The following is an extract from a press note published by the Financial Reporting Review Panel (FRRP):

FINDINGS OF THE FINANCIAL REPORTING REVIEW PANEL IN RESPECT OF THE ACCOUNTS OF S PLC FOR THE YEAR ENDED 31 MARCH 2001 The Financial Reporting Review Panel has had under consideration the Report and Accounts of S plc for the year ended 31 March 2001 and has discussed them with the company’s directors.

The matters raised by the Panel related to aspects of the company’s implementation of Financial Reporting Standard (FRS) 15 – Tangible Fixed Assets, regarded as standard in respect of financial statements relating to accounting periods ending on or after 23 March 2000.

The company’s stated accounting policy in respect of properties was not to provide any depreciation on any given property until approximately ten years before the end of its useful life, from which point the depreciable amount was written off over the remainder of the useful life. In respect of plant and equipment, it was the company’s policy not to commence depreciation until the accounting year following that in which the assets were acquired. In the Panel’s view, neither of these policies complied with the requirements of FRS 15.
As reported in their Report and Accounts for the year ended 31 March 2002, the directors have accepted the Panel’s findings. The directors have amended the 2001 comparative figures by way of prior year adjustment.
Required:

(a) Explain the role of the Financial Reporting Review Panel (FRRP). (8 marks)

(b) Explain why the FRRP disagreed with S plc’s depreciation policies and explain why it made this disagreement public. (6 marks)

(c) Explain whether the FRRP’s role could be left to the external auditor. (6 marks)
CIMA, Financial Accounting – UK Accounting Standards, May 2002 (20 marks)