Regulator sets out engagement plan with Abertay Housing Association

The Scottish Housing Regulator is to engage with Abertay Housing Association to gain assurance about its governance and financial management, its planned development programme and its medium term financial position.

The Regulator has been engaging with Abertay about a number of notifiable events which identified weaknesses in relation to the Association’s governance including how it manages conflicts of interest and the skills and knowledge on the governing body. Abertay had developed an action plan to strengthen its governance as a result of this but has not been able to progress aspects of this as quickly as expected, the Regulator said.

In its annual risk assessment of the Association, the Regulator noted that Abertay reported a deficit and net current liability position in its latest Audited Financial Statements. It started to engage with Abertay in April 2018 to understand its development plans and to seek assurance about its current and projected financial performance.

During this engagement Abertay told the Regulator that it had identified a significant overspend on its capital programme which may lead to a reduction in future works or an extension of the programme timescales. As a result the Regulator will seek assurance from Abertay about the impact of this on its future plans for investment.

Abertay commissioned an independent review of the reasons for the overspend from its internal auditor and this identified serious weaknesses in its handling of procurement, financial management, internal controls, project management, performance reporting, management control and oversight.

In May 2018, Abertay disclosed that two members of its governing body had resigned, leaving the Association with only seven members. Abertay has recognised it needs additional members with appropriate skills and expertise to strengthen its governing body and will co-opt two or three additional members.

Abertay has also decided to commission a comprehensive review of its governance and financial management to assess compliance with the Regulatory Standards. This will also incorporate a review of its internal financial controls. It will also commission an independent review of its approach to procurement as a matter of urgency.

Following a break from development, Abertay is developing new homes for social rent and will receive public subsidy to help achieve this. In light of the governance, financial management and procurement issues the Regulator said it will seek assurance that Abertay complies with the Regulatory Standards of Governance and Financial Management to determine whether Abertay is a suitable recipient of investment funds.

Abertay Housing Association said it is confident that the independent reviews will satisfy the Regulator’s concerns.

A spokesperson for Abertay told Scottish Housing News: “Abertay suffered a number of problems last year which led to an overspend on our capital works programme, and a fall in numbers of our management committee. We have taken action to address the issues and consider they have now been resolved.

“The Scottish Housing Regulator has asked us to commission independent reviews on our governance, financial management and procurement arrangements, and we are very confident that these will satisfy any remaining concerns which the Regulator has.”

Registered as a social landlord in 1997, Abertay currently owns and manages 1,736 homes and provides factoring services to 2,195 owners. It employs around 40 people.

Abertay’s turnover for the year was just under £8.1 million at 31 March 2017and its debt per unit was £8,125.

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