Fixed Assets - Properties Procedure

Fixed Assets - Properties Procedure Procedure Ref: F3-1 Author: Director of Finance Consultation Process: Last Review: Board, SMT, Staff Distrib...
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Fixed Assets - Properties Procedure Procedure Ref:

F3-1

Author:

Director of Finance

Consultation Process: Last Review:

Board, SMT, Staff

Distribution: Next Review:

Jan 2014 Jan 2017

Finance Policy and Procedure Manual As per legal or organisation requirement or a maximum of three years from last review

Change Record Version Nature of change: No: 1 1st Issue – adapting ISO format

Issue Date: July 2008

Date Ratified: Aug 2008

Ratified By: CEO

2

Minor amendments

Oct 2012

Oct 2012

CEO

3

Amendments to include RAM

June 2014

June 2014

CEO

Department Name Version Approved by

Finance F3-1 Fixed Assets - Properties Procedure 1 Issue Date: June 2014 CEO Page 1 of 5

Fixed Assets - Properties Procedure Scope This procedure covers the management of all land and properties on the balance sheet. They are recorded at actual build or acquisition cost, including on-costs and the A&D allowances available. The properties are depreciated in accordance with the SORP 2010 in Component Accounting.

Responsibility It is the responsibility of the Finance Department to record the costs of all properties, to account for A&D Allowances and record all HAG received, on the SDM Nominal Ledger. The records in Finance should mirror the hard copy records kept in files in the Development Department

Procedure Set up a Property Cost Centre on the Balance Sheet in the Nominal Ledger, as soon as the first payment is requested towards the acquisition of land or property. To set up new property:  Go to file maintenance  Cost Centres – property cost centres are those with codes below 1000  Scroll down to find the number of the last property cost centre  Select insert tab  Code: enter next property cost centre number  Description: Enter name of property  Society: enter 01  Abbreviated Description: enter abbreviated description of property  Development Type: leave blank  Status: On pull down arrow, select ‘in progress’  Local Authority: leave blank  Works Description: leave blank

Department Name Version Approved by

When recording payments to the property cost centres, the analysis code chosen must reflect if the property is either:  Registered Home Finance F3-1 Fixed Assets - Properties Procedure 1 Issue Date: June 2014 CEO Page 2 of 5

  

Supported Housing Agency Homes General Needs Homes

The postings must also be analyzed into either Property Costs, On-Costs or Adaptation Works Property Costs include:  Purchase of land  Off-the-shelf property purchase  Contractors’ certificates On-Costs include:  Legal fees;  Land/property valuation fees;  Housing Association in house management costs  External consultant’s fees, (Note: where the development contract is Design & Build, the on-cost also includes the builder’s design fee element of the contract sum);  (Total) CDM consultant’s fees – if not included in (d) above;  Clerk of Works or equivalent costs;  (Total) external consultant’s Fees for the preparation of an Economic Appraisal.  Fees for Planning approval.  Fees for Building Control approval  Defects Liability & Building Warranty Insurance.  Contract performance Bonds premium (exclude contract insurance included in works costs).  Lender - borrowing administration charges.  Pre-tender costs of advertising.  Allowable furniture costs When Housing Association Grant (HAG) is received for a particular property, the money is posted to the Property Cost Centre and the Property HAG analysis code, relevant to the property type ie. Registered, Supported, Agency, General Needs or Adaptation HAG (For entering receipts on SDM Nominal Ledger, see procedure F1-6) Real Asset When a property is completed, it is entered onto Real Asset Management Management (RAM) software and broken into the separate components. Therefore, WIP is not entered on RAM. A reconciliation is maintained between the Property Fixed (RAM) Assets on SDM nominal and RAM. Depreciation charges are put through by journal on a monthly basis. The charge is calculated in accordance with the SORP 2010 for component accounting, as follows: Department Name Version Approved by

Finance F3-1 Fixed Assets - Properties Procedure 1 Issue Date: June 2014 CEO Page 3 of 5



The apportionment of individual properties within a scheme and the component costs of a property, including land value are requested from the contractor.



Properties completed in the first half of a year, will be depreciated for the full year. Properties completed in the second half of a year will not be depreciated until the following year.



HAG is apportioned across all the components in the ratio of their cost.



The cost of each component less any HAG allocated against it, is depreciated over the useful life of the component. The useful lives are in line with the ‘Asset Management Strategy’ as follows: Main Fabric -100 years Roof – 70 years Windows and Doors – 25 years Boilers – 15 years Kitchens – 17 years Bathrooms – 20 years Mechanical – 35 years Electrical – 35 years



If a component is replaced before the old component is completely depreciated, the outstanding balance of the old component will be written off before the new component is added to the depreciation schedule.



The depreciation is calculated by Real Asset Management (RAM) software. A journal is exported from RAM and imported into SDM.

The Development Department before each year end, will supply information on how much A&D Allowances are available on each property. The A&D Allowances will then be released up to the amount necessary to cover the expenditure in the Development cost centre. A&D Allowances are released by a journal in the Nominal Ledger, whereby the relevant Property Cost Centres on the Balance Sheet are debited and A&D Allowances Cost Centre in the Income and Expenditure Account is credited. Department Name Version Approved by

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Land Subsidy

In occasional instances, the Housing Executive will transfer land to the association for development. A journal must be made in the Nominal Account to debit the Property Cost Centre and credit the Property Hag account with the value of the land. This will ensure that the total value of the Property is reflected in the Balance Sheet

Records The computer records for property costs and HAG received are kept by Finance Department indefinitely. The hard copies of invoices will be kept by Finance Department for 13 years. Invoice files include invoices paid from European grants, therefore they must be kept for this time period to comply with European grants regulations. The hard copies of HAG remittances will be kept for 3 years by Finance Department. Hard copies of Invoices and HAG remittances are also stored in Development Department indefinitely.

Department Name Version Approved by

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