The Registered Housing Associations (Accounting Requirements) (Scotland) Order 1999

• Citation: S.I. 1999/1073
• Sections: 86

Section 1 Citation, commencement and revocation

(1) This Order may be cited as the Registered Housing Associations (Accounting Requirements) (Scotland) Order 1999 and shall come into force on 1st May 1999.

(2) Subject to paragraph (3), the Registered Housing Associations (Accounting Requirements) (Scotland) Order 1993 is hereby revoked.

(3) Notwithstanding paragraph (2), the Registered Housing Associations (Accounting Requirements) (Scotland) Order 1993 shall continue to apply in respect of any period of account starting before 1st April 1999.

Section 2 Interpretation

In this Order, unless the context otherwise requires–

“accounting policies” means the specific accounting bases selected and consistently followed by a registered housing association which are, in the opinion of the board of the registered housing association, appropriate to its circumstances and best suited to present a true and fair view of its results and financial position and which conform with generally accepted accounting practice;

“accounts” means the registered housing association’s financial statements which consist of the balance sheet, the income and expenditure account, the notes to the accounts and any other such statements required to conform with generally accepted accounting practice;

“balance sheet” means the balance sheet required for the purpose of section 39(1) of the Industrial and Provident Societies Act 1965 ;

“balance sheet date” means the date as at which the balance sheet was made up;

“board” means the management committee of the society;

“chief executive” means the person who has overall responsibility for the running of the day to day affairs of the registered housing association;

“co-ownership society” means an industrial and provident society in the case of which–

the rules of the society restrict membership to persons who are tenants or prospective tenants of the registered housing association and preclude the granting or assignment of tenancies to persons other than members; and

each tenant (or his personal representatives) will, under the terms of the tenancy agreement or of the agreement under which he became a member of the society, be entitled, on his ceasing to be a member and subject to any conditions stated in either agreement, to a sum calculated by reference directly or indirectly to the value of his housing accommodation;

“designated reserve” means funds set aside to be used for a particular purpose in the future;

“director” means, unless otherwise stated, a member of the board of the registered housing association;

“disposal proceeds fund” means the sums standing in the disposal proceeds account of a registered housing association, calculated and disclosed in accordance with guidance issued by Scottish Homes.

“group” has the same meaning as in section 262(1) of the Companies Act 1985 ;

“housing accommodation” means dwellings, houses in multiple occupation and hostels;

“housing land” means land and buildings held by a registered housing association for the purposes of providing housing accommodation (including accommodation to be provided by disposal for sale or on lease);

“income and expenditure account” means the revenue account required for the purposes of section 3(2) of the Friendly and Industrial and Provident Societies Act 1968 ;

“industrial and provident society” means a body registered under the Industrial and Provident Societies Act 1965;

“notes to the accounts” means notes to the balance sheet or the income and expenditure account;

“period of account” means the period to which the income and expenditure account relates;

“registered housing association” means a body registered with Scottish Homes under the Housing Associations Act 1985;

“restricted reserve” means funds provided to the registered housing association, the use of which is restricted by general law or by the terms on which the funds were given to the registered housing association or were allowed to be retained by the registered housing association to be used for a specific purpose;

“supported housing” means accommodation owned by a registered housing association and allocated to individuals requiring some form of support in order to live independently in the community, but does not include accommodation the primary purpose of which is to provide care rather than housing, accommodation which aims to fulfil a statutory duty other than under housing legislation and accommodation which is not provided with the aim of providing residents with a permanent home or the life skills and confidence to move into permanent accommodation;

“undertaking” has the same meaning as in section 259(1) of the Companies Act 1985 ; and

“unit of accommodation” means, in the case of supported housing or a hostel, accommodation which is provided for one individual and, in any other case, a dwelling.

Section 3 Application

This Order applies to the accounts of every registered housing association in respect of a period of account starting on or after 1st April 1999.

Section 4 Information in specified form

Any requirement in this Order to prepare information in a specified form shall be satisfied if it is prepared in a form substantially to the same effect.

Section 5 Materiality

Unless stated otherwise, amounts which in a particular context of any provision of this Order are not material may be disregarded.

