rura hous association FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023 Rural Housing Association 2 Killy¢logher Road. Omagh. County Tyrone, BT79 OAX Rural Housing Association Ltd 2 Killyclogher Road, Omagh, County Tyrone, B T79 OAX Association Information Board of Management John Waddell {Chairl Carol Follis BA (Hons) (Vice Chair) Rory O'Brien Bsc IHons} (Secretary) ASistair McKane BA, Dip TP, MRTPI {Treasurerl Thomas Gallagher B Ed. Tom Potter Michaela Mccusker Margaret Raffety John Moss Chief Executive Mr Stephen Fisher PGDip, Msc, CIHCM Registered Office 2 Killyclogher Road, Omagh. County Tyrone. BT79 OAX Head Office 2 Killyclogher Road. Omagh. County Tyrone, BT79 OAX Bankers Danske Bank 5-7 Market Street, Omagh, County Tyrone BT78 1 BN AIB 1-4 East Bridge Street, Enniskillen, County Fermanagh, BT74 7BT Solicitors Mccaffrey & Co 8-10 Church Hil Omagh Co Tyrone BT78 1DQ Statutory Auditors McAleer Jackson Ltd Chartered Accountants & Registered Auditors Church House 24 Dublin Road Omagh Co Tyrone BT78 1HE Internal Auditors Wylie and Bissett Chartered Accountants & Registered Auditors 168 Bath Street Glasgow G2 4TP Rural Housing Association Ltd 2 Killyclogher Road, Omagh, County Tyrone. 8T79 OAX Financial Statements for the Year Ended 31 March 2023 Contents Report of 8oard of Management Page Auditor's Report to the Members of Rural Housing Association Page Statement of Comprehensive Income Page Statement of Financial Position Page 10 Slatament of Changes in Equity Page Statement of Cash Flows Page 12 Notes to the Financial Statements Page 13 Detailed Income and Expenditure Summary for the Financial Year Ended 31 March 2023 Page 24 Incorne and Expenditure from Lettings for the Financial Year Ended 31 March 2023 Page 26 Administrative Expenditure for the Financial Year Ended 31 March 2023 Page 27 Rural Housing Association Ltd 2 Killyclogher Road, Omagh, County Tymne, B T79 OAX Financial Statements for the Year Ended 31 March 2023 Report of the Board of Management The Board present their report together with the audited financial statements for the year ended 31 March 2023. Principal activities Rural Housing Association was registered under the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 on 2 March 1992. The Association is a registered non-profit rnaking housing association with the Department for Communities providing housing accommodation for those in need and is recognised as a charity vith The Charity Commission for Northern Ireland and has charitable status with HMRC (HM Revenue & Customs). Business Review Much has changed for the Association, its staff and tenants over the last year and our Corporate Strategy, which was agreed in 2021, provides a clear picture for the organisalion going forward. As part of our strategic review in 2021 a full organisationa5 review was carried out during 2022123. That has brought about o new Committees under the Board, Finance and General Purposes Committee and Housing Services Committee. Both Committees will complement the main Board and provide further assurance in all aspects of the operations of the Association. Further to the committee additions. the organisation staffing structure was fully reviewed. Thi5 review was to ensure the Association's operational setup was fit for purpose for the coming years with an expected development programme of over 300 new homes. Four new Departmental Directors have been put in place with Housing and Technical Departments seeing new posts created for middle managers, and Business Development Department getting a new fvll time administrative post. These changes were all complete before March 2023 and provide the Association with the workforce and experience lo develop, manage and mainlain a high volume of new homes over the next few years. One of the main aspecls the Association focussed on over the last year was the welfare of tenants. The Association availed of local and regional grants lo provide outreach to tenants in the form of food parcels alongside providing one to one welfare advice and sign posting. Most tenants, and in particular the more vulnerable, were frequently contacted directly by staff members throughout the year lo provide support_ The Association implemented a hardship fund for ils tenant5, providing much needed financial support lo the most needed cases. The Association also provided support to its staff through its normal channels of welfare provision alongside extra training on home working. wellness training and social functions held through virtual and face to face means to ensure staff stayed connected at an informal level as well. Vvhen setting its budgets for 2023124 the Association. in line with mitigations identified in its Corporate Risk Register added weight to its cashflows for routine rnainlenance and planned maintenance schemes to ensure coverage for anticipated rises in costs of materials and labour due lo Brexit and a post covid economy of high demand. It is anlicipaled that this prudent action should provide the Association with proper cover and ensure that inflationary pressures will not have an extreme impact on the Association as a going concern. At the balance sheet date. the Hybrid working policy had been fully implemented and Covid restrictions eased in accordance with Departmental guidance. During the financial year the Association maintained ils level of properties bringing on 6 new units and selling 6 units through the House Sale Scheme12022'. 21 units)12021'. 