Statutory Instrument 1988 No. 395

The Registered Housing Associations (Accounting Requirements) Order 1988

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© Crown Copyright 1988

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1988 No. 395

HOUSING, ENGLAND AND WALES

HOUSING, SCOTLAND

The Registered Housing Associations (Accounting Requirements) Order 1988

The Secretary of State for the Environment as respects England, the Secretary of State for Wales as respects Wales, and the Secretary of State for Scotland as respects Scotland, in exercise of the powers conferred upon them by section 24(1), (2) and (5) of the Housing Associations Act 1985^[1], and of all other powers enabling them in that behalf, hereby make the following Order:

Citation, commencement and revocation
    1.—(1)  This Order may be cited as the Registered Housing Associations (Accounting Requirements) Order 1988, and shall come into force on 1st April 1988.

    (2)  Subject to article 3 of this Order, the Registered Housing Associations (Accounting Requirements) Order 1982^[2], the Registered Housing Associations (Accounting Requirements for Almshouses) Order 1983^[3] and the Registered Housing Associations (Limited Accounting Requirements) Order 1984^[4] are hereby revoked.

Interpretation
    2.    In this Order, unless the context otherwise requires-

"the 1965 Act" means the Industrial and Provident Societies Act 1965^[5];

"the 1968 Act" means the Friendly and Industrial and Provident Societies Act 1968^[6];

"the 1985 Act" means the Housing Associations Act 1985;

"accounts" means the balance sheet, the income and expenditure account, the statement of source and application of funds and additional financial statements required by this Order, and notes to the accounts;

"almshouse" means a corporation or body of persons which is a charity and which is prevented by its rules or constituent instrument from granting tenancies of dwellings occupied for the purposes of the charity;

"association" means a registered housing association within the meaning of the 1985 Act;

"1965 Act society" means an association which is registered under the 1965 Act;

"balance sheet" means the balance sheet required for the purposes of section 39(1) of the 1965 Act^[7] or, as the case may be, paragraph 2(1) of Schedule 3 to the 1985 Act;

"balance sheet date" means the date on which the period of account ends;

"co-ownership society" means a 1965 Act society in the case of which-
 (i) the rules of the society restrict membership to persons who are tenants or prospective tenants of the association and preclude the granting or assignment (or, in Scotland, assignation) of tenancies to persons other than members, and
 (ii) 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;

"grant for rent phasing" means as much of the housing association grant for a project as does not exceed the amount, taken into account in the calculation of that grant, which relates to the inability of the association to recover the full amount of the fair rent registered under Part VI of the Rent Act 1977^[8] or, in Scotland, Part VI of the Rent (Scotland) Act 1984^[9] by reason of the provisions thereof;

"housing cost and finance statement" means the statement required by article 8(c) of this Order;

"housing land" means land and buildings held by an association for the purpose of providing housing accommodation (including accommodation to be provided by disposal on sale or on lease);

"income and expenditure account" means the revenue account required for the purposes of section 3(2) of the 1968 Act or, as the case may be, paragraph 2(1) of Schedule 3 to the 1985 Act;

"large association" means, in relation to a period of account, an association which on the day when that period begins, is providing more than 250 units of accommodation;

"long lease" means a lease the unexpired term of which at the balance sheet date is not less than 50 years and, in Scotland, includes a lease which is the subject of a decree under Section 9(4) of the Land Tenure Reform (Scotland) Act 1974^[10];

"managing body" means-
 (a) in relation to a 1965 Act society, the committee of management or other directing body of the society;
 (b) in relation to a charity which is a company within the meaning of the Companies Act 1985^[11], the board of directors of the company;
 (c) in relation to any other charity, the trustees of the charity;

"notes to the accounts" means notes to the balance sheet, the income and expenditure account, the statement of source and application of funds and the additional financial statements required by this Order;

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

"property equity account" means an account showing the extent to which the association's capital expenditure on its property has been financed from its own resources;

"property revenue account" means the account required by article 8(a) of this Order;

"public authority" means any body of persons authorised by or under any Act to carry on a railway, dock, water or other public undertaking;

"rent", in relation to housing accommodation, includes any sum payable for or in consideration of the use or occupation of that accommodation;

"small association" means, in relation to a period of account, an association which, on the day when that period begins, is providing 250 or less units of accommodation;

"unit of accommodation" means, in the case of a hostel, the accommodation provided for one individual, and in any other case, a dwelling; and

"vacant accommodation" means housing accommodation available for occupation which has been vacant at any time during the period of account.

Application
    3.    This Order applies in relation to the accounts of every association in respect of any period of account commencing on or after the date when this Order comes into force; and in respect of any earlier period of account, the Orders revoked by this Order shall apply as if those Orders had not been revoked.

