from primary and
secondary source. There are some considerations which has to be followed by researcher while
conducting research such as ethical consideration. This is the aspect which helps to make
changes in operations as per change in plans and policies. It is important to consider these
aspects because with the help of it aims objectives of research are achieved. This also helps to
make research authentic. With the help of time scale, it is easy to determine time to complete
research project. This helps to understand flow of activities and synchronisation is research can
be achieved in effective and relevant manner (Dalwai, Basiruddin and Abdul Rasid, 2015). This
research will be completed within approx. 15 weeks.
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RESULTS OF SECONDARY AND PRIMARY RESEARCH
Results of primary research
Theme 1: Concept of accounting policies
Q1) Do you understand the concept of accounting policies? Frequency
a) Yes 35
b) No 15
Interpretation- From the above discussed graph, it is clear that out of 50 respondents, 35
have knowledge about accounting policies and its importance. Hence it is concluded that there
proper accounting policies has to be used which helps to keep stakeholders satisfied.
Theme 2: Information from accounting policies
Q2) Does accounting policies affects information of books of
accounts?
Frequency
13
a) Yes b) No
0
5
10
15
20
25
30
35
35
15 Frequency

a) Yes 40
b) No 10
Interpretation- AS per above mentioned graph, out of 50 candidates 40 have view that
accounting policies affects books of accounts. While 10 does not say that it affects books of
accounts. Hence it is concluded that managers of TESCO PLC has to give correct and relevant
information through books of accounts. This helps to keep external and internal parties of
organisation aware bout performance and changes which are taking place in TESCI PLC.
Theme 3: Inappropriate accounting policies
Q3) What is the impact of inappropriate accounting policies
on performance of TESCO PLC?
Frequency
a) Negative impact on brand image 20
b) Lower down the value of shares 18
c) Increment in expenses 12
14
a) Yes b) No
0
5
10
15
20
25
30
35
40
40
10
Frequency

Interpretation- Due to inappropriate accounting policies, there is impact on brand image,
competition, etc. of company. As per above graph, 20 respondents says that due to inappropriate
accounting policies, there is negative brand image of TESCO PLC in industry. 18 respondents
have view that there is reduction in value of shareholders. While remaining 12 candidate says
that there is increment in expenses because when budget are not setted properly and actual cost is
high, so cost for TESCO PLC increases.
Theme 4: Role of accounting policies
Q4) What is the role of accounting policies for stakeholders
of TESCO PLC?
Frequency
a) Better decision making 17
b) Interpretation of financial information 18
c) True and fair information about financial performance 15
15
a) Negative impact on brand image
b) Lower down the value of shares
c) Increment in expenses
0
2
4
6
8
10
12
14
16
18
20
20
18
12
Frequency

Interpretation- As per above graph, 17 candidates have view that with accounting
policies, better decision making is possible, 18 says that with the help of accounting policies
interpretation of financial information is possible. While remaining 15 candidates have view that
it informs about true and correct information. Hence it is interpreted that role of accounting
policy is important and crucial.
Theme 5: Reason of inappropriate accounting policies
Q5) What are the reasons of inappropriate accounting
policies at TESCO PLC?
Frequency
a) Composition of board of directors 13
b) Lack of knowledge about accounting 20
c) Focus on short term objectives 17
16
13.5
14.5
15.5
16.5
17.5
17
18
15
Frequency

Interpretation- As per above chart, it is identified that there are different reasons due to
which inappropriate policies are framed. 13 respondents says that this issue is due to composition
of board of directors, 20 says that lack of accounting to personnel is the reason, while remaining
17 feels that managers of TESCO PLC wants to achieve short term objectives due to which they
use inappropriate accounting policies. Hence it is concluded that there is there are some factors
such as roper training to accounts departments, hiring of expertise, etc. which has to be
considered by managers of TESCO PLC to maintain same image in retail industry.
Theme 6: Challenges faced in following corporate governance policies
Q6) What are the challenges faced by managers of TESCO
PLC in abiding corporate governance policies?
Frequency
a) Disclosure of off-balance sheet transactions 20
b) Diversity 14
17
a) Composition of board of directors
b) Lack of knowledge about accounting
c) Focus on short term objectives
0
2
4
6
8
10
12
14
16
18
20
13
20
17
Frequency