7 units). Operating costs increased by £236.25212022.' £97,100) while the operating surplus increased to £1,021,31212022,:£1 ,227.534). Interest payable was £712,562 12022: £629.4991 resulting in an overall surplus for the financial year of £293.743 (2021.. £577,752). Rural Housing Association Ltd 2 Killyclogher Road, Omagh, County Tyrone, B T79 OAX Financial Statements for the Year Ended 31 March 2023 Report of the Board of Management (continued) Business Review cont'd On the balance sheet housing properties al depreciated cost was £52m12022'. £49ml. Average staff numbers for the year are currently at 23 and are not anticipated to increase significantly during the incoming financial year. Internal Controls Assurance The Board acknowledges its overall responsibility for eslablishing and maintaining the whole system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and lo provide reasonable, and not absolute, assurance against material misstatemenl or loss. The process for identifying. evaluating and managing the significant risks faced by the Association is on going, has been in place throughout the period commencing 1 April 2022 up lo the dale of approval of the annual report and financial statements. Key elements of the control framework include.. Board approved terms of reference and delegated authorities for Audit Risk and Governance and Technical Sub- committees". clearly defined management responsibilities for the identification. evaluation and control of significant risks.. a Risk Register and Business Continuity Plan exists to help manage and mitigate these risks., robust strategic and business planning processes, with detailed financial budgets and forecasts.. a formal governance framework detailing standing orders, cyclic reporting processes and relationships bemeen the Board. Sub-committees, Senior Management Team and staff; formal recruitment, retention. training and development policies for all staff., established authorisation and apprais21 procedures for all significant new development initiatives and commitments.. regular reporting to the appropriate committee on key business objectives, targets and outcomes., and Board approved whistleblowing and fraud policies. The Board cannot delegate ultirllale responsibility for the system of internal control, bul it can, and has delegated authority to the Audit Risk and Governance Sub-committee lo regularly review the effectiveness of the system of internal control. The Board receives regular reports from the Audit Risk and Governance Sub-committee together with minute5 of meetings. The Audit Risk and Governance Sub-committee has received the annual report of the internal auditor, and has reported its findings to the Board. Statement of Board of Management Responsibilities The Co-operative and Community Benefit Societies Act {Northern Ireland) 1969 and registered housing association legislation require the members of the Board of Management to prepare financial statements for each financial year that give a true and fair view of the state of the Association's affairs and of its surplus or deficit for that period. In preparing these financial statements the Board is required to: select suitable accounling policies and apply them consistently., make judgements and estimates that are reasonable and prudent-, stale whether applicable accounting standards have been followed. subject to any material departures disclosed and explained in the financial statements.. and prepare the financial statements on the going concern basis unless il is inappropriate to presume that the Association will continue to operate. The members of Ihe Board of Management are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Association and to enable them to ensure that the financial slalements comply with the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 and the Registered Housing Associations (Accounting Requirements) Order (Northern Ireland) 1993. They have general responsibility for taking reasonable steps to safeguard Ihe assets of the Association and lo prevent and detect fraud and other irregularities. Rural Housing Association Ltd 2 Killyclogher Road, Omagh, County Tyrone, ET79 OAX Financial Statements for the Year Ended 31 March 2023 Report of the Board of Management (continued) statement of Disclosure to Auditors So far as each of the members of the Board of Management at the date of approval of these financial statements is aware.. there is no relevant information of which the Association's auditor is unaware. they h8ve taken all reasonable steps that they ought lo have taken as members of the Board of Management in order to make themselves aware of all relevant audit information and lo establish that the Association's auditor is aware of that information. On behalf of the Board Secretary Rural Housing Association Ltd 2 Killyclogher Road. Omagh, County Tyrone, B T79 OAX Financial Statements for the Year Ended 31 March 2023 Auditor's Report to the Members of Rural Housing Association Opinion We have audited the financial statements of Rural Housing Association Limited for the year ended 31 March 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of changes in equity, the Statement of Cash Flows and the related notes to the financial statements. including a summary of significant accounting policies set out in note 1. The financial reporting framework that has been applied in their preparation is applicable law and United ￿ngdoM Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice) and