1 LEGAL STATUS The association is registered under the Cooperative and Community Benefit Society Act 2014 and is a registered provider of social housing. 2 ACCOUNTING POLICIES Basis of Accounting These financial statements are prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) including FRS102 “The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland” (FRS102) and the Statement of Recommended Practice Housing SORP 2018 “Statement of Recommended Practice for Registered Social Housing Providers” and comply with the Accounting Direction for Private Registered Providers of Social Housing 2019 . The financial statements are prepared on the historic cost convention. Going Concern The association has sufficient financial resources based on forecasts and current expectations of future sector conditions. Consequently, the Board believes that the association is well placed to manage its business risks successfully. Cashflow scenarios take possible pressures arising from COVID-19 and Brexit into account. Covid-19 has presented challenges for Arhag. The Board has considered the impact of the pandemic, and actions have been put in place to manage these risks and the Board considers these risks to be sufficiently mitigated. Arhag’s cash position has been reviewed for any cash shortfalls resulting from Covid-19 pressures, and the association is satisfied that the cashflows in place offer sufficient flexibility to reduce any risk and remain sustainable. The Board has a reasonable expectation that it will have adequate resources to continue in operational existence for the foreseeable future. The Board therefore continues to adopt the going concern basis in preparing these financial statements. Social Housing Grant (“SHG”) Social Housing Grant (“SHG”), receivable from the Greater London Authority (GLA), is recognised using the accrual model in accordance with clause 24.5C of FRS 102. SHG is initially measured at the fair value of the grant received. It is initially recorded as a long-term liability (with the exception of the portion expected to be amortised to income in the forthcoming year, which is classified as a current liability) and classified as deferred grant income. Once the asset it is funding reaches practical completion, it is then released through the statement of comprehensive income as turnover over the estimated life (100 years) of the structure of housing properties. On disposal of properties, all associated SHG is transferred to the Recycled Capital Grant Fund (RCGF) until the grant is recycled or repaid to reflect the existing obligation under the social housing grant funding regime. Where units are acquired from a third party who received grant funding for the development, the grant is not reflected in the association’s statement of financial position. Instead, it is disclosed in the notes to the financial statements as contingent liabilities as the obligation will only crystallise on the disposal of these units. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022 52 ARHAG
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