Rogers Almshouses. Report and Financial Statements. For the year ended 31 December Charity Number:

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1 Charity Number: Regulator of Social Housing Registration Number: A0746 Almshouse Association Member Number: 0203 Report and Financial Statements

2 Report and Financial Statements Contents Page Trustees, Registered Office and Advisers 1 Report of the Trustees 2 7 Independent Auditor s Report 8 9 Statement of Financial Activities 10 Balance Sheet 11 Statement of Cash Flows 12 Notes to the Financial Statements 13 21

3 Trustees, Registered Office and Advisers Trustees: Registered Office: Mr S Holland (Chair) The Very Reverend J Lepine Mrs A N Jackson (resigned 28 June 2017) Mrs J Simpson Mr A Hillary Reverend M S Evans The Reverend A Garrow Mr M Wright (appointed 8 November 2017) 10 High Street Harrogate North Yorkshire HG2 7HY Registered Number: Charity: Regulator of Social Housing (RSH): A0746 Almshouse Association Member Number: 0203 Auditors: Bankers: Beever and Struthers Statutory Auditor St George's House Chester Road Manchester M15 4JE CAF Bank 25 Kings Hill Avenue Kings Hill West Malling Kent ME19 4JQ Yorkshire Bank 21 James Street Harrogate North Yorkshire HG1 1QU Managing Agent: Harrogate Housing Association Limited 10 High Street Harrogate North Yorkshire HG2 7HY 1 P a g e

4 Report of the Trustees Accounts The Trustees present their annual report and the audited financial statements for the year ended 31 December Objectives and public benefit The Charity is an unincorporated Charity registered in England and Wales (Number ), a member of the National Almshouse Association (Number 0203) and is registered with the Regulator of Social Housing (Registration Number A0746). In setting the objectives and planning the activities of the Charity for the year the Trustees have given careful consideration to the Charity Commission's general guidance on public benefit. The Charity has pursued the principal object for which it was established, namely the provision of accommodation for the almspeople of Bradford and Harrogate and the Trustees are satisfied that the Charity delivers charitable activities for public benefit. Residents is both a charity and a Housing Association. It provides fourteen units of accommodation, twelve two storey houses and two bungalows, for people over sixty years of age who previously lived within a five mile radius of either Bradford Cathedral or Christ Church Harrogate. When making decisions about the appointments to a vacancy the Trustees try to maintain a balance between residents who came originally from Bradford and residents from Harrogate. To this end separate lists of applicants are drawn up. Trustees have tried to ensure that vacancies are allocated to the applicant most in need of the accommodation at the time that they occur. There was one empty property during the year which arose on the death of a resident at the start of the year. It took longer than usual to find a new resident, over six weeks, in this case. Void periods will be monitored closely going forward to identify if any further action is required to ensure there is demand for the properties. The annual informal lunch meeting between the residents and Trustees was held on 29 November The venue and format of the event was changed this year with the aim of increasing attendance but unfortunately only five properties were represented, which was the same as in Those residents who attended enjoyed the event and other residents have expressed the desire for the format to continue. The value from the event is greatly enhanced when a larger number of residents attend. The Trustees will continue to seek different ways of engaging with the residents. The feedback received by Trustees at the lunch and the reports supplied by the managing agent indicate that the residents are satisfied with the service and standard of accommodation. The Trustees take an active interest in the health and wellbeing of the residents and undertake adaptations to properties when required in order to maintain residents independence. No care or support is provided by the Charity. Trustees The Trustees in office during the year are listed on page 1. After many years of service to the Charity Anne Jackson decided to retire as a Trustee during the summer. To show the Charity s appreciation for her involvement she was invited to and attended the annual lunch with residents where she was presented with a small gift from the other Trustees. 2 P a g e