the Housing SORP 2018 ~ Statement of Recommended Practice for social housing providers issued by the National Housing Federation. In our opinion the f nancial statements= give a true and fair view of the state of affairs of the Association at 31 March 2023 and of its surplus for the year ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice.. and have been prepared in accordance with the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969. the Housing (Northern Ireland) Order 1992. the Registered Housing Associations (Accounting Requirements) Order {Northern Ireland) 1993 and Statement of Recommended Practice 2D18 Accounting by Registered Social Landlords. Basis for opinlon We conducted our audit in accordance with International Standards on Auditing (UK) IISAS (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Association in accordance with ethical requirements that are relevant to our audit of the financial statements in the UK, including Ihe FRC'S Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficienl and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements. we have concluded that the Board of Managements, use of the going concern basi5 of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relaling to events or conditions that, individually or collectively. may cast significant doubl on the Association's ability to continue as a going concern for a period of at least ￿e1ve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Board of Managemenl with respecl to going concem are described in the relevant sections of this report. other Information The other information comprises the information included in the annual report other than the financial statements and our Auditor's Report thereon. The Board of Management are responsible for the other information. Our opinion on the financial statements does not cover the other information and. except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is lo read the other information and. in doing so, consider whether the other information is materially inconsistent with the financial slatements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements. we are required to determine whether there is a rnaterial misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Rural Housing Association Ltd 2 Killyclogher Road. Omagh, County fyrone, 8T79 OAX Financial Statements for the Year Ended 31 March 2023 Auditor's Report to the Members of Rural Housing Association Gont'd Matters on which we are required to report by exception In the light of the knowledge and understanding of Ihe Association and its environment obtained in the course of the audit, we have not identified any material misstatements in the report of the Board of Management. We have nothing to report in respect of the following matters where the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 requires us to report to you if, in our opinion.. proper accounting records have not been kept by the association., or the financial statements are not in agreement with the accounting records and returns-, or a satisfactory system of intemal control over transactions has not been maintained.. or we have not received all the information and explanations we require for our audit. Respective responsibilities of the Board of Management and Auditor As described in the Report of the Board of Management on page 4 the Board of Managernent are responsible for the preparation of the financial statements and for being satlsfied Ihat Ihey give a true and fair view. and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due lo fraud or error. In preparing the financial statements, the Board of Management are responsible for assessing the Association's ability to continue as a going concern, disclosing. as applicable. matters related to the going concern and using the going concern basis of accounting unless management either intends to liquidate the company or lo cease operations, or has no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whelher the financial statements as a whole are free from material misstatement, whèther due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance. but is not a guarantee that an audit conducted in accordance with ISAS (UK) will always detect a material misstatement when it exists. Mi55tatements can arise from fraud or error and are considered material if, individually or in aggregate. they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial staternents. Irregularities. including fraud, are instance5 of non-compliance with laws and regulations. Vve design proceduies in line with our responsibilities, outlined above. to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. Our approach to identifying and assessing the risks of material mis-statement in respect of irregularities including fraud and non-compliance with laws and regulations. was as follows.. We identified the laws and regulations applicable to the Association through discussions with management and from our commercial knowledge and experience of the sector.. We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence. We assessed the susceplibilily of the company's financial statements ta material mis-statement, including obtaining an understanding of how fraud might occur, by Making enquiries of managerllent as to where they considered there was susceptibility to fraud, their knowledge of actual. suspected and alleged fraud- Considering the internal controls in place to mitigate risks of fraud and non