Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
The specific requirement in the Standard is: -
“To maintain a thorough, accurate and up to date record of their assets and liabilities and particularly those liabilities that may have recourse to social housing assets” (Paragraph 1.5.1(a))
The accompanying Code will require liabilities to be “in the widest context” and that is hardly surprising given the tale of woe apparent from the Cosmopolitan saga. There is no prescribed format, nor a list of what is to go in – it is all up to each provider, or to be specific, each board, since the Code states that the Regulator expects the Board to oversee the Asset Register.
In our view clients should be considering the following areas: -
|Property (understand property as an asset)||Finance (cashflow etc)|
|Planning (making sure conditions are complied with and you have evidence to that effect)||Title (the need to link with development)|
|Regulatory (known and anticipated potential impacts)||Loans (treasury management etc)|
There is a clear risk of a compliance industry being created here but we are not talking about a requirement for some all-encompassing database/spreadsheet; what we are talking about is for providers to have this information up to date, accurate, and at hand – and crucially to see it not just in the light of a compliance requirement but as an essential business tool fundamentally informing the VfM agenda. And to underline the point the Code provides that assets which have a negative impact should be easily identifiable.
Another way of looking at things is to consider if you were working for another provider and rescuing your organisation what would you need? What would the Regulator want to see if they ever had to intervene? What do you want to see when you are purchasing properties from another provider?
Finally the asset register needs to scope up all that company information that the board needs to be able to make decisions; what are the cross group guarantees; what off balance sheet funding is there; what dependencies are there.
Don’t forget that boards will need regularly (at least annually) updating.
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