Asset and Liability Registers update

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Jim Lashmar crop resizeBy now we are all familiar with the HCA requirement to produce Asset and Liability Registers (ALRs) and we are pleased to note that we are seeing significant progress in this area amongst our clients.

However the March 31 compliance deadline is fast approaching and in some cases a final push may be needed to get to a compliant position by the end of the Financial Year. As a reminder, Registered Providers (RPs) are required to:

  • Maintain a thorough, accurate and up to date record of assets and liabilities
  • In particular identify those liabilities that may have recourse to social housing assets
  • Have an up to date record of sufficient information to enable a potential buyer to accurately value the business in the event of distress.

As RPs have progressed with development of their ALRs the idea of a single “register” has evolved in that much of the information required for the ALR is already recorded in a number of different existing “registers”.

For housing assets and charging, records in this area are normally good and can be built upon to ensure all stock is covered and other property related matters such as restrictions to title are added to the records. Other assets and liabilities are usually available through accounting records and contractual liabilities should be recorded in a contracts register.

The function of the ALR in most cases is to act as a central link between these existing registers to allow quick access to all relevant data in a manner that can easily be followed both by the RP and by any potential rescuer in the event of distress.

This is by no means a comprehensive list of the data that needs to be pulled together and one area that often needs work is that of contingent liabilities – those liabilities that could crystallise depending on the outcome of some uncertain future event. This is an important area where the Register can fulfil a number of functions. In addition to documenting the contingent liabilities it can be used to inform the assessment of the likelihood that liabilities will crystallise and the potential financial impact of this. The Board must understand the risks relating to such liabilities and these should help to inform the stress testing that will be carried out on business plans – if a number of such liabilities crystallise could this potentially be fatal for the organisation?

The Register should be reviewed by the Audit Committee for accuracy and completeness and will inform internal audit assurance work both on review of asset and liability records and on systems to ensure preparedness and the ability to respond in the event of liabilities crystallising.

Recent years have seen Housing Association funding shift from long term bank funding to a greater range of public and private placements and club bond issues supported by a desire by institutions such as pension funds and insurance companies to increase exposure to the sector. This coupled with the prospect of innovative funding solutions such as charitable bonds, retail bonds and leasing solutions means that there is no better time to ensure that your ALR is complete and up to the job allowing you to move quickly and confidently both with regard to funding requirements and in the face of potential threats to the business.

 

For more information please contact Jim Lashmar on 07968 616 550 | jim.lashmar@nullaltairltd.co.uk