HOUSING Citation and commencement 1 1 This Order may be cited as the Registered Social Landlords Accounting Requirements (Scotland) Order 2007 and shall come into force on 1st April 2007. Interpretation 2 In this Order– “accounting policies” means the specific accounting principles selected and followed by a registered social landlord which are, in the opinion of the governing body of the registered social landlord, 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; “balance sheet” means in the case of a company, the balance sheet required for the purpose of section 226A(1)(a) of the Companies Act 1985 and in the case of an industrial and provident society, the balance sheet required for the purpose of section 39(1) of the Industrial and Provident Societies Act 1965 ; “book value” means the value of an asset as it appears on the balance sheet; “depreciation” means the cost or value of an asset which is used or consumed during the period of account; “executive” means a director, trustee, member of the governing body and member of the key management of a registered social landlord; “general needs housing” means housing that is not shared ownership accommodation or supported housing accommodation; “governing body” means in the case of a company, the board and in the case of an industrial and provident society, the management committee; “historical cost surplus or deficit” means the surplus or deficit if no revaluation has taken place during the period of account; “impairment” means a reduction in the recoverable amount of a fixed asset below its carrying value; “income and expenditure account” means in the case of a company, the profit and loss account required for the purpose of section 226A(1)(b) of the Companies Act 1985 and in the case of an industrial and provident society, the revenue account required for the purpose of section 3(2) of the Friendly and Industrial and Provident Societies Act 1968 ; “industrial and provident society” means a society registered under the Industrial and Provident Societies Act 1965; “officer” has the same meaning as in Part 3 of the Housing (Scotland) Act 2001 ; “operating costs” means all of the direct and indirect costs associated with an activity, including cost of sales; “operating surplus or deficit” means the surplus or deficit incurred after running costs are taken into account and before any interest or other finance costs are taken into account; “period of account” means the period to which the income and expenditure account relates; “planned and cyclical maintenance” means costs incurred by the registered social landlord to maintain property that can be planned or contracted for; “reactive maintenance” means costs incurred by the registered social landlord to maintain property that cannot be planned or contracted for; “shared ownership accommodation” means accommodation that is owned jointly by the registered social landlord and the occupant; “the SORP ” means the Statement of Recommended Practice: Accounting by Registered Social Landlords Update, issued by the National Housing Federation, the Welsh Federation of Housing Associations and the Scottish Federation of Housing Associations in May 2005 ; “subsidiary undertaking” means an undertaking which has a parent body which is a registered social landlord or a registered social landlord in terms of section 1 of the Housing Act 1996 and that parent body either– exercises, or has the power to exercise dominant influence or control over the undertaking, or is managed on a unified basis with the undertaking; “supported housing accommodation” means accommodation owned by a registered social landlord and allocated to an individual requiring support to live independently, which is occupied by that individual as the individual’s sole or main residence, but does not include accommodation the primary purpose of which is to provide care rather than housing, or which aims to fulfil a statutory duty other than under housing legislation; “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; “voids” means the monetary value of rent lost by a registered social landlord for properties that are not let. Application of Order 3 This Order applies to all registered social landlords with a period of account which begins on or after 1st April 2007. Information in specified form 4 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. Materiality 5 Unless stated otherwise, amounts which in a particular context of any provision of this Order are not material may be disregarded for the purpose of that provision. General accounting requirements 6 1 The accounts of a registered social landlord shall comply with the requirements of this Order with respect to the form and content of the balance sheet, income and expenditure account, additional statements and any additional information to be provided by way of notes to the accounts. 2 Nothing in this Order shall prevent the accounts giving more information than is required by this Order. True and fair view 7 1 The balance sheet shall give a true and fair view of the state of affairs of the registered social landlord 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 social landlord for the period of account. 