Preparation of financial statements

This guide explains how RSLs should prepare their financial statements.


13 February 2024


13 February 2024



This guidance sets out the reporting requirements that registered social landlords (RSLs) must comply with when they prepare their financial statements. We use RSLs’ financial statements to review and analyse performance, so consistent financial reporting within the social housing sector is essential.


In complying with this guidance, RSLs will meet the requirement to submit information in section 3 of the Regulatory Framework.


This guidance note should be read in conjunction with our notifiable events guidance which gives details of financial notifiable events. When preparing financial statements, RSLs should consider whether there have been any notifiable events during the period under review and report any matters to us that have not already been drawn to our attention.


The governing body of an RSL is responsible for preparing its financial statements. It should be aware of changes in applicable accounting standards issued by the Financial Reporting Council, along with any Abstracts issued by the Financial Reporting Council, and must adjust its financial reporting accordingly.


If RSLs are in any doubt about financial reporting requirements, they should consult their auditor or take professional advice.


Accounting Determination 2014


The Determination of Accounting Requirements (the Determination) issued by us under of Section 68(1) of the Act came into force on 1 January 2015 and applies to all RSLs with accounting periods starting on or after 1 January 2015.


All RSLs must prepare financial statements in accordance with the Determination for accounting periods that commence on or after 1 January 2015 and the Notes to the Financial Statements should include confirmation that they comply with the Determination.

Statement of Recommended Practice (SORP 2014)


The Housing SORP (“SORP”) interprets UK Generally Accepted Accounting Practice (“UK GAAP”) for registered social housing providers. RSLs should discuss its implications with their auditors in deciding how to prepare their financial statements.


All RSLs except co-ownership societies must prepare financial statements in accordance with the 2014 SORP. There are no exemptions on the basis of size of organisation. For RSLs with charitable status, the 2014 SORP takes precedence over the Charities’ SORP.


Notes to the Financial Statements must include confirmation that the statements comply with SORP. The Notes should also cover any material departures from applicable accounting standards and the reasons for any such departure.

Statutory Instrument 2009 No. 2331 European Communities – The Financial Transparency (EC Directive) Regulations 2009 (the Regulations)


The purpose of the Financial Transparency Directive (Commission Directive 2006/111/EC) is to enable the European Commission to ensure that public money being granted to public undertakings is being used to pay for providing public services and that there is no cross-subsidy of commercial activities, which may be illegal under European State Aid law. The Regulations give effect to the Directive in the UK.


The provisions of the Regulations, as at the date of enforcement, apply only to RSLs with an annual turnover €40 million or over. Annual turnover includes turnover from all activities, as well as publicly funded activities.


The Regulations require bodies (including not-for-profit ones) which are engaged in commercial activities and which receive public funding to provide a Service of General Economic Interest (“SGEI”), to ensure that their financial statements are sufficiently separate to distinguish between the publicly supported activities of the body and the purely commercial activities it undertakes which are unrelated to the SGEI.


The governing body of an RSL is responsible for reviewing the current scope of the Regulations. If RSLs are in any doubt about whether they must comply with the Regulations, they should consult their auditor.

Going concern


As part of their audit, an RSL’s auditors are required to obtain sufficient appropriate audit evidence regarding, and conclude on, whether a material uncertainty related to going concern exists and the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements. However, the RSL’s governing body is still responsible for determining whether it is appropriate to adopt the going concern basis for preparing the financial statements.


In preparing the financial statements the RSL must make clear disclosures and document a thorough assessment of whether the RSL is a going concern. It also remains the responsibility of the RSL to notify us at an early stage if there are going concern issues within the RSL as detailed in our notifiable events guidance.

Note: This guidance is issued by us under section 36 of the Act. It is intended to clarify what we expect from RSLs when discharging their duty under section 70 of the Act.