Grants relating to revenue are recognised in income and expenditure over the same period as the expenditure to which they relate once reasonable assurance has been gained that the association will comply with the conditions and that the funds will be received .
Government grants released on the sale of a property may be repayable but are normally available to be recycled and are credited to a Recycled Capital Grant Fund and included in the statement of financial position in creditors .
If there is no requirement to recycle or repay the grant on disposal of the asset , any unamortised grant remaining within creditors is released and recognised as income in income and expenditure .
Recycled capital grant fund Grants repayable on property disposals are calculated in accordance with relevant Homes and Communities Agency procedures and included within a recycled capital grant fund . Interest is credited to the fund and calculated on a daily basis with the interest rate being determined by the level of total deposits .
The fund can be used in the same manner as a new project funded with social housing grant with certain permitted uses . It is intended to use the fund in the provision of either new social housing for rent and / or housing for sale on shared ownership terms or to supplement the major repair programme . Grants are repayable in certain specific circumstances including where the Homes and Communities Agency concludes that the Group is unlikely to use the fund for a permitted purpose within three years . The fund is included within long term creditors .
Disposal proceeds fund Net proceeds from the disposal of property under voluntary purchase grant and statutory right to acquire legislation and regulations are included within a disposal proceeds fund . Interest is credited to the fund and calculated on a daily basis with the interest rate being determined by the level of total deposits . The fund can be applied for specific purposes ranging from acquisition of dwellings for letting , to repairs or improvement of vacant dwellings or buildings otherwise subject to demolition . The fund may be repayable at the discretion of the Homes and Communities Agency , in certain specific circumstances . The fund is included in long term creditors .
Other long term creditors Other long term creditors include the costs of arranging long term funding . These amounts are amortised over the period of the underlying financial instrument . Loan termination costs are charged to the statement of comprehensive income in the year in which they are incurred .
Provisions for liabilities Provisions are recognised when :
a ) There is a present obligation as a result of a past event ; b ) It is probable the association will be required to settle the obligation ; and c ) A reliable estimate of the obligation can be made .
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period , taking in to account the risks and uncertainties surrounding the obligation .
Where the effect of the time value of money is material , the amount expected to be required to settle the obligation is recognised at present value using a per-tax discount rate . The unwinding of the discount is recognised as a finance cost in the statement of comprehensive income as it arises .
The association recognises a provision for annual leave accrued by employees as a result of services rendered in the current period , and which employees are entitled to carry forward and use within the next 12 months . The provision is measured as the salary cost payable for the period of absence .
Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the association . All other leases are classified as operating leases .
Rentals payable under operating leases are charged to the statement of comprehensive income on a straight-line basis over the lease term .
Financial Instruments Financial instruments which meet the criteria of a basic financial instrument as defined in Section 11 of FRS 102 are accounted for under an amortised historic cost model .
Where the association holds non-basic financial instruments they are recognised using a valuation technique with any gains or losses being reported in the statement of comprehensive income .
Derivatives The association uses interest rate swaps to reduce its exposure to future increases in the interest rate on floating rate loans . The notional principal is not reflected in the association ’ s statement of financial position . Payments made under swaps are accrued over the payment period on a straight-line basis and adjusted against interest payable on loans .
60 Accord Housing Association