The accounting watchdog is to scrutinise the former finance director of Tesco during a probe into the financial statements of Britain's biggest retailer.
Sky News understands that Laurie McIlwee, who left Tesco in April and had no role in the half-year results which triggered its accounting crisis in September, will face questions as part of the Financial Reporting Council's (FRC) investigation.
The FRC confirmed on Monday that it had commenced an inquiry into the "preparation, approval and audit" of Tesco's financial results following the disclosure that its profits had been overstated by £263m.
Members of Tesco's audit team at PricewaterhouseCoopers (PwC) will also be central to the FRC inquiry, which will examine statements dating back to the year ended 25 February 2012, and their impact on "the matters reported in the company's interim results for the 26 weeks ended 23 August 2014".
It is unclear whether Mark Armour, a Tesco director and member of its audit committee who also sits on the FRC board, will form part of the investigation.
The accounting body's inquiry will run alongside that of the Serious Fraud Office (SFO), which said in November that it had launched a criminal probe into the affair.
Mr McIlwee resigned in April and left Tesco's head office almost immediately after being asked not to return by the then chief executive, Philip Clarke.
Sources said that Mr McIlwee had not personally signed off Tesco's 2013-14 accounts.
Tesco's outgoing chairman, Sir Richard Broadbent, was forced to clarify remarks made in September that Mr McIlwee had not been at Tesco for "days and weeks", eventually admitting that he had not been called upon since April.
After his departure, Mr Clarke formed a separate finance committee to oversee the preparation of future financial statements.
According to insiders, members of that committee included Carl Rogberg, the former UK finance director, Mr Clarke himself, and Mike Iddon, who is now chief financial officer at New Look.
The £263m profits overstatement, announced by Mr Clarke's successor, Dave Lewis, triggered the suspension of at least eight executives, including Mr Rogberg, at least four of whom have since left the company.
One, Matt Simister, has been reinstated, while the fate of three others remains unclear.
The overstatement was a result of the way Tesco managers booked income from commercial suppliers, prompting Mr Lewis to announce an overhaul of those relationships.
The FRC has the power to impose unlimited fines and bans on individual members and member firms following formal disciplinary procedures.
Although widely expected, the formal confirmation of its investigation is a further distraction for Mr Lewis, who is attempting to improve Tesco's domestic performance in the wake of another devastating profit warning.
It issued its fourth profits warning in a year earlier this month, saying that full-year earnings would not exceed £1.4bn - well short of City forecasts of around £1.94bn.
Mr Lewis will update the City on Christmas trading and his broader plans to reinvigorate Tesco on January 8.
Tesco and the FRC declined to comment further, while Mr McIlwee could not be reached for comment.
Sky News
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