It has appointed Deloitte to independently investigate the issue.
Dave Lewis, CEO, is quoted by the BBC:
"We have uncovered a serious issue and responded accordingly."Tesco said the overstatement was "principally due to the accelerated recognition of commercial income and delayed accrual of costs". It also said some of the error was due to "in-year timing differences".
Unsurprisingly the markets are unimpressed, and shares in Tesco nosedived by 10% this morning.