4 Administration and Accounting Requirements

4.1 General

4.1.1 For both reporting and audit purposes, all transactions involving the Fund must be fully documented and a clear audit trail maintained. 

4.1.2 The withdrawals from the Fund must be calculated, in writing, according to procedures in this Guide for the type of scheme.  Details of the calculations and withdrawals must be retained for inspection by external auditors. 

4.1.3 The Fund need not be cash backed, but monies must be available when needed to produce the replacement properties.

4.1.4 RSLs may never overdraw from the Fund, not even in anticipation of forthcoming proceeds.

4.1.5 As with SHG, the fund should not be spent in advance of need.

4.1.6 The Fund should not be used retrospectively, for example, to recoup costs previously funded by the RSL.
 
4.1.7 The Fund should be operated on a first in first out basis.

4.2 Internal Accounting and Administration

4.2.1 A clear audit trail must be maintained, documenting all transactions involving the fund. To assist this, the Agency suggests opening a separate bank account for the Fund. The account can be cleared to zero nightly with the balance being transferred to the general account for transaction purposes.  This arrangement should allow RSLs to produce a statement for the account showing proceeds and expenditure that will help with calculating notional interest. 

4.3 Statutory Accounting Requirements

4.3.1 Section 24(5) of the Housing Act 1996 makes the presentation of the Fund in the statutory accounts a matter for determination by the Agency.  The Agency has determined that the Fund shall appear as a creditor to be identified separately in a note to the accounts amongst the debts falling due.  Click on the asterisk to see the Accounting Requirements for Registered Social Landlords General Determination 2000, published with circular R2 - 04/01.