THE FRC has issued guidance for auditors on the audit of housing associations, because of the emergence of new risks and the sector's changing regulatory landscape.
Reductions in grant funding, welfare reform and the impact on availability of funding following the financial crisis have led many associations to diversify their activities and funding models.
Associations have also begun to augment their traditional housing activities with more commercial activities such as student accommodation or care homes, while some have moved away from long term bank financing to bond financing and an increased use of interest rate swaps.
"This new update is intended to assist auditors in understanding the nature of these risks in, among other things, the context of recent regulatory developments, pressures on public expenditure and changes in the ways in which some Housing Associations finance their activities," said Nick Land [pictured], FRC board member and chairman of the audit and assurance council.
Guidance for auditors was previously issued in 2006 and withdrawn in 2012 pending this revision. The updated guidance is given in Practice Note 14: The audit of housing associations in the United Kingdom.
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