General accounting requirements
    4.—(1)  The accounts of every large association and every co-ownership society shall comply-
 (a) if the association is not an almshouse, with the requirements contained in this Order except Schedule 7 hereto;
 (b) if the association is an almshouse, with the requirements contained in this Order except articles 6, 7 and 8 and Schedules 2 to 7 hereto.

    (2)  The accounts of every small association which is not a co-ownership society shall comply either with the requirements specified in paragraph (1)(a) or (b) of this article (as appropriate) or with those requirements amended by Schedule 7 to this Order.

    (3)  Nothing in this Order shall prejudice or affect the duties imposed by section 3(1) of the 1968 Act or, as the case may be, paragraph 2 of Schedule 3 to the 1985 Act insofar as they require a true and fair view to be given of the state of affairs of an association and of its income and expenditure; and accordingly where it is necessary to depart from the requirements of this Order so as to give such a true and fair view-
 (a) nothing in this Order shall prevent such a departure from those requirements, but
 (b) the fact of any such departure, the reasons for it and its effect shall be recorded in the notes to the accounts of the association.

    (4)  Nothing in this Order shall prevent the accounts of an association from giving more information than is required by this Order.

    (5)  Save for the information required to be shown in accordance with Part I of Schedule 1 to this Order, paragraph 12 of Part II of Schedule 1 to this Order and paragraph 14(f) to (i) of Part III of Schedule 1 to this Order, amounts which in the particular context of any provision of this Order are not material may be disregarded for the purposes of that provision.

    (6)  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 like effect.erial may be disregarded for the purposes of that provision.

    (6)  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 like effect.

Balance sheet and notes to the accounts
    5.—(1)  The information referred to in Part I of Schedule 1 to this Order shall be shown, in the manner thereby required, in the balance sheet.

    (2)  The information referred to in Part II of Schedule 1 to this Order shall be shown, in the manner thereby required, in the balance sheet or in notes to the accounts.

    (3)  The information referred to in Part III of Schedule 1 to this Order shall be shown, in the manner thereby required, in notes to the accounts.

Income and expenditure account
    6.    The income and expenditure account of an association-
 (a) which is not a co-ownership society, shall be in the form set out in Schedule 2 to this Order;
 (b) which is a co-ownership society, shall be in the form set out in Schedule 3 to this Order.

Preparation of statement of source and application of funds
    7.    An association shall prepare a statement of source and application of funds which shall show the disposition during the period of account and the previous period of account of all funds received or receivable by the association in each period, and the sources thereof.

Preparation of additional financial statements
    8.    In addition to the balance sheet, income and expenditure account, statement of source and application of funds, notes to the accounts and any other accounts which it is required to prepare apart from this Order, an association shall prepare the following additional financial statements-
 (a) unless it is a co-ownership society, a property revenue account in the form set out in Schedule 4 to this Order;
 (b) unless it is a co-ownership society, a statement of housing administration costs in the form set out in Schedule 5 to this Order; and
 (c) if it is a co-ownership society, a statement showing the cost of the housing accommodation of the society and the finance thereof ("the housing cost and finance statement") in the form set out in Schedule 6 to this Order.

Method of distinguishing housing activities in the accounts
    9.—(1)  Where an association undertakes any activities which are not housing activities the method by which that association shall distinguish in its accounts between its housing activities and other activities shall be as set out in paragraph (2) of this article.

    (2)  The method shall be-
 (a) to identify those items which relate solely to housing activities; and
 (b) to apportion those items which relate to housing and other activities.

Constitution of the Grant Redemption Fund
    10.—(1)  The Grant Redemption Fund of an association shall be constituted and shown in the accounts according to the method set out in this article, and in this article "Fund" means Grant Redemption Fund.

    (2)  The surpluses calculated in the manner determined by the Secretary of State under section 53(3) of the 1985 Act shall be shown as such in the property revenue account or, in the case of a co-ownership society or almshouse, in the income and expenditure account of the association.

    (3)  The Fund shall be shown in the balance sheet, and the sums shown under paragraph (2) of this article shall be transferred to that Fund.

    (4)  Where sums stand in the Fund in respect of previous periods, they shall be accumulated with any sums transferred to the Fund in respect of the period of account.

Nicholas Ridley

Secretary of State for the Environment

1st March 1988

Peter Walker

Secretary of State for Wales

2nd March 1988

Malcolm Rifkind

Secretary of State for Scotland

4th March 1988

[1] 1985 c. 69. back

[2] S.I. 1982/828. back

[3] S.I. 1983/207. back

[4] S.I. 1984/1833. back

[5] 1965 c. 12. back

[6] 1968 c. 55. back

[7] Section 39(1) was amended by section 11(1) of the 1968 Act. back

[8] 1977 c. 42. back

[9] 1984 c. 58. back

[10] 1974 c. 38. back

[11] 1985 c. 6. back

Explanatory Note