Financial Reporting - Internal
5.18 Reporting as a method of Control
Registered Housing Associations (Associations) are independent bodies responsible for their own performance and management; however they must have appropriate financial and other management controls applied to safeguard public funds.
The management and the Board of Associations rely on financial reports to understand the financial position of the Association and to assist them in the decision making process.
5.19 Internal Reports
Examples of the type of Internal Reports that should be prepared and used by management and the Board include:
- Management Accounts
These should ideally be prepared monthly, but a minimum frequency of quarterly for developing Associations, and six monthly for non developing Associations is required. Management Accounts should contain as a minimum a Balance Sheet, Income and Expenditure Account and a narrative overview of performance (e.g. explanations for variances from budgets). They should without fail be presented to the Board (or a sub committee of the Board) for examination. Ideally individual departments (budget holders) should also be made aware of their financial performance against budget.
- Budgets
Budgets must be prepared annually by each Association and should cover a minimum period of one year. They should be prepared and agreed by the Board in advance of the financial year to which they relate.
Budgets should be a realistic estimate of income and expenditure and should be compared against actuals for Management Accounts purposes. The split during the year should reflect the expected timing of items (i.e., it should not be the annual total divided by twelve, unless equal monthly income or expenditure is expected).
Associations should consider re-forecasting their budgets on a quarterly or six monthly basis.
- Cash Flow Projections
All Associations should prepare monthly cash flow projections for a minimum period of one year (ideally on a rolling basis).
- Key Performance Indicator (KPI) Reports
Reports are required to monitor the performance of the Association on key areas impacting financial performance such as Voids and Arrears.
- Internal Audit Reports
Reports appraise the performance of the Associations’ existing policies and procedures and where necessary recommend improvements to the Board or appropriate sub-committee.
- New Scheme Commitments
The Board must be made aware of all new scheme commitments entered into by the Association. This should include details of the scheme, the number of units and the total value for each of the following categories:
- New schemes identified at risk;
- Schemes contractually committed at risk;
- Scheme submissions submitted to NIHE (DPG);
- Scheme approvals received.
- Impact on cash flow
- Borrowing capacity
All of the above reports should be presented to the Board to ensure that they are fully aware of the financial position of the Association and to assist them in the decision making process.
A useful free financial management e-learning tool for non-financial staff, including Board members is available from the Audit Commission  When registering for the e-learning tool you will be required to provide some information. Where it asks you to select Department choose ‘Housing Services’ from the drop down list and for Body, select ‘Other’. Although some of the information in the training is only relevant in England, most of the basic financial information on budgeting, KPI’s etc is relevant for all.
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