In my previous post, I provided some practical guidance on the compliance audit process and what you need to do to set the wheels in motion. In this blog, we look at the benefits of demonstrating compliance and potential cost of not doing so.
The cost of non-compliance
Let’s deal with the negative part first!
Where non-compliance is identified, Homes England assigns breaches based on the severity of the non-compliance – these are classed as low, medium and high severity. The number and level of breaches feed in to the overall provider grade of green, amber or red. An amber or red breach signifies a higher risk and pretty much guarantees that you will be audited in the following year.
A serious misapplication of funds could also result in the grant being reclaimed.
An amber or red audit is also likely to incur the wrath of the Chief Executive and Chair of the Board as the report lands on their respective desks. It’s not where you want to be!
The benefits of compliance
But the positive side is so much more than the opposite of the negative side. Of course, it’s good to get over the line with a clean bill of health and you should receive acknowledgement of a job well done from those higher up.
The compliance audit exists to ensure that public money is used for its intended purpose but essentially it is underpinned by and helps to drive sound contract management practices and principles. These should apply to all schemes and not just those selected for audit – in any case, by the time a scheme has been selected, it’s often too late to set matters straight.
Having a signed and dated contract in place is important in any case. Ensuring that you have a valid valuation in place that supports your financial appraisal is fundamental, especially where schemes are only deemed as marginally viable. Homes England are seeking to protect their investment, but it is your organisation that is making the larger investment. And having a clean scheme will make charging those properties so much easier.
So having a structured framework for delivering development projects that protects your organisation’s investment as well as meeting Homes England requirements is eminently sensible. It’s all about having your ducks in a row!
I’m sure you will still be checking those files prior to the audit, but hopefully in a calm and measured way!
How can TIAA help?
At TIAA, we have over 26 years of undertaking internal audit in the social housing sector and over 15 years of delivering independent compliance audits. We understand development and the importance of meeting the audit requirements. We can guide you through the set-up and audit process, helping you to demonstrate your compliance.
Please Contact us to find out more.
The first and third blogs in this series are available below.