Preparing for In Depth

Assessments

Karen Marshall

Director of Governance and Compliance

In Depth

Assessment V

Preparing for an IDA

take

a

deep breath

whg’s experience

Background and context

Key stages in the process

Preparation

Document requests

Site visit

Board / Committee meeting

Feedback / follow up

Background and context

• Stock transfer 2003

• 20,000 homes, mainly in Walsall

• Turnover £92m

• £250m bond

• Development programme: 1900 homes

(2014-18)

• 641 colleagues (FTE)

• Governance review – part way through

In Depth Assessments

• aka Deep Dive

• Now part of HCA’s regulatory engagement

• New way for HCA to gain assurance

• Every three to four years

• 12 pilots – Summer 2015 started carrying out for real

• whg was one of the first!

IDAs: why?

Cosmopolitan: lessons learnt

– Developing beyond its capacity

– Losing money, running out of cash

– Delays in putting new funding in place

– Complexity: group structures & funding

– Board skills not kept pace

– Board didn’t understand interactions of risks

– Lack of challenge to growth-focused Exec

HCA: Regulating The Standards

Key operational approaches

• Review of quarterly surveys

• Stability checks

• In-depth assessments

Getting ready

• Be prepared:

– What areas are the HCA likely to be interested in? • Generally

• What are the current / emerging issues?

• Specific to your organisation

• whg:

– Governance review

– Rent reduction /

revised Business Plan

IDA……outline

• Notification – and request for Board and AAC meeting dates

• Document request

• …. further document request

• Agenda? / Scope?

• Site visit

• …….. more documents requested

• Board or Committee meeting

• Outcome and feedback

Notification - timescales

6 July 2015 telephone call advising whg in IDA programme. Scope and documents required to be advised ‘in due course’

15 July email advising immediate IDA work being re-assessed in the light of budget announcements

11 August telephone call advising IDA site visit

12 & 13 October

October 2015

Preparation

Advance preparation: documents

– map to the 5 streams of enquiry

Strategy

Structure

Financial resilience

Risk profile and mitigation

Governance

Document request(s)

Specific document eg Development Strategy

Or

Evidence to show………..

Documents requested (1)

List 1: requested 12 Aug. provide by 19 August

10 issues / topics: 16 documents including

Structure charts

Risk report

Performance report

Report on compliance with Code

Audited accounts

Treasury Policy

Management accounts (latest)

Latest report to Board on the development programme

Documents requested List 2: requested 9 Sept. Provide by 21 Sept

24 issues / topics: 58 documents including

Full set of board papers and minutes

Asset Management Strategy

Board member information including skills assessment and succession planning

Update on assets and liabilities register

Summary and recommendations from most recent governance review

Latest board paper on welfare reform

evidence of Board leading on VFM

Documents requested- the Group Audited accounts for each Group member

Overview of management and reporting arrangements between

parent and each subsidiary

Appointment and removal of board members

Board member details / skills

Employer status of subsidiaries

Asset ownership

Turnover and potential exposure

External borrow and other liabilities

Guarantees provided within the group

Cross default provisions

Governance and reporting arrangements including any legal advice

Overview of whg

Walsall Housing Group Limited

Visionary Investment Enhancing

Walsall Limited (VIEW) whg Trading Company Limited whg Developments Limited whg Treasury PLC Buy For Good CIC

Registration

Details

Registered Provider L4389

Company Limited by Guarantee

Companies House registration number 04015633

Registered Charity 1108779

Exempt charity and registered society

under the Co-Operative and Community

Benefit Societies Act 2014

Registration number 29907R

• Company Limited by Shares

Companies House registration number

05407219

Company Limited by Shares

Companies House registration number

07872595

Public Company Limited By Shares

Companies House registration number

09138070

Company Limited by Guarantee not having a

Share Capital

Companies House registration number

07548143

Purpose Provide housing, accommodation and associated

facilities and amenities

Administer the VAT shelter fund to benefit

local community projects

Carry out commercial and similar activities

on behalf of whg

Carry out development activity on behalf of

whg

Special purpose vehicle for issuing listed

bonds on behalf of whg

Deliver social value through innovative and

collaborative procurement initiatives

Member

Details and

Voting Rights

Three constituent Groups of Members each with

33⅓ voting rights:

Independent Members

Tenant members

Council Member

Members are:

Walsall Housing Group

Members appointed by whg (i.e. Board

Members)

Wholly owned by Walsall Housing Group

Limited

Wholly owned by Walsall Housing Group

Limited

Wholly owned by Walsall Housing Group

Limited

Wholly owned by Walsall Housing Group Limited

Reporting

Arrangements

WHG Board has final approval of its

investment strategy, annual budget, annual

accounts and statement of internal controls

Minutes of all Board meetings are reported

to WHG Board

WHG Board has final approval of its business

strategy, annual budget, annual accounts and

statement of internal controls

Minutes of all Board meetings are reported

to WHG Board

WHG Board has final approval of its business

strategy, annual budget, annual accounts and

statement of internal controls

Minutes of all Board meetings are reported

to WHG Board

WHG Board has final approval of its business

strategy, annual budget, annual accounts and

statement of internal controls

Minutes of all Board meetings are reported

to WHG Board

WHG Board has final approval of its business

strategy, annual budget, annual accounts and

statement of internal controls

Minutes of all Board meetings are reported to

WHG Board

Employer

Status

All colleagues are employed by Walsall Housing

Group Limited

No employees No employees No employees No employees No employees

Getting the documents right Document or evidence of………

Is the information readily accessible?

Does it answer the question / give the assurance sought?

Does it give too little / too much information?

What will it lead to next?

Is it clear? summary / context / timeline / progress to date /further

plans

Have the right colleagues read and checked the documents (including

someone who will read them as the regulator will)?

Submitting the documents

Have a single point of contact

Create document list and cross reference to HCA list

and file names

Upload via NROSH

Preparation – for site visit

• Briefing the Board

• Briefing colleagues

• Briefing notes

• Compiling more documents

• Practice interviews – external support?

• Making the team welcome

IDA Briefing Notes

1. IDA: five key areas 2. Corporate Plan 3. Future strategic direction 4. Governance structure 5. Risk and risk management 6. Treasury management 7. VFM 8. Compliance with regulatory standards 9. Compliance with NHF Code 10. Governance review 11. Asset management 12. Assets and Liabilities register 13. Welfare reform 14. Sources of assurance 15. Work in progress (examples) 16. Stress testing 17. Covenant compliance

Site visit – what to expect

• Well prepared team

– not just the documents sent for IDA but earlier returns too

– will spot any inconsistencies / discrepancies

• Lots of questions – challenging and detailed

• Triangulation –documents / follow up with questions to Board and Exec

• Requests for more documents

The agenda

Received 7 October: on site 12/13 October

Sessions with:

– exec team

– asset management and development colleagues

– finance and treasury management colleagues

– Chair

– member(s) of Governance Review Working Group

– other: to be confirmed (CE, Director of Governance, lead person for VFM)

Key areas

Strategic decision making

Financial strength – Budget / Business Plan

Covenants and golden rules

Treasury management

Risk and stress testing

Assets and liabilities register

Asset management

Development

Community work

Gas servicing performance

Governance review (Chair and Board members)

Follow up

• Clarification and more documents

• Submission of revised Business Plan

• HCA attended Audit and Assurance Committee

meeting ‘observing this meeting to enable us to get a

fuller understanding of how your board structure

operates’

The outcome

• HCA internal meeting– to present findings

• Telephone call to advise of outcome

• Judgment published on HCA website

• Session to feedback and discuss the process for

updating governance and viability straplines

Reg Code Provider Gov Via Type of Publication Status Date Route

L4389 Walsall Housing Group Limited G1 V1 Strapline RJ Published 16/12/2015 In Depth

Assessment

What to expect?

• High level engagement, feels different

• Positive challenge, insightful, learning experience

• Resource intensive for exec, Board & governance

• Burden of proof of compliance lies with RP

• Tailored to each organisation

• Documents, questions, follow-up

• How is the Board assured?

• Looking to triangulate

– Or query inconsistencies

Good luck

For more information contact

Karen Marshall

Karen.marshall@whgrp.co.uk

01922 425705 / 07525 251965