3 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 social landlord and of its income and expenditure account in accordance with the duties imposed by– a section 226A(2) of the Companies Act 1985 in the case of a registered social landlord that is a company, or b section 3(1) and (4) of the Friendly and Industrial and Provident Societies Act 1968 in the case of a registered social landlord that is an industrial and provident society, then– nothing in this Order shall prevent such a departure but particulars of any such departure, the reasons for it and its effect shall be stated in the notes to the accounts. Accounting principles and policies 8 1 Accounting policies used by a registered social landlord shall be applied consistently within the same accounts and from one period of account to another. 2 Accounting policies adopted by a registered social landlord in determining the amounts to be included in respect of items shown in the balance sheet or in the income or expenditure account shall be stated in the notes to the accounts. 3 Where a change is made to an accounting policy, details of the change, the reasons for it and its effect on the accounts shall be stated in the notes to the accounts. 4 Where the accounts are prepared other than on a going concern basis, a statement to that effect shall be included in the notes to the accounts. 5 Amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be) or vice versa. 6 All income and expenditure relating to the period of account shall be taken into account without regard to whether the income and expenditure is received or paid during the period of account. Housing activities 9 1 If in the course of the period of account a registered social landlord has engaged in housing activities in two or more types of accommodation that in the opinion of the governing body differ substantially from each other, the income and expenditure account shall state, in respect of each type– a the amount of the turnover attributable to that type; b the costs attributable to that type; and c the amount of operating surplus or deficit which is in the opinion of the governing body attributable to that type. 2 For the purposes of paragraph (1), the type of accommodation includes general needs housing, supported housing accommodation and shared ownership accommodation. Format of income and expenditure account and balance sheet 10 1 Subject to paragraph (3), the income and expenditure account of every registered social landlord shall– a include headings and sub-headings corresponding to the items listed in Format 1 of Part 1 of Schedule 4 to the Companies Act 1985 where the items are listed by reference to the activities of the registered social landlord. b show the amount of the items listed under those headings and sub headings; and c show the amount of the surplus or deficit of the registered social landlord in respect of the activities of the registered social landlord before taxation. 2 Subject to paragraph (3), the balance sheet of every registered social landlord shall– a include headings and sub headings corresponding to the items listed in Format 1 of Part 1 of Schedule 4 to the Companies Act 1985; and b show the amount of the items listed under those headings and sub headings. 3 The corresponding amount, if any, for the previous period of account shall be shown against each item in the income and expenditure account and in the balance sheet. 4 Items listed in the Format adopted in preparing the income and expenditure account or balance sheet shall not be included if there is no amount to be shown in respect of both the period of account and the previous period of account. Signature of balance sheet 11 The balance sheet shall– a show the date on which the accounts have been authorised for issue by the governing body of the registered social landlord; b be signed on behalf of the governing body by– i a member of the governing body in the case of a company, or ii two members and the secretary of the governing body in the case of an industrial and provident society. Notes to the accounts 12 1 Every registered social landlord shall include in the notes to its accounts the information shown in the Schedule to this Order, together with the corresponding information for its previous period of account. 2 Items listed in the Schedule to this Order shall not be included if there is no amount to be shown in respect of both the period of account and the previous period of account. Additional statements 13 1 Every registered social landlord shall include in the accounts– a a statement of the total recognised surpluses and deficits, unless the total recognised surpluses and deficits are identical to those shown in the accounts, in which case a statement to this effect; and b a note of the historical cost surpluses and deficits, unless the historical cost surpluses and deficits are identical to those shown in the accounts, in which case a statement to this effect. 2 A registered social landlord which is– a in the process of increasing its housing stock, or b the owner of 500 or more units of accommodation, shall include in the accounts a cash flow statement prepared in accordance with the SORP. Revocation and savings 14 1 Subject to paragraph (2), the Registered Housing Associations (Accounting Requirements) (Scotland) Order 1999 is hereby revoked. 2 The Registered Housing Associations (Accounting Requirements) (Scotland) Order 1999 shall continue to apply in respect of any period of account starting before 1st April 2007. RHONA BRANKIN A member of the Scottish Executive St Andrew’s House, Edinburgh 6th March 2007