Housing Association - Audit of Community Fees

Leodogger

We have purchased a 95% housing association property (OAP Bungalow) and have had one or two concerns with getting maintenance jobs carried out under the lease.

This has lead me to look at the Community Fees Annual Accounts Statement which were presented to us in Feb this year at the AGM. As we were new to the development I did not question the layout or accountability of the expenditure but now having had one or two issues with them where things did not appear to be happening as they should, I have taken another look and the financial statement does not show a balance carried forward from the previous year with the outstanding money left over after taking account of income (community fees) and expenditure or where it has gone.

Someone else on our development queried this and they were fobbed off by their internal accountant who still did not explain where this money went.

Does anyone know how we can find out if these accounts have been audited independantly by an external firm of accountants ?

princeofpounds

If they have been audited, the accounts will come with a letter confirming 'that in all material respects the accounts below represent a true and fair picture of blah blah blah'.

If there is no such letter there, it is unlikely that an external audit has been made.

And money does not and should not disappear on the balance sheet. You should be able to reconcile where that money went using a combination of the P&L, balance sheets at the beginning and end of the period, and the cashflow statement.

Leodogger

princeofpounds wrote: »

If they have been audited, the accounts will come with a letter confirming 'that in all material respects the accounts below represent a true and fair picture of blah blah blah'.

If there is no such letter there, it is unlikely that an external audit has been made.

And money does not and should not disappear on the balance sheet. You should be able to reconcile where that money went using a combination of the P&L, balance sheets at the beginning and end of the period, and the cashflow statement.

That is exactly what I thought when I looked at them. I have worked for financial directors and also receive a set of accounts from our Administrator of our apartment block in Spain and they always have a balance o/s of monies not spent and carried forward to the next financial year or it is reconciled down to the last penny.

This statement shows expenditure and annual community fees per property for the last year and then a column with the new fees set for the next year per property. There is no balance of income at the bottom and no evidence of where the o/s balance went on the following year's accounts. It is just not shown at all. Very fishy from what I can see and I would think illegal from an housing organisation accounting practice point of view ?????

What can I do about it, I don't believe there was a letter like you explained, only a very general covering letter to say they have included the annual accounts for the year ?

Leodogger

I have just found out from another tenant that apparently the housing association admitted that sometimes they have an external auditor do the accounts and sometimes they use their own internal accountant "to save the residents money", they said. For all we know they could be getting a 16 yr old to type out the statement and where is the evidence that this is correct or even legal? Also how do we know the balance outstanding is actually being put back into the community fees pot for the next year, there is nothing to show that it is :mad:

Leodogger

Does anyone know if the annual accounts that are handed out to residents in a housing association should be on the official letterheaded paper of the auditor who prepares them ?

We seem to get budgets and annual accounts just on plain paper but the housing association insist they are prepared and audited by a big accountancy firm.

mavisangelica

As a first stage, have you tried putting in a written request to the housing association requesting the accounts and then see what comes back? It could be that at the meeting they just hand out photocopies/summarised version of the accounts?

mavisangelica

Just had another thought (it might not be relevant but..) - we have just had a letter this year saying that the way our service charge is calculated has changed and it (I think) will be based on actual spend on the previous year rather than an estimated cost. I am not sure if this is a change in regulation or just the Housing Association has decided to change it.

Sorry should have given a bit of background. We bought a shared ownership house (75%) 18 years ago and bought the remaining 25% after a year. We have still had to pay a service charge for various bits and pieces (most of which have eventually dropped off the list) such as landscaping, street lighting, television aerial.

BitterAndTwisted

It's usual to have an estimated budget (and your service charges payments on account) where there is no previous expenditure to base it on. If the costs don't vary from year to year there's no particular reason to change the budget if there's no under-spend or deficit created. That's not the same as not disclosing the opening service-charge balance even if it was only fifty pence between fifty properties.

As it's a Housing Association I would be more inclined to believe that it's down to poor accounting procedures internally than anything sinister going on but the residents are entitled to know both where their money has gone or whether there was any left at the end of the previous year. it's not like it's the HA's funds that are being administered.

I'd be putting my enquiries to the HA in writing asap

"Does anyone know if the annual accounts that are handed out to residents in a housing association should be on the official letterheaded paper of the auditor who prepares them"

No they wouldn't necessarily. An auditor would verify that the information presented in the documents was fair and accurate but they wouldn't have produced those figures themselves.

Leodogger

mavisangelica wrote: »

Just had another thought (it might not be relevant but..) - we have just had a letter this year saying that the way our service charge is calculated has changed and it (I think) will be based on actual spend on the previous year rather than an estimated cost. I am not sure if this is a change in regulation or just the Housing Association has decided to change it.

