Target investigation over

Target inflated its earnings by $21 million in a scandal involving over 30 international suppliers.

Parent company Wesfarmers has revealed the results of an investigation into Target's accounting practices.

Wesfarmers, with its external auditors Ernst & Young, commenced the investigation after concerns over supplier arrangements surfaced in December, 2015.

The retail group found that Target's income was inflated by $21 million in the six months to December 31 last year.

Target’s earnings before interest and tax would have been $53 million as compared to the $74 million reported.

This stemmed from $18.1 million worth of rebate deals with around 30 suppliers.

Additionally, a number of supply arrangements amounting to less than $3 million were found to not comply strictly with the group’s accounting policies.

Target is now working with suppliers to unwind the arrangements.

Wesfarmers confirmed any benefit recorded in the first half would have substantially reversed over the second half of 2016 due to higher product costs.

Wesfarmers MD Richard Goyder expressed his disappointment with the actions of those involved.

“There is no excuse for this conduct,” he said.

"We set very clear direction and expectations at Wesfarmers crystallised in our Code of Conduct, and supported by detailed group policies, divisionally specific accounting policies, and regular staff training.

"We encourage and expect adherence to a strong culture of managing for long term sustainable growth over short term gain, which is regularly reinforced by the Wesfarmers Board and which should have guided behaviour.

“Wesfarmers will take immediate action throughout the group to reinforce the importance of compliance with its policies and governance practices.”