Consultations, consultations - now it's the turn of the Accountants

Gordon Whelan, Managing Director of Haines Watts Service Charge looks at what we can expect to see in service charge reporting.

Amidst the plethora of government consultations to be concluded in 2019 we should expect to see progress on a revision to the best practice accounting guidance note, TECH03/11. TECH03/11 was released in 2011 and since that time the residential property management sector has changed beyond recognition. A revision to the guidance will give the accountancy profession the opportunity to highlight the important role that the reporting accountant plays in the sector

Meaningful consultations

Since the release of TECH03/11 in 2011, revisions have been made to most of the key documents that regulate the behaviour of professionals operating in the sector. These include the RICS Code of Practice, ARHM Code of practice and ARMA Q. All of these documents refer to TECH03/11 within them and in so doing they inadvertently give TECH03/11 an elevated status that was not foreseen at the time the 2011 guidance was issued. TECH03/11 has undoubtedly raised standards of service charge reporting but it now needs to be brought up to date to keep pace with the many changes in the sector.

In 2018 the Institute of Chartered Accountants in England and Wales (ICAEW) set up a working party to look into this issue and work has been going on behind the scenes to update and redraft the existing guidance note. The aim is to release an exposure draft for consultation early in 2019.

If previous consultations are anything to go by then the consultation process will be comprehensive and not without controversy. Who can forget the furore caused by the consultation on accounting for Residents’ Management Companies (FRED50)? It is hoped that the process will not get bogged down in controversial technical matters that are of little relevance to the rest of the sector. The goal of the process must to be produce a document that guides accountants, provides a framework for them to engage in a meaningful way with all interested parties in the sector and is consistent with the other codes of best practice.

Wish list

If 2019 is to be the year for TECH03/11 then the icing on the cake would be a number of measures to ensure the robust application of the guidance note. Our wish list at Haines Watts for 2019 includes the following measures,

  1. A statutory right for all lessees to demand a TECH03/11 report from landlords with significant penalties for any landlord failing to meet the demand within a reasonable timescale.
  2. 100% compliance with TECH03/11 for all service charge reports attached to service charge accounts.
  3. A greater understanding in the courts of the role of TECH03/11 and its importance. The guidance note should be the first point of reference for FTT hearings that involve service charge reporting issues.
  4. For the sector to move away from the perception that service charge reporting is a low value process and towards an appreciation that the reporting accountant has a key role to play in ensuring transparency and providing peace of mind.


Good service charge reporting is essential to effective property management and therefore it is important that the process to revise TECH03/11 results in a guidance note that is fit for purpose.

Gordon Whelan is the Managing Director of Haines Watts Service Charge who work with Managing Agents, Surveyors, Landlords and Residents.

Reviewed: July 2019