Sorry should have given a bit of background. We bought a shared ownership house (75%) 18 years ago and bought the remaining 25% after a year. We have still had to pay a service charge for various bits and pieces (most of which have eventually dropped off the list) such as landscaping, street lighting, television aerial.

We purchased 95% of this shared ownership but this year our community fees increased from £105 per month to £112 per month, we have only been in 6 months. I have queried the accounts because we do not get to see the invoices or quotes, we only discuss them generally at the AGM but the cost just appears in the accounts when they are audited. I have now been told that although the accounts do not appear on the auditors letterheaded paper, they are done on a cumulative basis for the whole housing group (to give a better cost to the residents), then the housing association "present" them on their headed paper but I have the last 3 yrs on plain paper. I also queried the increases in community costs and the balance carried forward which is nearly £20,000 ! The housing manager said they are advised to hold at least £1,500 pa for each property for large one off costs for the 20 bungalows. My grievance is that of what can cost that much on 18 yr old bungalows, the biggest expense this year has been replacing the fencing around the perimeter which probably will cost a few thousand pounds. Our boiler is 18 yrs old and they even refused to service our gas fire which IS in the lease but said residents had voted to take it off the contract with British Gas as they have nearly all had them replaced with Electric fires. My argument was that it is in our lease and should have been included in the contract. The housing manager is now saying she will go back to residents to ask them if they want it included :mad: I said it has nothing to do with the residents what is in our lease ! She has also stated that the community fees may have to be increased again in the next few years to pay for increased costs.

The more I see of what goes on with housing associations, the more I wish I had stayed well clear of them !!

mavisangelica

I think it took us (hubby) a good few years to sort our service charge out. I think it was probably through him that we got the road adopted. Don't give in, hubby was never away from the community centre whenever there was a 'surgery'. He did it himself, apart from our next door neighbour at the time sometimes going with him. And for quite a few years he witheld part of the service charge until they agreed to drop the charge (this was relating to the communal tv aerial and satellite that didn't work and they would not replace).
Overall I think that we have done very well with our Shared Ownership house - not least because we bought when Shared Ownership first came about (I presume - there was a lot of talk that they were only built so that they could build more totally rented ones). After a year we had the option to buy the remaining 25% which we jumped at. Our housing association didn't have a clue. We had to get 3 valuers in of our choice and they valued at the same price we originally bought at so we were well happy.

Leodogger

We are unhappy with the Housing Association as they seem to automatically take the quotes THEY think are the best value, although it seems that they get less and less for the money, plus they use British Gas to service our central heating system but did not include the gas fires as I said because the majority of residents have changed to electric fires and THEY wanted it removed from the gas contract despite the fact that we have it included in our lease. When I said I wanted it done, they said they would go back to the residents to ask them if they wanted it included. I also said if they wanted it removed from the contract, they should have issued new leases, they then said it would cost the residents too much money for new leases, when I promptly reminded them that this was THEIR lease and it was their responsibility to pay themselves to get it changed and reissued. They charge us £112 per month for the following :

Buildings insurance, Servicing of the Central Heating, Window Cleaning once per month, Landscape Gardening (lawns only once per 2 weeks during the summer), all exterior maintenance (including painting gutterings and soffits and any roof repairs (supposedly, as if you ask them to carry out pointing, they find an excuse not to). Our central heating boiler is 18 yrs old but they have not got it down for changing for another 3 yrs ! Originally it was down for changing when it was 30 yrs old but they brought it forward as some residents have changed their own.

To be honest I think they take advantage of the residents, many of which are elderly and some sick, so they do not question the accounts or understand how the housing association actually arrive at the costs they do. They have now said they will issue me with copy invoices for the work they undertook year before last but this year's (for work done last year)are not available until September when the accounts are audited and signed off (or so they say!).

They use "friendship" tactics too by sending round a site housing manager who takes residents out to their spouses and friends in care homes to visit them and generally does favours for them so the elderly residents do not want to rock the boat as they rely on her to stay friendly, despite some of the items in the accounts not being value for money.

For a start I am sure there are far more cheaper quotes for servicing the central heating than British Gas ! Also they pay a landscape gardener for doing the lawns only, they do not touch any of the residents borders to hoe, only twice per year, they never touch any dividing hedges and they never even removed some hedging my husband took out of our little front garden but mowed the lawn, putting back the hedge clippings on the lawn!!

I do not think they are bothered to get good value for the residents as it is easier to employ large companies who "supposedly" offer a group discount for servicing 100's of their properties instead of one.

Can we argue for them to shop around for cheaper quotes ?