Document control. Supercedes (Version & Date) Policy approved 21/02/2013

Transcription

1 IMPAIRMENT Policy

2 Document control Document Reference / Version Number Version 2 October 2015 Title of Document Authors Name(s) Steven Battersby Authors Job Title(s) Senior Management Accountant Directorate(s) Resources Document Status Revised Policy Supercedes (Version & Date) Policy approved 21/02/2013 Approved By EMT Date of Approval 21 st October 2015 Publication / Issue Date November 2015 Date of Annual Review October 2016 Changes Made at Last Review Full Review Date October 2018 Distribution Finance & Procurement Team and Intranet Rochdale Boroughwide Housing Limited is a charitable community benefit society. FCA register number 31452R. Registered Office: Sandbrook House, Sandbrook Way, Rochdale OL11 1RY. Registered as a provider of social housing. HCA register number: 4607

3 Contents Section Page Introduction Policy Objectives 4 Scope of Policy 4 Impairment Assessment 4 Impairment Review 4/5 Monitoring & Review 5 Legal Framework 5 Related Policies/Documents 5 Equality and Diversity 5

4 1. Introduction Policy Objectives 1.1 The objective of this policy is to provide guidelines on impairment reviews undertaken to ensure fixed assets are held at no more than their recoverable amounts. 2. Scope of the Policy 2.1 This policy applies to all financial statements prepared within RBH Group which fall under the scope of FRS and hold fixed assets. This therefore applies to RBH Ltd. Both RBH (Design & Build) Ltd and RBH Professional Ltd hold no fixed assets at this time. 3. Impairment Assessment 3.1 RBH Group will carry out a full impairment review when there is an indication that impairment has occurred, or where a fixed asset is depreciated over 50 years or more. 3.2 Indications of impairment would include: A current period operating deficit, and an expectation of continued operating losses or negative cash flows. Evidence of obsolescence, or physical damage. Significant adverse changes to the business or market, or in the statutory or regulatory environment. 3.3 Fixed assets currently depreciated over 50 years or more: Component Buildings (General) Cladding Roofs Useful Economic Life 100 years 60 years 50 years 4. Impairment Review 4.1 Where an impairment review is indicated, the carrying value of the fixed asset will be compared to its recoverable amount, or where appropriate an alternative measure of service potential will be used. 4.2 Homes (due to some components within this class of fixed assets having an Existing Useful Life (EUL) of over 50 years) will be reviewed for impairment on a yearly basis. Properties will be grouped together at neighbourhood level to form income generating units. 4

5 4.3 These groups of assets will be compared primarily to the reports produced by RBH s independent valuation consultants, (these are an annual desk top report, and a full valuation every 5 years) to determine possible impairment. 4.4 Where investment in a particular location is primarily to promote sustainable communities, and is not expected to be economic, no impairment loss will be recognised, to the extent that a more appropriate alternative measurement covers the cost of the investment. 5. Monitoring and Review 5.1 This policy will be reviewed annually to ensure that it complies with relevant legislation and continues to promote good practice unless amendment is prompted sooner by a change in legislation. 5.2 Compliance with this policy will be monitored by the Finance Team and any write off s documented in Finance Reports to EMT and Board. 5.3 FRS102 introduces changes in the Accounting treatment and disclosure of Fixed Assets and associated SHG and is to be applied to all Financial Statements beginning on or after 1 st April These changes will be applied by RBH with effect from 1 st April 2015.It has been recommended to Board that the Society continues to value its property at historic cost. 6. Legal Framework 6.1 RBH will ensure that this policy is compatible with UK Generally Accepted Accounting Practice; Companies Act 2006 FRS 11 Impairment of Fixed Assets and Goodwill FRS15 Tangible Fixed Assets FRS102 SORP Housing 7. Related Policies/ Documents Capitalisation policy Depreciation policy 8. Equality & Diversity An Equality Impact Assessment relevance test has been carried out for this policy and the outcome was found not to warrant a full Equality Impact Assessment. 5