Section 6 General accounting requirements

The accounts shall comply with the requirements of this Order (as far as applicable) with respect to the form and content of the balance sheet and income and expenditure account and any additional information to be provided by way of notes to the accounts.

Section 7 General accounting requirements

(1) The balance sheet shall give a true and fair view of the state of affairs of the registered housing association as at the end of the period of account.

(2) The income and expenditure account shall give a true and fair view of the surplus or deficit incurred by the registered housing association for the period of account.

Section 8 General accounting requirements

Where the accounts are prepared other than on a going concern basis, a statement to that effect shall be included in those accounts.

Section 9 General accounting requirements

Accounting policies used by a registered housing association shall be applied consistently within the same accounts and from one period of account to another and the accounting policies adopted by the registered housing association in determining the amounts to be included in respect of items shown in the balance sheet or in the income and expenditure account shall be stated (including policies with respect to the depreciation and diminution in the value of assets).

Section 10 General accounting requirements

The amount of any item shown shall be determined on a prudent basis, and in particular–

(a) only surpluses realised at the balance sheet date shall be included in the income and expenditure account; and

(b) all liabilities and deficits which have arisen or are likely to arise in respect of the period of account to which the accounts relate shall be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the board.

Section 11 General accounting requirements

All income and expenditure relating to the period of account shall be taken into account without regard to the date of receipt or payment.

Section 12 General accounting requirements

In determining the aggregate amount of any item to be included in the accounts, the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

Section 13 General accounting requirements

Where it is necessary to depart from the requirements of this Order so as to give a true and fair view of the state of affairs of a registered housing association and of its income and expenditure account in accordance with the duties imposed by section 3(1) and (4) of the Friendly and Industrial and Provident Societies Act 1968 , then–

(a) nothing in this Order shall prevent such a departure; but

(b) particulars of any such departure, the reason for it and its effect shall be given in a note to the accounts.

Section 14 General accounting requirements

Nothing in this Order shall prevent the accounts giving more information than is required by this Order.

Section 15 General accounting requirements

If in the course of the period of account a registered housing association has engaged in housing activities in two or more classes of accommodation that, in the opinion of the board, differ substantially from each other, there shall be stated in respect of each class (describing it)–

(a) the amount of the turnover attributable to that class; and

(b) the amount of the surplus or deficit before taxation which is in the opinion of the board attributable to that class.

Section 16 General accounting requirements

Where the accounts are to be circulated by the registered housing association to persons who are not members, a copy of the auditor’s report on those accounts shall be circulated at the same time.

Section 17 General accounting requirements

The balance sheet shall–

(a) show the date on which the accounts have been approved by the board;

(b) be signed on behalf of the board by at least two members of the board and the secretary.

Section 18 Balance sheet and income and expenditure account

Subject to article 20, the balance sheet of every registered housing association shall–

(a) include headings and sub-headings corresponding to the items listed in Format 1 of Part I of Schedule 4 to the Companies Act 1985;

(b) show the amount of the items listed under those headings.

Section 19 Balance sheet and income and expenditure account

Subject to article 20, the income and expenditure account of every registered housing association shall–

(a) include headings and sub-headings corresponding to the items listed–

(i) in Format 1 of Part I of Schedule 4 to the Companies Act 1985 where the items are listed by reference to the activities of the registered housing associations; or

(ii) in any other case, in Format 2 of that Part;

(b) show the amount of the items listed under those headings;

(c) show the amount of the surplus or deficit of the registered housing association in respect of the ordinary activities of the registered housing association before taxation; and

(d) show separately as additional items any amount set aside or proposed to be set aside to or withdrawn from reserves.

Section 20 Balance sheet and income and expenditure account

Articles 18 and 19 are not to be read as requiring the heading or sub-heading for any item to be distinguished by any letter or number assigned to that item in the format used.

Section 21 Balance sheet and income and expenditure account

The corresponding amount, if any, for the previous period of account shall be shown against each item in the balance sheet or the income and expenditure account.

Section 22 Balance sheet and income and expenditure account

Items listed in the Format adopted in preparing the balance sheet or the income and expenditure account shall not be included if there was no amount to be shown in respect of both the previous period of account and the period of account.