c) Accountability issue 16
Interpretation- As per above graph, it is clear that there are some challenges which arise
while following corporate governance policies. According to 20 candidates, with performing
corporate strategies activities balance sheet shows transaction which are estimated or accrue. 14
candidates says that there is issue of diversity. As there is difference in background of people
who are working in TESCO PLC, hence this communicating working to workers. Remaining 16
employees says that while implementing corporate strategy policies, there are some issues
related to accountability. So it is concluded that there must be proper training sections, managers
of TESCO PLC must consider changes in policy.
Theme 7: Measures to reduce impact of inappropriate accounting policies
Q7) What are the measures through which TESCO PLC can
reduce negative impact of inappropriate accounting policies?
Frequency
a) Proper disclosure of working notes 20
18
a) Disclosure of off-balance sheet transactions
b) Diversity
c) Accountability issue
0
2
4
6
8
10
12
14
16
18
20
20
14
16
Frequency

b) Disclosure of impact of inappropriate accounting policies 18
c) Hiring of expertise personnel 12
Interpretation- As per above mentioned graph, it is clear that there is requirement of
some measures which helps to reduce negative impact of applying inappropriate accounting
policies. According to 20 respondents, proper disclosure of working notes in books of accounts
helps to reduce negative impact. 18 favours for there must be proper disclosure of impact on
accounts due to change in accounting policies. While remaining 12 candidates says that there
must be hiring of expertise personnel at TESCO PLC. Hence it is clear that with proper
disclosure of reason of change in accounting policy and its impact on revenues of TESCO PLC,
then this helps to generate positive outcome.
Theme 8: Party affected with inappropriate accounting policies
Q8) Which party majorly gets affected with inappropriate
accounting policy of TESCO PLC?
Frequency
19
a) Proper disclosure of working notes
b) Disclosure of impact of inappropriate accounting policies
c) Hiring of expertise personnel
0
2
4
6
8
10
12
14
16
18
20
20
18
12
Frequency

a) Internal parties 12
b) External parties 38
Interpretation- There are two parties which are associated with TESCO PLC which gets
affected with change in plans in working style and plans and policies of organisation. Internal
parties includes employees, management, etc. of company. While external parties involves
creditor, debtor, competitors, market intermediators, shareholders, etc. With the above mentioned
graph, it is clear that 12 respondents favours that internal parties gets affected while remaining
38 candidates favours that external parties gets affected. So it is concluded that external parties
such as shareholders majorly gets affected with inappropriate accounting policies of TESCO
PLC.
Theme 9: Impact of inappropriate accounting policies on decision making
Q9) Does there any impact due to inappropriate accounting
policies of TESCO PLC on decision making of
stakeholders?
Frequency
20
a) Internal parties b) External parties
0
5
10
15
20
25
30
35
40
12
38
Frequency

a) Yes 43
b) No 7
Interpretation- As per above graph, according to 43 candidates, there is impact on
decision making of Parties associated with TXSC PLC. While remaining 7 says no there is
impact on decision making. So it is interpreted that due to improper accounting concept books of
accounts does not give correct and relevant information. Hence parties are not ready to get rely
on working of TESCO PLC.
Results of Secondary research
The concept of accounting policies
Accounting concept are the set rules and regulations which has to be followed in order to
give correct and relevant information to stakeholders. These are the framework which sets
benchmark to show accounts. This helps to compare revenues, profits from one year to other and
with following correct plans and policies, appropriate information about books of accounts can
be provided. Stakeholders analyse changes books of accounts in order to know about financial
position of organisation. Hence accounting policies plays crucial role. There are some policies
21
a) Yes b) No
0
5
10
15
20
25
30
35
40
45
43
7
Frequency

