The Single Regulatory Framework - Setting the Standard
Comments from the Association of Chartered Certified
Accountants
June 2001
The Association of Chartered Accountants (ACCA) is pleased to have been invited to participate in the consultative exercise for developing a single regularity framework for registered social landlords and local authorities in Scotland. The paper has been considered by ACCA's Housing Panel. The Panel's members have considerable experience of housing association regulation as well as auditing and accounting practice. We respond to each of the four consultation documents in the sections below.
Proposals for the Single Regulatory FrameworkACCA welcomes the proposal for a single regulatory framework under a newly created Executive Agency which will act on behalf of Scottish Ministers and will have responsibility for regulating:
- registered social landlords (namely, housing associations, co-operatives and housing companies that meet the registration criteria)
and
- local authorities in their landlord, homelessness and factoring functions. In general, we are supportive of the proposals stated in the consultation paper.
ACCA's views on the specific questions raised in the paper are set out as follows.
(a) The proposed aims and objectives outlined in the paper are aligned to the regulator's purpose.(b) The proposed regulators' roles, as stated in the paper, appear to be the right ones to achieve their purpose.
(c) The key principles of good regulation have been identified in the paper and we support an approach which would entail the Agency's regulation and inspection function reporting to a Regulation Board made up of independent members.
(d) The proposed regulatory framework is well designed to facilitate strong consumer input and to encourage consultation with a wide range of stakeholders in developing the framework.
(e) ACCA believes that inadequate weighting has been placed on social responsibility accounting issues in relation to (a) employees, with respect to standards of health and safety at work and alternative ways of working (job sharing and working from home) and (b) the environment, with respect to energy saving and waste management (offices and dwellings).
(f) ACCA believes that the proposed approach to inspection is the right one.
(g) The proposed grading system (A to D), ranging from excellent to poor, is a tried and tested and simple means of summarising performance.
(h) ACCA believes that the right approach to assessing and tracking risk in RSLs should be based on reviews of management's arrangements for:
- decision taking (including terms of reference, financial orders and financial regulations for the conduct of business)
- treasury management (including cash flows and debt counselling)
- the use of tools for assessing risk (such as internal management reports, sensitivity analysis, investment appraisal and gap analysis)
- mitigating against risk (by, inter alia, the use of financial derivatives, insurance policies and quantified contingency plans backed by finance)
- identifying potential tenants and their needs (through conducting market research).
(j) Appendix 2 sets out appropriate indicators for making performance comparisons within the sector.
(k) ACCA believes that by including PIs at Appendix 2, it provides useful guidance.
(l) The proposed approach for information dissemination appears to be appropriate.
(m) The proposed regulatory framework appears to provide sufficient support for regulated bodies.
(n) The framework incorporates a number of suitable ways for promoting good practice.
(o) The framework sets out a suitable approach to developing the use of intervention powers.
Regulatory Code of Practice
ACCA welcomes the proposal to publish a Code of Practice for the new Agency. We believe that the draft Code serves its purpose, which is to set out how the new Agency will exercise its regulatory operation in a way that promotes quality and improvement while being free of political interference.
Memorandum of Understanding
The draft Memorandum of Understanding sets out clearly the powers and responsibilities of the new Executive Agency, the Accounts Commission and the Accounts Commission's appointed auditors and also the arrangements for exercising these in housing authorities. ACCA supports the collaborative approach between the new agency and the Accounts Commission as proposed in the memorandum which aims to ensure effective joint working arrangements of the inspection and audit processes.
Performance Standards and Assessment Criteria
ACCA believes that the information paper on performance standards and assessment criteria serves as a useful framework for self assessment and evaluation as well as for external quality assurance by the inspection teams and for promoting best practice in housing management generally.