What is FRP?
Essentially FRP is the processes, procedures and controls that the management rely on in doing the following tasks:-
- performing accounting period close
- preparing the financial statements
- reviewing and approving the financial statements
We need an understanding of how key judgements are made.
Why is understanding the FRP critical to Audit or to you, a newbie Accountant joining the management team in a new company?
- FRP is where management is more likely to manipulate the financial statements. It is often more difficult to manipulate routine transaction entries.
- FRP forms the foundation for other systems and processes within the company.
As a new management staff, while it may take some time before you get a complete feel of the decision process, it is also utmost critical that you get to know it soon. Why? You are responsible for all things big and small from the first day you start work in that office.