such as materiality, prudence, etc. which has to be considered while making accounts. When
there is change in accounting concept, then it must be disclosure in working notes. This helps to
keep shareholder and other parties satisfied with working style of TESCO PLC.
The importance of disclosure profit and revenue of association
It is important for TECO PLC to disclose books of accounts because this provides
complete information about progress rate of organisation. There are many parties which are
related to TESCO PLC such as shareholders, consumers, employees, government, etc. which
have keen interest in performance of organisation. So it is important to keep them aware bout
working style of company. For instance: TESCO is thinking to open new outlet at South Africa,
then there must be consent of shareholders. This information is disclosed under non financial
aspect in books of accounts. This affects decision making of shareholders as there is increment in
cost with revenues. This affects decision making of parties related to TESCO PLC. When actual
profits are disclosed in accounts, then it is easy to complete in industry to expand business. If
expansion is done in new country, then government wants to access their audit report and
revenues to analysis sustainability in new market.
The influence of inappropriate accounting policies on revenues and profits of TESCO PLC
There is negative impact of inappropriate accounting policies. When accounting concepts
are not analysed properly and implemented in books of accounts of TESCO PLC, then profits
can either over or under valued. For instance: TESCO PLC is using straight line method to value
depreciation in two consequent years, then in this year written down value method is used. This
is the method which shows value of asset year end low as compared to last year. Hence due to
improper use of accounting policies, negative impact on revenue is analysed. It is tough for
stakeholders to compare balance sheet. There are possibilities that profit may over valued while
in actual it is not so. It has impact on brand image of TESCO PLC and stakeholders do not rely
on books of accounts. With inappropriate accounting policies, there are possibilities that expense
in near future may increase. So this also affects business revenues and profits in negative
manner.
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RECOMMENDATIONS AND ACTION PLAN
There are some recommendations for TESCO PLC through which corrective actions can
be taken in order to reduce negative impact of inappropriate accounting policies on profits and
revenues. From the above research, it is easy to understand that role of accounting policies is
important because this affects decision making of stakeholders. Some recommendations are
discussed as under-
Proper training to personnel- There are different methods of training through which
knowledge of individual can be maintained. There must be training at regular intervals so
individuals are aware about changes in accounting policies. Conferences, seminars, etc. must
organise in TESCO PLC for providing information about latest amendments, etc. When there is
change in accounting policy, then finance and accounts department must analyse it and
communicate to stakeholders. With training of employees they are able to make books of
accounts in best and appropriate manner.
Increase oversight- Over-sightedness must be recognised by managers of TESCO PLC
for conducting operations and expanding business in global market. In order to maintain long
term existence in industry, managers of TESCO PLC must plan operations through which long
sightedness can be done. When proper planning is done for future, there are less possibilities of
scandal and brand image of TESCO PLC can be maintained. When proper over-sightedness is
done then it is easy to understand policies through which accounts give correct information. In
case of scandal or fraud with over sightedness, it is easy to overlook all the aspects of accounts.
This helps to analyse importance of accounting policies in providing correct information.
Review of financial accounts- books of accounts is the main aspect which has to be
considered for successful running of business. There are some specific norms, rules of
accounting which has to be followed. There are some specific methods to maintain books of
accounts. When books of accounts are ready, then it must be review by third party. Auditor of
the TESCO PLC must not be independent party, so there is no fraud. When third party overlook
books of accounts, then it is easy to give authentication of books.
Action plan:-
Action plan is the framework which provides step by step information to achieve specific
aims and objectives. Action plan works as check list which can be reviewed in order to conduct
activities in appropriate and relevant manner. In this research, there is discussion about actions
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which has to be taken in order to reduce possibilities of inappropriate accounting policies in
business operations.
Steps Particulars Description
Step 1 Identify the reason First step in action plan is to identify the reason
behind conducting research. In this research, there is
discussion about inappropriate accounting policies
used by company and its impact on profits. There is
issue in accounting policies due to which profits are
shown at higher rate. This issue arise after
composition of board of directors.
Step 2 Formulate the
strategies
After analysing reason behind considering project, it
is important to identify strategies through which it is
easy to over come issues related to accounting
policies. In this case TESCO must plan operations
such as proper training, hiring expertise, conferences
and seminars, etc. This helps to perform business
activities in more ethical and relevant manner.
Step 3 Offer employees
options
Next action is to make strategies through which
employees remain concentrated to achieve business
objectives. In case TESCO, there is issue in
composition of board members. Hence in this case
employees has rights to choose person who are able
to lead and represent organisation. When employees
are aware about business activities, then there are less
possibilities of fraud. In order to engage workers,
there must be job rotation among various departments.
Employees must provide some decision making
powers through which they feel motivated and
responsible for their actions.
Step 4 Improve There are some changes which implemented because
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organisational
culture and
environment
of change in working style. It is important to consider
changes which are taking place in external
environment. In order to improve working style, it is
important to create dynamic policies in TESCO PLC.
Managers has to communicate with workers through
which culture of TESCO PLC is up to the mark.
Step 5 Implementation
and following
proper accounting
policies
At last after improving environment within
organisation. It is important to implement and follow
proper accounting tools. When accounting policies are
understood by employees, then there are less policies
of error. In earlier step, there is discussion about
maintaining cultural and ethical practices in
environment, it is easy to conduct business operations
in ethical and relevant manner. As this is the last stage
in action plan, so prior activities must be done in best
manner.
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26

CONCLUSION
From the above discussion, it is easy to understand about corporate governance. This is
framework which provides complete information about code of conduct, ethics, etc. which has to
be followed. In this research, there is discussion about impact of inappropriate accounting
policies on profits and revenues. In this research data is collected primary as well as secondary
sources through questionnaire, books, journals, online sources, etc. With the helps of these ways,
it is easy to collect and analyse information to give appropriate recommendations and
conclusions. In this research at last, there is an action plan which helps to understand measures to
over come corporate governance issue.
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Online
AS 1 – Disclosure of Accounting Policies. 2019. [Online]. Available through:
<https://cleartax.in/s/as-1-disclosure-of-accounting-policies>.
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