comply with more stringent financial reporting standards on depreciation, following the adoption of revised guidance by the National Housing Federation.
Landlords previously maintained they did not need to depreciate because they had considerable stock maintenance programmes. Following publication of FRS 15 last week, that argument will no longer be valid.
The impact of FRS 15 has been outlined by the NHF, which represents groups such as housing associations and trusts, in its updated statement of recommended practice for the sector.
‘The review was necessary due to the large number of changes to financial reporting standards,’ said federation finance policy officer Catherine Farrell. ‘The ASB will no longer accept non-depreciation on the grounds of maintenance of properties.’
The SORP replaces the 1994 version and follows a two-year consultation period which was delayed by disagreements with the Accounting Standards Board.
Guidance on depreciation and impairment, commissioned by the NHF from KPMG and surveyors Drivers Jonas, has also been published.
The depreciation standard has also been reflected by CIPFA in its response to a government consultation paper on a new financial framework for local authority housing. The government plans to introduce resource accounting to housing revenue accounts.
Despite supporting the main objectives of the framework, the public-sector institute CIPFA warned some proposals would fail to achieve greater comparability between councils and registered social landlords.
In its response, CIPFA called for more consideration on how the major repairs allowance fitted with depreciation for accounting purposes as defined in FRS15.
The institute also warned that the valuation of social housing should not exceed market value in existing use, in accordance with Generally Accepted Accounting Practice.
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