Another big US food distributor was under scrutiny over its accounting practices yesterday, as Fleming said it was facing a formal Securities & Exchange Commission (SEC) probe.

News of the investigation at the biggest US wholesale grocery distributor came a day after Dutch retailer Ahold said income may have been overstated by $500 million (€464 million) at its US Foodservice subsidiary.

One focus of the Fleming probe is vendor allowances, the accounting of rebates and discounts from suppliers. Ahold said the overstatement at US Foodservice, which supplies food to schools, hospitals and restaurants, was also related to vendors' promotional allowances.

Fleming, like Ahold, is an audit client of Deloitte & Touche. The new probe could intensify the debate over the accounting treatment of vendor allowances, an issue being examined by a Financial Accounting Standards Board task force.

Dealing with questions raised at Ahold and Fleming will be important for Deloitte's new leadership.

Nash Finch, one of Fleming's competitors, saw its share price halve this month after it said the SEC was probing accounting practices and its auditors, also Deloitte, resigned.

Fleming said last November the SEC was conducting an informal inquiry into vendor allowances, its calculation of same-store sales figures in now-discontinued retail operations and the presentation of second-quarter 2001 earnings per share data.

Fleming said: "We have been co-operating with the SEC and will continue to co-operate."