Section 23 Balance sheet and income and expenditure account

Items to which Arabic numbers are assigned in the Format adopted may be combined in the registered housing association’s accounts for a period of account if–

(a) their individual amounts are not material to assess the state of affairs or surplus or deficit of the registered housing association; or

(b) the combination facilitates that assessment, but in this case the individual items so combined shall be shown in the notes to the accounts.

Section 24 Balance sheet and income and expenditure account

In preparing the registered housing association’s balance sheet or income and expenditure account, the headings and sub-headings otherwise required under articles 18 and 19 in respect of items to which an Arabic number is assigned may be adapted where the special nature of the registered housing association’s business requires such adaptation.

Section 25 Notes to the accounts

Every registered housing association shall include in the notes to its accounts the information shown in Part 1 and Part 2 of the Schedule to this Order in the manner shown.

Section 26 Notes to the accounts

Where at the end of a period of account the registered housing association is part of a group, it shall include in the notes to its accounts the information specified in Part 3 of the Schedule to this Order.

Section 27 Distinguishing housing activities

Where a registered housing association undertakes any activities which are not housing activities, it shall in its accounts distinguish its housing activities from its other activities by–

(a) distinguishing housing land from other fixed assets;

(b) identifying any other assets and liabilities which relate solely to housing activities; and

(c) apportioning income and expenditure between those items which relate to housing activities and those relating to other activities.

Section 28 The rent surplus fund

(1) The rent surplus fund of a registered housing association required to maintain such a fund shall be constituted and shown in the accounts according to the method set out in article 29.

(2) Article 5 does not apply to articles 29 and 30.

Section 29 The rent surplus fund

(1) The surpluses calculated in the manner determined under section 55(3) of the Housing Act 1988 shall be shown in the notes to the accounts.

(2) These surpluses shall be transferred to the rent surplus fund.

(3) Where sums are in the rent surplus fund in respect of previous periods of account, they shall be accumulated with any sums transferred to the rent surplus fund in respect of the period of account.

Section 30 The rent surplus fund

Where a proportion of the rent surplus fund is retained for re-investment, then this amount shall be shown in a restricted reserve.

Section 31 The disposal proceeds fund

(1) The disposal proceeds fund of a registered housing association required to maintain such a fund shall be constituted and shown in the accounts according to the method set out in article 32.

(2) Article 5 does not apply to article 32.

Section 32 The disposal proceeds fund

(1) The net disposal proceeds calculated in the manner determined under Scottish Homes' guidance shall be shown in a note to the accounts and included in long term creditors within the accounts.

(2) Where sums are in the disposal proceeds fund in respect of previous periods of account, they shall be accumulated with any sums transferred to the disposal proceeds fund in respect of the period of account.

Section 1 Establishment of registered housing association

A statement of the legislative provisions under which the registered housing association is established.

Section 2 Financial reporting standards

Whether the accounts have been prepared in accordance with applicable financial reporting standards, particulars of any material departures from these standards and the reasons for any such departure. In this paragraph, “financial reporting standards” has the same meaning as “accounting standards” in section 256(1) of the Companies Act 1985 and “applicable” has the same meaning as in section 256(2) of that Act.

Section 3 Pensions

A statement of the nature of the pension scheme and how it is funded. Details of the nature of the chief executive’s pension arrangements stating–

(i) whether he is an ordinary member of the pension scheme;

(ii) whether any enhanced or special terms apply;

(iii) whether he has an individual pension arrangement (including a personal pension); and

(iv) the value of the registered housing association’s contributions.

The information relating to the chief executive may be shown under the pension note or as part of the information required to be shown under paragraphs 5 to 7 below.

Section 4 Extension of definition of director

In paragraphs 5 to 15 below, “director” also includes the chief executive and any other person reporting directly to the chief executive or directly to the board and whose total emoluments exceed £40,000 per year.

Section 5 Directors' remuneration, etc.

The aggregate amount of emoluments payable to or receivable by the registered housing association’s directors or former directors during the period of account or, where no such emoluments are so payable or receivable, a statement to that effect.

Section 6 Directors' remuneration, etc.

The emoluments payable to or receivable by the highest paid director during the period of account, excluding pension contributions.

Section 7 Directors' remuneration, etc.

