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Deloitte comment letter on new draft SORP for registered social housing providers

Published on: 17 Feb 2014

We have published our comment letter on the National Housing Federation’s (NHF’s) Exposure Draft (ED) on a revised Housing Statement of Recommended Practice (SORP) setting out revised proposals for accounting for registered social housing providers in the UK (“the Housing SORP”).  We are generally supportive of the proposals in the Housing SORP but have highlighted a number of areas that need to be addressed before a final SORP can be published.

The ED updates the previous Housing SORP to include the requirements of Financial Reporting Standard (FRS) 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

 Our key comments include:  

  • We believe that further guidance is required for the measurement of the recoverable amount of properties held for social housing in the context of testing for impairment.  Under FRS 102, recoverable amount is the higher of fair value less costs to sell and value in use.  The Housing SORP suggests that existing use value for social housing (EUV-SH) based on the information obtained from the sector’s valuers is the best indicator of recoverable amount. We believe that the adoption of the EUV-SH method to calculate recoverable amount “would lead to frequent impairment write downs in circumstances when this would not be appropriate”.     
  • We recommend that the SORP includes “some general guidance on where certain balances should be presented in the Statement of Comprehensive Income, for example the amount of grant that has been recognised or amortised”.  We also comment that the SORP should only include those requirements of FRS 102, that are relevant to the housing sector.
  • We disagree that the recycling of grants should be treated as provisions.  We believe that “they should be disclosed in a manner that is consistent with when they are repayable if repayable, i.e. a long-term liability when due after more than one year and a current liability when due in less than one year”.

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter which can be downloaded below.


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