Inspection of Housing Associations
1. Introduction
This guide explains how the Department for Social Development (DSD) Regulator of Registered Housing Associations (RHA’s) will inspect registered associations. These inspections should be a catalyst for improvement.
This guidance sets out the Departments approach to inspections and describes what we will inspect, when we will inspect and how we will form judgements and assessments.
As the regulator, Housing Division is required to “exercise supervision and control over Registered Housing Associations” (Article 4 (1) (c) of the Housing (NI) Order 1992) and has a key role in promoting “best value” in the delivery of social housing in Northern Ireland. It is therefore essential to have a system in place to inspect the performance and compliance of RHA’s. The inspection is a key element in providing assurance to the Departments Accounting Officer and the Northern Ireland Audit Office (NIAO) with regard to the overall corporate affairs, management and financial control of RHA’s.
The inspectors in the Inspection Team along with Accountant colleagues from Housing Finance Branch and Technical staff from Central Procurement Group, Department of Finance & Personnel carry out periodical inspections on RHA’s to ensure compliance with procedures laid down in the Housing Association Guide.
2. Scope of the Inspection
There are four main areas of focus during the inspection:
- Corporate Governance and Management
- Finance
- Property Development
- Property Management
The objective of each area is to examine the internal workings and control procedures for each RHA in order to:
- Assess compliance with regulatory requirements
- Consider how the association is performing in providing good quality, cost effective housing and services
- Measure its ability to achieve improvement in its operations and
- Provide an independent opinion on the adequacy and effectiveness of internal control
- Hold service providers to account
- Share good practice
3. Programme of Inspections
The programme for when associations are to be inspected is developed based on the following information:
- Inspection ratings from previous inspections
- The development programme listed for each association by the Development Programme Group (DPG) in the Northern Ireland Housing Executive
- Levels of stock
- Other concerns
The above data enables the Department to establish a priority list ranging from high to low. The programme will be made publicly available to all associations. It will give association’s additional time to prepare in advance for the inspection. The programme may be subject to change to take account of urgent priorities or needs to address poor performing associations who may require follow up inspection.
Inspection Process
4. Stage 1
- Pre-inspection research
From information held on file within the Department including Annual Regulatory Returns (ARR’s), Performance Indicators, previous audit reports, minutes of meetings and ongoing monitoring information the Team will be able to identify areas for testing. Contact will be made by the Team approximately 4 weeks prior to your Association being inspected.
- Introductory Meeting
An introductory meeting will be arranged to discuss the scope of the inspection and the timetable. The Chair or a Board member and the Chief Executive/Senior Officer attend this meeting with the Inspection Manager and the Governance Inspector.
5. Stage 2
- Fieldwork
The inspectors will spend time onsite at the Associations offices gathering information and evidence to facilitate inspection testing and to support their findings. Inspectors may meet with a cross section of relevant staff and Board members, Joint Management Partners and customers. At the end of each strand of inspection all inspectors will leave a written list of issues found during the fieldwork.
- Exit Meetings
As soon as possible after completion of the field work an exit meeting is held. This is usually attended by all the Inspectors and the Inspection Managers, the Chief Executive/Senior Officer, the Chair, the Senior Management Team and any Board Members who wish to attend. It will enable the inspectors to deliver their findings, which will be similar to the issues left with the Association at the end of fieldwork. This will enable the Association to provide evidence if they dispute any of the issues raised and to come back with any comments so as to progress to the draft report stage.
6. Stage 3
- Reporting Mechanism
Although the inspection covers a range of operational functional areas, a single composite Inspection Report is compiled covering the inspectors findings across the four areas. The report includes input from Central Procurement Group staff on property development and property management issues, housing finance accountants on finance issues and governance inspectors on corporate governance and management. Based on the findings of the inspectors, the report provides the association with individual ratings for the four main areas plus an overall rating.
- Scoring Mechanism/Assurance Ratings
The scoring mechanism is on the basis of an overall rating along with individual ratings for the four main areas of focus. The four tier assurance ratings are:
- Substantial Assurance
- Satisfactory Assurance
- Limited Assurance
- No Assurance
7. Draft Report
The association is issued with a draft report highlighting the Inspectors main findings along with recommendations and an action plan to address any areas of weaknesses or non-compliance. The report will highlight strengths by identifying areas of good practice as well as identifying weaknesses and areas that need improvement. The draft report will include:
- Details of the context in which the association works, stock, location, client group etc.
- The main service areas covered by inspection
- Acknowledgement of strengths and good practice of the services provided to customers
- Recommendations to improve performance and acknowledgement of required improvements already identified by the association
- An overall assessment of how good the service delivery is at present and whether the organisation is working for continuous improvement.
The Association’s management board is required to submit its comments back to the Department within 4 weeks. The Associations comments are then considered along with any new or additional evidence that is brought to light. Further meetings may be required and if appropriate the report content and ratings may be changed.
8. Final Report
A final report, which contains management’s comments and agreed actions, is then issued to the Association. All final reports will be published on the Departments website, and copied to the Northern Ireland Audit Office.
9. Action Plan
Following inspection an Association may have a number of recommendations detailing areas where the inspection team determines that there is room for improvement. It is important that the Association addresses these recommendations as quickly as possible. The Department will monitor the Association’s progress against its agreed action plan to determine if the Association is taking appropriate action on a timely basis. This action will only be required for those Associations with a Limited and No Assurance ratings. The Associations action plan will be contained within the final report and will be monitored periodically (depending on the overall rating obtained in the report).
10 Follow up
The completed action plan will also be used to determine the level and extent of future follow-up action and inspection activities. On occasions where performance is deemed to be particularly poor or where an Association has failed to take recommendations and action plans seriously sanctions will be imposed on that Association. In these circumstances the sanctions will not be lifted until the inspectors deem that sufficient progress has been made.
11. No Assurance Rating
When a Housing Association receives a No Assurance rating following inspection, there are a number of options which the Department will consider to address the concerns. These options are:
- An agreed Action Plan to address the weaknesses over a reasonable period of time
- A change of either Board Members or Management Team or both
- Merger with another Association
- Inquiry
12. Additional Support
The Inspection Team will provide support and guidance to Associations who are underperforming. As well as passing on areas of best practices during the course of each inspection, the Department will also disseminate to all Housing Associations periodically areas of best practices and a summary report.
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