5 Report of the Trustees Trustees (continued) The maximum number of Trustees permitted under the scheme of arrangement is 13. Of these five are nominative Trustees, four are Ex-officio and four are Co-opted. The current number of Trustees is seven which is thought sufficient to oversee the activities of the Charity due to the appointment of a managing agent who undertakes all the day to day management, operation and administration activities but a greater number is required to allow for succession planning. The strategic review work started by the Trustees early in 2017 and referred to in last year s report continued during the year. The Trustees looked at the links of the Almshouses to Bradford as well as considering and translating into the modern day equivalent the intentions of the founder Mr George Rogers. The Trustees agreed that the Almshouses would not be subject to any major changes except that there would be greater focus for future residents on their financial circumstances. They considered how the reserves of the Charity could best be used to help those most in need in the current day and determined those in Bradford recovering from alcohol and drug addiction, particularly where families are involved, should be helped. As a result the Trustees have been discussing opportunities with Horton Housing Association, a specialist in this field in Bradford. It is likely that the Charity will purchase a property for Horton Housing to use as follow on accommodation for those it is helping to reintegrate into the community. The Trustees recognise that any such investment will involve changing the rules of the Charity and work has already commenced on getting them updated. The Trustees have also reviewed their current range of skills and are looking to recruit new Trustees with legal skills. Charges The Trustees set a weekly maintenance charge at a level which is expected to meet the day to day running costs of the Almshouses and grounds, including the cost of cyclical maintenance and major repairs expenditure. As a Housing Association the Charity is also required to operate within the guidance on rent setting provided by the Ministry of Housing, Communities and Local Government, which limits the maximum amount to be charged and the annual increases in rent. The Government, through the Ministry of Housing, Communities and Local Government, introduced a 1% rent reduction from 1 April 2016 for four years. Through lobbying by the Almshouse Association this reduction does not apply to almshouses. The Trustees did, however, consider the impact of the reduction and concluded that it was manageable. The weekly maintenance charge is still well below the market rents and local housing allowance rent levels. Residents are able to subscribe to the dispersed alarm system provided by Harrogate Borough Council; a separate charge is levied by the Council for this service. Fixed assets The changes in fixed assets during the year are set out in note 10 of the financial statements. Political and charitable donations During the year the Charity made no political or charitable donations. 3 P a g e

6 Report of the Trustees Format of accounts is a registered provider of housing as well as a registered almshouse charity. The Trustees have prepared accounts in line with the Housing Statement of Recommended Practice for many years but as an Almshouse, accounts can also be prepared in line with the Charities Statement of Recommended Practice (FRS 102). Having reached a decision on the future strategic direction as an independent charity the Trustees have determined that it is more appropriate for the accounts to be prepared under the Charities Statement of Recommended Practice (FRS 102). The only significant change for the accounts is in relation to the treatment of the Social Housing Grant received by the Charity in previous years. Under the Charities Statement of Recommended Practice grant, including Social Housing Grant, is included in the Statement of Financial Activities on receipt, whereas previously it was included as a long term liability amortised to the Statement of Financial Activities over 80 years. The impact of this change has been treated as a prior year adjustment and details are included in note 2. Value for money The Charity s definition of value for money is simple, it aims to deliver its objectives in the most cost effective way possible but ensuring that it provides quality homes and services that help its residents remain independent. The Trustees determined a number of years ago that the best value approach to managing and maintaining the properties, dealing with administrative tasks and the regulatory matters required for a registered provider was through the appointment of a managing agent. This was instead of direct employment of staff or the use of volunteers. By adopting this approach the range of skills, knowledge and IT systems at the disposal of the Charity was significantly increased. Harrogate Housing Association, a local registered provider itself, was appointed into this role. It provides a local office base, manages the repairs service, collects and administers rents and deals with all day to day tenant contact which includes regular welfare visits to residents. It also provides administrative support to the Charity and Trustees. This approach has also enabled the Charity to piggy back with them in securing cost effective repairs services which would not be available to it individually. For example both organisations use the same 24 hour emergency gas service and repairs company and the Charity pays the same rates as Harrogate Housing Association. The Charity is also able to utilise their 24 hour on call service and their approved contractors list for repairs. This list includes local trades people who do not charge VAT which results in savings as the VAT is an expense and not recoverable. By operating this way the Charity is able to secure better rates than would be possible by working in isolation. Resident satisfaction with the service received from Harrogate Housing Association remains high. Harrogate Housing Association reviewed its costs of providing the above service to the Charity during the year and determined that it was in excess of the 847 being charged. As a result a new fee arrangement was put in place from 1 June A fee of 1,000 per property is now being charged together with ad hoc payments agreed for specific pieces of work. The Trustees consider this fee still delivers value for money as it covers all housing management matters as well as company secretarial type work, statutory return completion and submission and all the costs associated with the administration of the Charity. The size of the Charity, at only 14 units, makes comparison against others difficult especially as the Regulator does not capture or publish any information on associations with less than 1,000 properties. Very few associations the size of the Charity subscribe to benchmarking clubs as the costs outweigh the benefits and are not therefore considered value for money. Given the information available the Charity is performing in the top quartile in relation to arrears. It is also aware of other housing providers who surrender all their rental income to the managing agent, who carry the risk on repairs, and therefore do not have a surplus. Compared to such providers the Trustees consider the fees paid to Harrogate Housing Association are value for money. The Charity prides itself on meeting the needs of its residents wherever possible. This includes installing disabled adaptations even where no external funding is available. This increases the repairs costs but reflects the purpose of 4 P a g e

