Tesco has suspended four executives, including its UK managing director, after the supermarket overstated its half-year profit guidance by £250m.
That would be almost a quarter of its expected profit for the period.
It has launched an investigation headed by Deloitte, and says it is now working to establish the impact of the issue on its full-year results.
"Disappointment would be an understatement," said Tesco chief executive Dave Lewis.
Mr Lewis, who only took the helm on 1 September, said it was "a serious issue", but insisted "it doesn't take away from what I'm able to build at Tesco".
Shares fell 8% in early trading.
Mr Lewis said "a number of people" had been suspended from duty "to facilitate the fullest and deepest investigation possible", but said this was not "disciplinary or an admission of guilt".
UK managing director Chris Bush is one of those suspended, according to Radio 5 Live presenter Adam Parsons.
Mr Lewis said Robin Terrell, Tesco's multi-channel director, would be "stepping in and running and leading the UK leadership team", but he refused to confirm that Mr Bush had been suspended.
Tesco is also believed to have suspended its UK finance director Carl Rogberg, its food commercial director John Scouler and the head of food sourcing Matt Simister.
Mr Lewis said the issue was "something completely out of the ordinary" and his priority was to carry out "a full and frank investigation".
"We will take decisive action as the results of the investigation become clear," he added.
Tesco also confirmed that there had been no chief financial officer (CFO) at the group over the past week, after its current CFO Laurie McIlwee left just over a week ago following his resignation in April.
Marks and Spencer's chief financial officer (CFO) Alan Stewart was announced as Mr McIlwee's replacement in July, but is not due to join Tesco until December.
Tesco chairman Sir Richard Broadbent rebuffed criticism that he should have discovered the issue sooner.
"Things are always unnoticed until they have been noticed." he said. "The shareholders will have to decide for themselves whether I'm part of the solution or part of the problem."
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