42 | Accord Housing Association
In making its judgement on the organisation ’ s ability to continue in operation for the foreseeable future , our updated financial plan has been subject to severe but plausible stress testing of Covid 19 related scenarios surrounding the economic , operational and housing market impacts . As part of this judgement , the Board has considered detailed mitigating actions that could be taken to ensure the association remains within existing cash facilities and covenants , if required .
As such the Board are confident that Accord has adequate cash to more than meet its obligations , remain compliant with funders covenants at all times and manage its financial and operational risks for the foreseeable future which is at least 12 months from the signing of the financial statements . Whilst it is acknowledged that the full impact of Covid-19 remains uncertain management do not consider this to be material uncertainty ; the Board has therefore concluded that the organisation is a going concern and have prepared these financial statements on that basis .
Turnover and Revenue Recognition Turnover represents rental and service charge income receivable , fees receivable , revenue grants from other public authorities and sale proceeds from first tranche shared ownership sales . Income is recognised from the point when properties are first let , net of any voids . Income from first and subsequent tranches sales , and properties built for sale is recognised at the point of legal completion of the sale . Revenue grants are receivable when the conditions for receipt of agreed grant funding have been met . Charges for care and support services funded are recognised as they fall due under contractual arrangements .
Value Added Tax The association is Value Added Tax ( VAT ) registered . It is able to recover part of the VAT it incurs on expenditure , using a partial recovery calculation mechanism . The financial statements include VAT to the extent that it is suffered by the association and is not recoverable from HM Revenue and Customs . The balance of VAT payable at the year-end is included as a current liability in the accounts .
Taxation Current tax is recognised for the amount of income tax payable in respect to the taxable surplus for the current or past reporting periods using the tax rates and laws that have been enacted or substantively enacted by the reporting date .
Pension Costs The association primarily operates a defined contribution pension scheme , the costs of which are written off to the Income & Expenditure account in the period in which they are incurred .
There are a limited number of employees who participate in the Social Housing Pension Scheme ( SHPS ), a multi employer defined benefit scheme to which the association contributes . For financial years ending on or before 28 February 2019 , it was not possible for the association to obtain sufficient information to enable it to account for the Scheme as a defined benefit scheme , therefore the association has accounted for the scheme as a defined contribution scheme . For financial years ending on or after 31 March 2019 , it is possible to obtain sufficient information to enable the Association to account for the Scheme as a defined benefit scheme .
Current service costs and costs from settlements and curtailments are charged against operating surplus . Past service costs are spread over the period until the benefit increases . Interest on the scheme liabilities and the expected return on scheme assets are included net in other finance costs / income . Actuarial gains and losses are reported in the statement of comprehensive income .
Scheme assets are measured at fair values . Scheme liabilities are measured on an actuarial basis using the projected unit method and are discounted at appropriate high quality bond rates . The net deficit is presented separately from other assets on the statement of financial position . A net surplus is recognised only to the extent that it is recoverable by the association .
Sale of Housing Properties Where properties built for sale are disposed of during the year , the disposal proceeds are included in turnover , and the attributable costs included in cost of sales . The surplus or deficit on disposal of housing properties held as fixed assets , including second or subsequent tranches of shared ownership properties , is accounted for in the statement of comprehensive income . Where any Social Housing Grant ( SHG ) is to be recycled or repaid is less than the SHG relating to the disposal , the difference is treated as abated SHG and included as a component of the surplus or deficit on disposal .
Housing Properties , Impairment and Property Improvements Housing properties are properties held for the provision of social housing or to otherwise provide social benefit . Housing properties are principally properties available for rent and are stated at cost less accumulated depreciation and impairment losses .
The cost of such properties include :
n Costs of acquisition , including stamp duty
n Construction costs
n Cost of capitalised interest during the development period
n Directly attributable administration costs