7 Report of the Trustees Value for money (continued) the Charity which is to provide accommodation to older persons of limited means. By adopting this approach residents are able to continue to live independently and low levels of voids occur. Systems are in operation by the Managing Agent to ensure competitive quotes are obtained for any major work undertaken which ensures costs competitiveness. All the properties owned by the Charity are in one location within close walking distance of the town centre and other amenities. They are well maintained (supported by a stock condition survey undertaken during the year) and are easy to let. The Trustees have not identified any individual property which is not adding to the surplus being generated. The nature of the almshouses is such that the disposal of an individual property would not be worthwhile and would potentially impact significantly on the environment created by the scheme. As noted above the Trustees are looking to use the Charity s reserves to acquire additional property to support the work of Horton Housing Association. Reserves Any surplus of income over expenditure is added to reserves. The results for the year are set out in the financial statements on pages 10 to 21. During the year the Charity reported net income of 49,467 (2016: 73,305) which includes 17,849 increase (2016: 30,261 increase) in the value of investments. As a result total reserves increased to 714,055. The trustees consider this is sufficient to cover current commitments and the ongoing activities of the Charity and provides sufficient funds to enable the work noted above with Horton Housing Association to proceed. Maintenance A property survey was carried out at the end of The survey did not identify any major work that was required to be undertaken. The detailed report is currently being developed into a plan of work which it is aimed will be undertaken in This will result in a larger than normal spend on repairs and maintenance in the year but there are sufficient cash reserves in the Charity to meet this investment. The Trustees will continue to monitor the need for level access showers instead of baths (there is now only one bath in the scheme) and replace them as necessary on the advice of an occupational therapist. The Trustees intend to ensure that the Almshouses continue to meet the needs of residents by maintaining them to a high standard and, where possible, adapting them to suit the needs of individual residents as their circumstances change. The Trustees are confident that the Almshouses will continue to provide comfortable homes for the residents for the foreseeable future and they are satisfied that the level of reserves is adequate to meet the ongoing maintenance liability. In addition to the work identified in the property survey the Trustees have been reviewing the condition and layout of the garden with residents represents the 150 th anniversary of the establishment of the Almshouses and the Trustees consider it an appropriate time to rejuvenate the grounds. They have employed a garden designer and engaged with Harrogate in Bloom to develop an updated design which does not require excessive maintenance. The garden work has commenced and is almost complete. Statement of the Trustees' responsibilities in respect of the financial statements The Trustees are responsible for preparing the Trustees Annual Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). 5 P a g e