Where the registered housing association is a member of a group or where the aggregate amount of directors' emoluments exceeds £40,000, then the number of directors to whom emoluments (excluding pension contributions) were payable or receivable during the period of account and whose emoluments fall within each of the following bands:–

more than £40,000 but not more than £45,000

more than £45,000 but not more than £50,000

more than £50,000 but not more than £55,000

more than £55,000 but not more than £60,000

and so on.

Section 8 Directors' remuneration, etc.

In paragraphs 5 to 7 above, “emoluments” means emoluments in respect of a director’s services as a director of the registered housing association or the director’s services (while a director of the registered housing association) in connection with the management of its affairs or the affairs of any subsidiary undertaking of the registered housing association, and includes–

(a) wages and salaries, including performance pay, payable for the period;

(b) fees and percentages;

(c) sums payable by way of expense allowance (so far as chargeable to United Kingdom tax);

(d) contributions payable in respect of pensions except where otherwise stated; and

(e) the estimated money value of any other benefits otherwise than in cash,

and emoluments in respect of a person accepting office as director shall be treated as emoluments in respect of his service as director.

Section 9 Directors' remuneration, etc.

The total expenses reimbursed in so far as not chargeable to United Kingdom income tax.

Section 10 Directors' remuneration, etc.

The aggregate amount of any compensation payable to directors or past directors during the period of account in respect of loss of office (whether by retirement or otherwise) and the notes shall distinguish between compensation in respect of the office of director, whether of the registered housing association or any subsidiary, and compensation in respect of other offices.

Section 11 Directors' remuneration, etc.

In paragraph 10 above, “compensation” means compensation received or receivable for–

(a) loss of office as a director of the registered housing association, or

(b) loss, while a director of the registered housing association or in connection with ceasing to be a director of that body, of–

(i) any other office in connection with the registered housing association’s affairs; or

(ii) any office as director or otherwise in connection with the management of the affairs of any subsidiary undertaking of the registered housing association,

and includes benefits otherwise than in cash and, in relation to such compensation, references to its amounts are to the estimated money value of the benefit.

Section 12 Directors' remuneration, etc.

The aggregate amount of directors' or past directors' pensions. This amount does not include any pension payable or receivable under a pension scheme if the scheme is such that the contributions under it are substantially adequate for maintenance of the scheme but, subject to this, it includes any pension payable or receivable in respect of any such services of a director or past director as are mentioned in paragraph 8 whether to that person or by that person or, on that person’s nomination or by virtue of dependence or other connection with that person, to or by any other person. The amount shown shall distinguish between pensions in respect of services as director, whether of the registered housing association or any of its subsidiary undertakings, and other pensions.

Section 13 Directors' remuneration, etc.

In paragraph 12, references to pension include benefits otherwise than in cash and, in relation to such non-cash benefits, references to their amount is to the estimated money value of the benefit. The nature of any such benefit shall also be disclosed.

Section 14 Directors' remuneration, etc.

Particulars of any loan made to a director or person connected with a director. Particulars of any loan which is repayable by the registered housing association, in which a director of the registered housing association or person connected with the director has an interest.

Section 15 Consideration for directors' services

The aggregate amount of any consideration payable to or receivable by third parties for making available the services of any person as director of the registered housing association, or (while a director of the registered housing association) in connection with the management of the affairs of the registered housing association or the affairs of any subsidiary undertaking of the registered housing association. Where the consideration includes a benefit otherwise than in cash, the reference to its amount is a reference to the estimated value of the benefit; and the nature of such consideration shall be shown. “Third parties” means persons other than a director or a person connected with the director or a body corporate controlled (within the meaning of section 346 of the Companies Act 1985) by that director and the registered housing association or any of its subsidiary undertakings.

Section 16 Employees

The average number of employees of the registered housing association including part-time employees, as ascertained from the average number of persons employed in each month of the period of account but excluding any employees who are members of the board of the registered housing association.

Section 17 Employees

The average number of employees expressed in full time equivalents.

Section 18 Employees

In relation to employees and the members of the board of the registered housing association, the aggregate amount of–

(a) wages and salaries (including performance pay) payable for the period;

(b) the social security costs incurred by the registered housing association; and

(c) any other pension costs so incurred.