Tesco has confirmed it is under investigation from the Serious Fraud Office (SFO).
The struggling retailer said it had been notified by the office, which said that an investigation into its accounting practices had begun.
It said in a statement: “Tesco has been cooperating fully with the SFO and will continue to do so.”
In light of this, the Financial Conduct Authority (FCA) has discontinued its own investigation into the company.
The examination of Tesco’s practices comes after it made a catastrophic profit overstatement of £263m earlier this year.
Professor Crawford Spence of Tesco Warwick Business School said: "Now that Tesco are being investigated for fraud by the SFO, the Financial Reporting Council have yet greater reason to start an investigation into the auditors role with regard to these irregularities.
"Tesco have been losing market share to its competitors steadily in recent years and losing value quite dramatically in its share price in recent months. Rather than fix the underlying problems, they have been playing around with their numbers to try and make things look better.”