8 Report of the Trustees Statement of the Trustees' responsibilities in respect of the financial statements (continued) The law applicable to charities in England and Wales requires the Trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Charity and of the incoming resources and application of resources of the Charity for that period. In preparing these financial statements, the Trustees are required to: 1. Select suitable accounting policies and then apply them consistently; 2. Observe the methods and principles in the Statement of Recommended Practice applicable to Charities preparing their accounts in accordance with Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102); 3. Make judgements and estimates that are reasonable and prudent; 4. State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 5. Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Charity will continue in business. The Trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Charity and enable them to ensure that the financial statements comply with the Charities Act 2011, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing They are also responsible for safeguarding the assets of the Charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Disclosure of information to Auditors The Trustees who held office at the date of approval of this Report confirm that, so far as they are each aware, there is no relevant audit information of which the Charity s auditors are unaware; and each Trustee has taken all the steps that they ought to have taken as a Trustee to make themselves aware of any relevant audit information and to establish that the Charity s auditors are aware of that information. Statement on the Charity s system of internal control The Trustees acknowledge their overall responsibility, for establishing and maintaining the whole system of internal control and for reviewing annually its effectiveness. The Trustees recognise that no system of internal control can provide absolute assurance or eliminate all risk. The system of internal control is designed to manage risk, and to provide reasonable assurance that the key business objectives and expected outcomes will be achieved. It also exists to give reasonable assurance about the preparation and reliability of financial and operational information and the safeguarding of the Charity s assets and interests. In meeting its responsibilities, the Trustees have adopted a risk-based approach to internal controls, which are embedded within the normal management and governance process. This approach includes the regular evaluation of the nature and extent of risks to which the Charity is exposed and is consistent with principles incorporated in guidance. The process adopted by the Trustees in reviewing the effectiveness of the system of internal control, together with some of the key elements of the control framework includes: Identification and evaluation of key risks Management responsibility has been clearly defined for the identification, evaluation and control of significant risks. There is a formal ongoing process of management review in each area of the Charity s activities. The results continue to be reviewed by the Trustees on a regular basis. The Chief Executive of the Managing Agent is responsible for reporting significant risks or any changes in significant risks facing the Charity to the Trustees within these reports. 6 P a g e

9 Report of the Trustees Statement on the Charity s system of internal control (continued) Monitoring and corrective action The Trustees are responsible for ensuring the process of control through self-assessment is effective and that management reporting on control issues provides hierarchical assurance to successive levels of management and to the Trustees. This includes a rigorous procedure for ensuring that effective monitoring is in place and that corrective action is taken in relation to any significant control issues, particularly those with a material impact on the financial statements. Control environment and control procedures The Trustees retain responsibility for a defined range of issues covering strategic, operational, financial, and compliance issues including treasury strategy and new investment projects. Policies and procedures cover such issues as delegated authority, segregation of duties, accounting, treasury management, health and safety, data and asset protection and fraud prevention and detection. Information and financial reporting systems Financial reporting procedures include detailed budgets for the year ahead. These are reviewed and approved by the Trustees. The Trustees also review key performance indicators regularly to assess progress towards the achievement of key business objectives, targets and outcomes. Auditors A resolution to re-appoint Beever and Struthers as the Charity s auditors, will be proposed at the Annual General Meeting. Governance The Trustees have adopted the Charity Commissions Good Governance Code and abide by its principles. However, a formal assessment against the code has not been carried out. This will be undertaken during The Trustees confirm that the Charity complies with the Regulator of Social Housing s Governance and Financial Viability Standard. Management Day to day responsibility for management of the Almshouses and implementation of policy set by the Trustees is delegated to a managing agent, Harrogate Housing Association. The Trustees would again like to record grateful thanks to their staff for all their help throughout the year. In particular, the Trustees are grateful to Mo Mather for her regular visits to residents and caring approach and to Steven Brook, Chief Executive, of Harrogate Housing Association who has provided an invaluable management service. Approved by the Trustees on 6 June 2018 Mr S Holland Chairman 7 P a g e

