Its reluctance to comply with FRS11 was revealed in a Commons Trade and Industry Committee report which warned that despite doing so ‘there are grounds for fearing that the Post Office may struggle to maintain even its current level of profitability’.
The accounts for 1999-2000 show an overall loss of £415m, the first such loss for many years, largely attributed to the exceptional write-down of £571m in expenditure on the Horizon project designed to computerise the sub-post office network.
Impairment arose from assets no longer required after Parcelforce completed two new hubs in Coventry. Evidence from the Post Office Users National Council contained the allegation that the Post Office ‘has shown considerable zeal in its application of the impairment accounting standard, adding £35m for restructuring and £21m of internal expenditure for the same purpose.
The council said: ‘The PO has taken this opportunity to clean up the balance sheet and to ‘dump’everything possible with an eye to the future. If you are going to have a bad year then have a really bad one.’
But Post Office chief executive John Roberts said they had written off ‘old legacy assets’ – ‘a very straightforward ordinary commercial decision’. He claimed the Post Office would have preferred not to have done it but complied with ‘very strong audit advice’.
He added: ‘It was not a question of having zeal. We had long arguments with the auditors over whether it was right to do this and in the end they convinced us that the best commercial practice was that we had to do it.’
The committee report’s main thrust was to raise questions over the modernisation of the sub-post office network and its proposed Universal Bank for welfare recipients without commercial bank accounts through which to receive payments.
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