After visiting the Scottish Federation of Housing Associations (SFHA) Finance Conference in early November and speaking to delegates, it struck me that Registered Social Landlords (RSLs) are generally aware of forthcoming changes, but a quick summary might be helpful.
Following the publication of Financial Reporting Standard (FRS) 102 and the updated RSL SORP 2014, all RSLs will be required to adopt these new regulations for accounting periods beginning on or after 1 January 2015. The key areas of change that will affect most RSLs are as follows:
- Accounting for government grants,
- Classification of financial instruments as either “basic” or “other”,
- Recognition of pension liabilities in respect of past service deficits,
- Holiday pay accrual and related party transactions.
There are also some important optional exemptions during the transition to these new regulations, which may be of particular relevance to some RSLs. These include:
- Measuring property or plant and equipment at fair value and then using this as a deemed cost,
- Retaining current treatment of lease incentives and,
- Using a previous revaluation of an item of property as its deemed cost.
For some RSLs, this new legislation may significantly change the results and appearance of their financial statements. Therefore, it is essential that this is considered now so that any material changes are communicated to stakeholders and the users of the financial statements. Chiene + Tait is in the process of working with our RSL clients in relation to the transition to these new regulations and the reinstatement of their financial statements. We appreciate that RSLs face particular challenges and we will continue to assist in this highly demanding environment. If you have a concern about the new regulations, please feel free to contact me or another member of our Social Housing Group at email@example.com.