10 Independent Auditor s Report to the members of We have audited the financial statements of the charity for the year ended 31 December 2017 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the charity s trustees, as a body, in accordance with Part 4 of the Charities (Accounts and Reports) Regulations Our audit work has been undertaken so that we might state to the charity s trustees those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and the charity s trustees as a body, for our audit work, for this report, or for the opinions we have formed. We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with the Act and relevant regulations made or having effect thereunder. In our opinion, the financial statements: give a true and fair view of the state of the charity s affairs as at 31 December 2017 and of its incoming resources and application of resources, including its income and expenditure for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the requirements of the Charities Act 2011, the Housing and Regeneration Act 2008 and the Accounting Direction for Private Registered Providers of Social Housing Basis for opinion We conducted our audit in accordance with International Standards on auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern We have nothing to report to you in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: the trustees use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or the trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the charity s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor s report thereon. The trustees are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 8 P a g e

11 Independent Auditor s Report to the members of Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 require us to report to you if, in our opinion: the information given in the financial statements is inconsistent in any material respect with the trustees report; the charity has not kept sufficient accounting records; or the financial statements are not in agreement with the accounting records; or we have not received all the information and explanations we require for our audit. Responsibilities of trustees As explained more fully in the Trustees Responsibilities Statement set out on pages 5 and 6, the trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charity s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charity or to cease operations, or have no realistic alternative but to do so. Auditor s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council s web-site at This description forms part of our auditor s report. Beever and Struthers Beever and Struthers is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006 Statutory Auditor St George's House Chester Road Manchester M15 4JE Date: 18 June P a g e

12 Statement of Financial Activities Notes Unrestricted Funds 2017 Total Funds 2017 Total Funds 2016 Restated Income from: Charitable activities social housing 3 69,809 69,809 70,510 Investments 4 11,237 11,237 11,157 Total income 81,046 81,046 81,667 Expenditure on: Charitable activities social housing 5 (49,428) (49,428) (38,623) Total expenditure (49,428) (49,428) (38,623) Net gains on investments 11 17,849 17,849 30,261 Net income and net movement in funds 49,467 49,467 73,305 Reconciliation of funds: Total funds brought forward 664, , ,283 Total funds carried forward 714, , ,588 All of the above results derive from the continuing operations of the Charity. The notes on pages 13 to 21 form an integral part of these financial statements. The financial statements on pages 10 to 21 were approved and authorised for issue by the Board of Trustees on 6 June 2018 and were signed on its behalf by:- Mr S Holland Trustee The Very Reverend J Lepine Trustee 10 P a g e

13 Balance Sheet At 31 December Notes Restated Fixed assets Tangible fixed assets , ,321 Investments , ,050 Current assets 588, ,371 Debtors 12 3,490 3,348 Cash and cash equivalents , , , ,990 Less: Creditors: amounts falling due within one year 14 (10,452) (11,773) Net current assets 125,188 94,217 Total assets less current liabilities 714, ,588 Total net assets 714, ,588 Funds of the charity Unrestricted funds: Unrestricted general fund , ,633 Social Housing Grant fund , ,955 Total charity funds 714, ,588 The notes on pages 13 to 21 form an integral part of these financial statements. The financial statements on pages 10 to 21 were approved and authorised for issue by the Board of Trustees on 6 June 2018 and were signed on its behalf by:- Mr S Holland Trustee The Very Reverend J Lepine Trustee 11 P a g e

