The Importance of an Assets and Liabilities Register for Registered Providers

As part of the Governance and Viability Standard set by the Regulator of Social Housing (RSH), Registered Providers (RPs) must ensure they can manage risks and protect social housing assets. One of the key ways to achieve this is by maintaining a thorough, accurate and up-to-date record of all assets and liabilities, an Assets and Liabilities Register or ALR as they are more commonly known. Here DTP Senior Consultant Marcus Evans takes a look at ALRs and sets out what you need to do to get the most from them.

Why an Assets and Liabilities Register is Essential

To comply with RSH regulatory standards, every RP needs a comprehensive ALR. This isn’t just a box-ticking exercise. It’s about knowing your social housing business inside out.

An ALR should allow the Regulator to have sufficient information as to the assets and liabilities within an organisation in case of step in/distress etc. It should facilitate the financial assessment of the assets and liabilities​ and also be a tool to identify any issues at an early stage (e.g. missing information, significant changes in information/risks)​. It is a crucial tool used to support effective risk management and resilience planning.

For RPs that are part of a Group structure, the Group Parent Board must fully understand any intra-group liabilities. This means including all intra-group arrangements and showing that social housing assets are protected through these agreements.

While there is no requirement to send a copy of the ALR to the Regulator, RPs need to confirm its existence and accuracy when certifying annual financial statements. It’s crucial for both Group and subsidiary Boards to ensure their ALR meets all the necessary requirements.

What should be in an ALR?

A well-maintained and up-to-date register should cover a variety of elements:

• Treasury arrangements: This includes details of financial arrangements, investments, cash management and charging arrangements.
• Key contracts: Significant contracts and agreements, especially those related to service delivery and development activities.
• Title information: Property title documentation, including any restrictions.
• Valuations: Accurate and up-to-date asset valuations.
• Accommodation: – All content that relates directly to accommodation.
• Non-housing related assets: – Any relevant content that could be seen as an asset (buildings, land, vehicles – note some may also have a liability)​.
• Stock condition: Information on the condition of accommodation and investment requirements.
• Loans: This includes intra-group loans, guarantees, indemnities and leases.
• Lender covenants: Details of any covenants or conditions imposed by lenders.
• Relationships with third parties: Including any which relate directly to the delivery of services to tenants (e.g. local authorities, other RPS etc)​, delivery of development activities, or where failure to meet a commitment or termination would have a high financial impact.
• Pensions: All commitments and liabilities.
• Equipment: High-value items like vehicle fleets.

Ensuring Compliance

The Risk and Audit Committee (or a similar body) usually scrutinises the maintenance of the register on behalf of the Board, receiving updates at least twice a year. Boards should receive updates following Committee scrutiny, identifying anything that has changed and any links to risk management and resilience planning,​ as well as receiving a self-assessment report on compliance with the Governance and Viability Standard each year (which the ALR is part of) before certifying compliance as part of the Statutory Accounts process.

Here are some practical steps to ensure your ALR is accurate and effective:

1. Internal policy/procedures:Clarity on process, responsibilities and accountabilities/ Confirm how will be updated, governance arrangements and approvals/ Set materiality limits
2. Regular reconciliation: Periodically reconcile the register with other financial records/ Ensure that the data matches the actual assets and liabilities
3. Documentation standards: Keep clear documentation for each asset and liability/ Include acquisition dates, costs, depreciation and any changes over time
4. Data validation: Implement checks during data entry/ Cross-reference data with reliable sources like property deeds and loan agreements
5. Audit trails: Maintain a detailed audit trail of any changes made to the register/ Document the reasons for adjustments or corrections
6. User access controls:Restrict access to authorised personnel/ Ensure only nominated individuals can update the register/ Considerations for cyber security

Going beyond Compliance

An accurate and up-to-date ALR offers benefits beyond meeting regulatory requirements. Here are some added advantages:

• Mergers: Potential partners will need detailed information during due diligence.
• ESG Funding: Green covenants to improve energy performance will likely cover all accommodation.
• Adopting the SRS: Compliance with the Sustainability Reporting Standard for Social Housing requires a thorough understanding of assets and liabilities.
• Unsecured funding: Even if properties aren’t charged, knowing any restrictions that impact value is crucial.
• Building safety: An integrated register helps identify properties needing investment and improvement work.
• Net Zero Carbon: Thorough knowledge of accommodation profile allows RPs to plan upgrades and potentially benefit from bulk order discounts.
• Securing new funding: Accurate records of leasehold titles are essential for different financing requirements.

Remember….

An ALR isn’t just a regulatory requirement – it’s a vital tool for effective risk management and strategic planning. It ensures you’re prepared to handle new opportunities and challenges as they arise.

DTP can provide support in the development of an ALR, reviewing whether it meets with regulatory requirements and good practice and can also provide independent validation of an ALR for governance purposes. Please get in touch with Senior Consultant Marcus Evans (m.evans@dtp.uk.com) to discuss any support needs you may have.