Tesco has formally been placed under criminal investigation by the Serious Fraud Office (SFO) following its discovery of a £263 million hole in profit expectations.
The group said that in light of the SFO probe, a separate investigation by the Financial Conduct Authority (FCA) has been closed.
It comes after a probe for Tesco by accountants Deloitte and law firm Freshfields found the accounting error was worse than first thought and that the supermarket had been overstating its earnings for years.
In a statement, the group said: "Tesco confirms that it has been notified by the Serious Fraud Office that it has commenced an investigation into accounting practices at the company.
"Tesco has been co-operating fully with the SFO and will continue to do so.
"Tesco has been notified by the Financial Conduct Authority that, in light of the SFO investigation, its investigation will be discontinued."
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The SFO confirmed that its director David Green QC "has opened a criminal investigation into accounting practices at Tesco plc".
It said that as the investigation was under way it could not provide further details.
The SFO is responsible for investigating and prosecuting serious and complex fraud and corruption.
The FCA confirmed that it had "decided to discontinue its own investigation with immediate effect".
Accounting watchdog the Financial Reporting Council has also said it is "giving careful consideration" to whether it should take regulatory action.
Last week, Tesco said pay-offs totalling around £2 million to departed chief executive Philip Clarke and former finance director Laurie McIlwee had been suspended pending investigations.
Meanwhile, eight executives including UK managing director Chris Bush have been asked to step aside.
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Chairman Sir Richard Broadbent (pictured) last week said that he was preparing to step down to show someone was "carrying the can" for the scandal - which was "a matter of profound regret".
Deloitte's probe into the affair, which involved rebates from suppliers being moved around to different periods on the company's balance sheet, found it had been going on for years and at least as far back as the 2012/13 period.
New chief executive Dave Lewis tried to draw a line under the episode as he unveiled details of the inquiry while reporting a 92% fall in first-half profits and deteriorating sales last week.
But Tesco has now had to re-write its rules on dealing with suppliers in light of the mistakes and said this would have an impact on its second-half performance.
The Deloitte probe involved more than six million documents with 18,000 invoices reviewed and 700 scrutinised in detail.
It found a £118 million trading profit shortfall related to the latest half-year plus a £70 million hit for the previous financial year and £75 million for 2012/13.
Tesco first announced last month that it had discovered a problem but initially expected it to result in a £250 million overstatement - lower than the sum it eventually calculated.
Details of the probe revealed that, once started, the accounting error seems to have spiralled out of control, as Tesco said "current and prior practices appear to be linked as income pulled forward grew period by period".
But Mr Lewis brushed off any suggestion of fraud, saying that no-one had gained financially from the mistake.
The new boss is trying to turn the performance of the grocer around as it faces sliding sales amid a squeeze on market share from discounters Aldi and Lidl and a price war with its more established rivals.
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