14 Statement of Cash Flows Restated Net cash generated from operating activities (see Note 1 below) 28,127 47,920 Cash flow from investing activities Purchase of tangible fixed assets - (16,018) Purchase of investments (9,856) (9,688) Interest and similar income received 11,237 11,157 1,381 (14,549) Net change in cash and cash equivalents 29,508 33,371 Cash and cash equivalents at beginning of the year 102,642 69,271 Cash and cash equivalents at end of the year 132, ,642 Note 1 Net income for the year 49,467 73,305 Adjustments for non-cash items: Depreciation of tangible fixed assets 9,209 9,716 Increase in trade and other debtors (142) (579) (Decrease)/increase in trade and other creditors (1,321) 6,896 Profit on revaluation of fixed asset investments (17,849) (30,261) Adjustments for investing or financing activities: Interest and similar income received (11,237) (11,157) Net cash generated from operating activities 28,127 47,920 The notes on pages 13 to 21 form an integral part of these financial statements. 12 P a g e

15 Notes to the Financial Statements 1. General information The Charity is an unincorporated Charity registered in England and Wales, a member of the National Almshouse Association and is registered with the Regulator of Social Housing as a Private Registered Provider of Social Housing. The registered office is 10 High Street, Harrogate, North Yorkshire, HG2 7HY. 2. Principal accounting policies Basis of accounting The financial statements have been prepared in accordance with applicable United Kingdom Generally Accepted Accounting Practice (UK GAAP) and Accounting and Reporting by Charities: Statement of Recommended Practice applicable to Charities preparing their accounts in accordance with Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2015) (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), the Charities Act 2011 and the Accounting Direction for Private Registered Providers of Social Housing The accounts are prepared on the historical cost basis of accounting except as modified by the revaluation of investments and are presented in pounds sterling. The financial statements have been prepared in compliance with FRS 102. In complying with FRS 102 the Charity meets the definition of a public benefit entity. Going concern The financial statements have been prepared on a going concern basis which assumes an ability to continue operating for the foreseeable future. No significant concerns have been noted and we consider it appropriate to continue to prepare the financial statements on a going concern basis based on the cash flow forecasts. Judgements and key sources of estimation uncertainty The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements. a. Categorisation of housing properties The Charity has undertaken a detailed review of the intended use of all housing properties. In determining the intended use, the Charity has considered if the asset is held for social benefit or to earn commercial rentals. b. Impairment The Charity has identified a cash generating unit for impairment assessment purposes at a property scheme level. 13 P a g e

16 Notes to the Financial Statements 2. Principal accounting policies (continued) Other key sources of estimation and assumptions: a. Tangible fixed assets Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. b. Impairment of non-financial assets Reviews for impairment of housing properties are carried out when a trigger has occurred and any impairment loss in a cash generating unit is recognised by a charge to the Statement of Financial Activities. Impairment is recognised where the carrying value of a cash generating unit exceeds the higher of its net realisable value or its value in use. A cash generating unit is normally a group of properties at scheme level whose cash income can be separately identified. The Charity has assessed that no trigger for an impairment review has occurred. Income recognition Income from social housing activities represents weekly maintenance charge receivable, including water rates and other income and is recognised in relation to the period when the goods or services have been supplied. Weekly maintenance charge income is recognised when the property is available for let, net of voids. Distributions and interest on investments are included on the accruals basis by reference to the due date of payment. Service charges Service charge income and costs are recognised on an accruals basis. Taxation The Charity is a registered Charity and is, therefore, exempt from any liability to taxation on its income and capital gains. The Charity is not registered for VAT and therefore expenditure is stated inclusive of VAT. Tangible fixed assets and depreciation Tangible fixed assets are stated at cost, less accumulated depreciation. Freehold land is not depreciated. Housing properties Where a housing property comprises two or more major components with substantially different useful economic lives (UELs), each component is accounted for separately and depreciated over its individual UEL. Expenditure relating to subsequent replacement or renewal of components is capitalised as incurred. The Charity depreciates freehold housing properties by component on a straight-line basis over the estimated UELs of the component categories. 14 P a g e

