As part of its £360m improvement programme, RCT Homes is using Real Asset Management’s Asset4000 system as a central asset register incorporating detailed component accounting.
In December 2007, RCT Homes became the largest housing association in Wales when it took ownership of 10,000 homes from Rhondda Cynon Taf County Borough Council. RCT Homes’ immediate requirement was to assess the state of its newly-acquired asset base in order to create an improvement programme to meet the Welsh Housing Quality Standard by 2012.
Allister Parkinson, financial accountant, RCT Homes, explained, “The bulk of our fixed assets is the properties themselves. These properties were in a poor state of repair and our immediate focus was on getting them up to scratch.
“A large number of the kitchens and bathrooms needed modernisation and most of the boilers in the properties needed replacing. The finance team’s main target was to introduce a system to manage these fixed assets as they were being replaced.”
RCT Homes chose Real Asset Management’s Asset4000 system to help manage its replacement and renovation programme, with the system delivering component-level accounting in compliance with the new Statement of Recommended Practice (SORP) guidelines which take effect from this April. The system was installed in December 2008 in a contract worth £28,000.
Parkinson explained, “Until now, housing associations could record their properties as a single asset, but under the new rules we are required to split our properties into the main components such as kitchens, boilers and bathrooms. RAM has been instrumental in helping RCT achieve the level of detail required to become SORP compliant.”
RCT has developed automated processes to import data from its purchasing systems into Asset4000, removing the need to staff to re-key data into different applications.
Parkinson said, “If we hadn’t chosen RAM, we would really be struggling now with the sheer volume of processing involved and, almost inevitably, we would be making mistakes. Without Asset4000, we would have needed to employ someone to deal with 7000 new components every year. The RAM solution has therefore provided a clear return on investment, saving us the cost of a full-time member of staff on an annual salary of £37,000.”
RCT Homes expects to use Asset4000 to measure the growth of its asset base in the future. Parkinson explained, “It will allow us to track the increase in the value of our fixed assets as we make improvements to them. It will also help by tracking whether we have claimed the VAT on an improvement correctly under the terms of our VAT shelter agreement.”
Parkinson concluded, “RAM has also ensured that our internal processes have been future-proofed for upcoming legislation such as SORP and IFRS. The detailed level of component accounting means that we are already performing to the standards expected by such legislation, something that many housing associations have yet to address.”