asset and liability register

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The changes to the Regulatory Framework by the Homes and Communities Agency (HCA), which come into force on 31st March 2016, will require all Registered Providers (RPs) to have a comprehensive register of their assets and liabilities (Register).

There are a number of practical reasons why having an Asset and Liability Register could be beneficial to RPs; helping them to effectively and efficiently manage their business.

Governance and Financial Viability Standard Code of Practice

The compliance is meant to protect social housing assets. As a matter of best practice, RPs should assess, manage and where appropriate address risks to ensure long term viability. One of the ways to do this is by:

“maintaining a thorough, accurate and up to date record of their assets and liabilities and particularly those liabilities that may have recourse to social housing assets”.

But what does the Register need to contain? Well, that isn’t explicit, however the Code clearly states that the Register:

“should contain sufficient information to enable a potential buyer to accurately price the value of the business and/or the value of social housing assets in the event of distress”.

Information to compile in your Asset and Liability Register

Assets

It is clear from the Code that a simple asset register i.e. a list of physical assets owned by an RP will not be sufficient by itself.

The Register should cover the extent of the RPs’ portfolio of properties and activities including activities carried out in subsidiaries, joint ventures and partnerships. A simple search at the Land Registry will reveal all registered properties owned by a particular RP. This is a good starting point for the asset element of the Register.

Liabilities

Identifying liabilities could be more complicated and require significant analysis. Liabilities affecting an RP will range from the obvious;

  • loans
  • bonds
  • ISDAs
  • s106 obligations
  • lease covenants

To the less obvious such as;

  • restrictions
  • guarantees
  • indemnities

If the RP is part of a group structure, such liabilities need to be considered on a group-wide basis to ensure there is a full understanding of where liabilities lie between all entities.

Added value

At the heart of the regulation is a passion for improvement. The HCA wishes to;

  • protect social housing assets
  • ensure providers are financially viable and properly governed
  • maintain confidence of lenders to invest into the sector
  • encourage and support supply of social housing
  • ensure tenants are protected and have opportunities to be involved in the management of their housing
  • ensure value for money in service delivery

Creating a fully compliant Asset and Liability Register is going to take time to prepare, however RPs could view this exercise as an opportunity to not only become compliant, but to be more efficient and foster business growth.

When a Register is in place the improved organisation of information may assist in understanding and reducing the risks, costs and delays in a variety of large scale projects. A Register could even be used as a managment reporting tool – informing day to day decisions.

Bear in mind, the production of a Register will require input from all departments of an RP from treasury to maintenance, from housing management to development. However, it is vitally important that the Register is continually maintained and updated otherwise it will not be fit for purpose within weeks of it being created.

How do I create a Register?

An RP will need to focus on the following prior to the creation of it’s Register;

  1. establish the policies as to what will be included in your Register
  2. confirm the location of the documentation that will form the content of the Register
  3. review all documentation to find liabilities for inclusion in the Register
  4. maintaining the Register to ensure it is up to date

What form will the Register take?

Data can be stored across multiple systems including Housing Management Systems, existing Asset Management Systems, 3rd Party Systems, Spreadsheets and Databases. This disparate storage method runs the risk of the data becoming;

  • Duplicated
  • Siloed
  • Not accurately replicated
  • Corrupted
  • Difficult to view efficiently
  • Cumbersome to compile into meaningful, trustworthy reports

By implementing a robust and scalable system, RPs can integrate with existing systems and have a single, reliable view of their portfolio.

We recommend Microsoft SharePoint as the best platform to create your Register. It is flexible, cost-effective and has wide capabilities, offering advanced Document Management, Reporting and Records Management functionality.

We are already helping our RP clients create and manage their Registers. We would be happy to explain the steps they took and the timeframes involved.

Contact us today to discuss how you can leverage this compliance to benefit your business.

Asset and Liability Register advice

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