17 Notes to the Financial Statements 2. Principal accounting policies (continued) UELs for identified components are as follows: Structure Roofs Windows and doors Kitchens Bathrooms Boilers Electrical and heating installations 80 years 70 years 30 years 20 years 25 years 15 years 25 years Other tangible fixed assets Depreciation is charged on other tangible fixed assets on a straight-line basis over the expected economic useful lives which are as follows: Equipment 5 years Property managed by agents Where the Charity carries the majority of the financial risk on property managed by agents, income arising from the property is included in the Statement of Financial Activities. The assets and associated liabilities are included in the Charity s Statement of Financial Position. Short-term debtors and creditors Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the statement of financial activities in other operating expenses. Social Housing and other government grants In accordance with the Charities SORP FRS 102, grants received from government have been treated as income and added to reserves. The fund is held separately from unrestricted reserves reflecting the possibility of a repayment demand from Homes England. Investments Investments are initially recognised at their transaction value and subsequently measured at their market value as at the balance sheet date using the closing market value. Gains and losses on disposal and revaluation of investments are charged or credited to the Statement of Financial Activities. Financial Instruments The Charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value. 15 P a g e

18 Notes to the Financial Statements 2. Principal accounting policies (continued) Impairment of Financial Assets Financial assets are assessed at each reporting date to determine whether there is any objective evidence that a financial asset or group of financial assets is impaired. If there is objective evidence of impairment, an impairment loss is recognised in the statement of financial activities immediately. Reconciliation With Statement of Recommended Practice for Registered Housing Providers (Housing SORP 2014) The published financial statements for the year ended 31 December 2016 were prepared in accordance with the Statement of Recommended Practice for registered housing providers: Housing SORP These financial statements are prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to Charities preparing their accounts in accordance with Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2015) (Charities SORP (FRS 102)). In preparing these financial statements, the Trustees considered whether in applying the accounting policies required by FRS 102 and the Charities SORP FRS 102 a restatement of comparative items was required. In accordance with the requirements of FRS 102, a reconciliation of opening balances and net income for the year ended 31 December 2016 is provided with the net income under the Housing SORP adjusted for the presentation of Social Housing Grant having previously been amortised. Balance at 1 January 2016 Net income year ended 31 December 2016 Balance at 31 December 2016 Unrestricted general fund As reported under Housing SORP 440,515 75, ,419 Remove amortisation of grants (57,187) (2,599) (59,786) As stated in accordance with Charities SORP 383,328 73, ,633 Balance at 1 January 2016 Net income year ended 31 December 2016 Balance at 31 December 2016 Social Housing Grant As reported under Housing SORP 150,768 (2,599) 148,169 Grant amortised under Housing SORP 57,187 2,599 59,786 As stated in accordance with Charities SORP 207, , P a g e

19 Notes to the Financial Statements 3. Income from charitable activities Unrestricted Funds 2017 Unrestricted Funds 2016 Restated Weekly maintenance charge 65,694 64,743 Service charge income plus water rates 4,734 6,035 Less: Voids (619) (268) Total income from charitable activities 69,809 70, Investment income Unrestricted Funds Unrestricted Funds Bank interest received Income on fixed asset investments 11,186 11,057 11,237 11, Expenditure on charitable activities Unrestricted Funds Unrestricted Funds Management 26,329 16,793 Service charge costs 5,207 5,140 Routine maintenance 8,461 6,974 Depreciation of housing properties 9,209 9,716 Bad Debts Total expenditure on charitable activities 49,428 38, Net income for the year Net income for the year is stated after charging: Auditor s remuneration (excluding VAT): In their capacity as auditors 1, In respect of other services Depreciation of housing properties 8,970 8,970 Depreciation of fixtures and fittings Accommodation managed by others Number of properties Number of properties General Housing P a g e

20 Notes to the Financial Statements 8. Taxation is a registered Charity and is, therefore, exempt from any liability to taxation on its income and capital gains. 9. Employees and Key Management Personnel The Charity has no employees (2016 none). Key management personnel are defined as the Trustees. The day to day management of the properties is undertaken by Harrogate Housing Association from their offices in Harrogate. No Trustees received any remuneration or expenses in the year (2016 Nil). 10. Tangible fixed assets Social Housing Properties for Letting Completed Fixtures & Fittings Total Cost At 1 January ,755 3, ,486 Additions Disposals At 31 December ,755 3, ,486 Depreciation At 1 January ,912 3, ,165 Charge for the year 8, ,209 Eliminated on disposals At 31 December ,882 3, ,374 Net book value At 31 December , ,112 At 31 December , ,321 Housing properties comprise: Freeholds 288,873 Long leasehold - 288, P a g e

21 Notes to the Financial Statements 11. Fixed asset investments Valuation Listed investments Total At 1 January , ,050 Additions 9,856 9,856 Unrealised gains in year 17,849 17,849 At 31 December , ,755 The investments are held with M&G Investments. The historic cost of these investments at 31 December 2017 was 201,558 ( ,701). Investments are shown at market value at the balance sheet date. The market value is determined by reference to the quoted price for identical assets in an active market The investments comprise: Listed NAACIF income shares 299, , Debtors Amounts falling due within one year: Weekly maintenance charge in arrears 1,097 1,321 Less: Provision for bad debts - - 1,097 1,321 Prepayments and accrued income 2,200 1,851 Other debtors ,490 3, Cash and cash equivalents Cash at bank 132, , P a g e

22 Notes to the Financial Statements 14. Creditors: amounts falling due within one year Restated Trade creditors 3,529 4,825 Weekly maintenance charge paid in advance 1,767 2,004 Accruals and deferred income 5,156 4,944 10,452 11, Analysis of charitable funds At 1 January 2017 Restated Income Expenditure Gains on investments At 31 December 2017 Unrestricted funds Unrestricted general fund 456,633 81,046 (49,428) 17, ,100 Social Housing Grant fund 207, , ,588 81,046 (49,428) 17, ,055 Unrestricted general fund The unrestricted general fund represents the cumulative net income and expenditure net of other adjustments. Social Housing Grant fund In accordance with the Charities SORP FRS 102, grants received from government have been treated as income and added to reserves. The fund is held separately from the unrestricted general fund reflecting the possibility of a repayment demand from Homes England. 16. Analysis of net assets between funds Unrestricted funds Tangible fixed assets 289,112 Investments 299,755 Current assets 135,640 Current liabilities (10,452) 714, Capital commitments At the balance sheet date there were no capital commitments (2016 Nil). 18. Contingent liabilities At the balance sheet date there were no contingent liabilities (2016 Nil). 20 P a g e

23 Notes to the Financial Statements 19. Related party transactions Under FRS 102 related parties consist of the Trustees and Harrogate Housing Association, the managing agent. No trustees received expenses in the year (2016 none). During the year the Charity purchased services from Harrogate Housing Association totalling 12,682 ( ,826). At the balance sheet date 25 (2016 Nil) was owed to Harrogate Housing Association and a further 2,650 was included in accruals (2016 Nil). 20. Financial instruments Restated The Charity s financial instruments may be analysed as follows: Financial assets measured at fair value through net income/expenditure: Investments 299, ,050 Financial assets that are debt instruments measured at amortised cost: Weekly maintenance charge in arrears 1,097 1,321 Other debtors Cash and cash equivalents 132, ,642 Total financial assets 433, ,189 Financial liabilities measured at amortised cost: Weekly maintenance charge paid in advance 1,767 2,004 Creditors 3,529 4,825 Accruals 5,156 4,944 Total financial liabilities 10,452 11, P a g e