housing associations BRF bostadsrättsförening bostadsrätt tenant-owned apartment tenant ownership

A Swedish governmental investigation proposes a new standard for financial statements for housing associations. I have written an article in Swedish about it here Bostadsrättsföreningar får nya redovisningsregler.

A draft has been sent for comments until October 1, 2017. The changes are to be in force for fiscal years starting January 1, 2019 and later, according to the draft.


Today’s Standards Not Suitable for Housing Associations

In Sweden housing associations is a very common form of living. The association owns the building and supplies the members with tenant-owned apartments. The ownership is transferred by selling and buying member shares in the association.

Since a membership share can be quite pricey, at least in prime locations, the investigations has focused on improving the financial information that is provided by the housing associations in their financial statements.

In Sweden we have two general standards for financial statements, K2 for smaller entities and K3 for larger entities and groups. There is no specific standard for housing associations.

The draft includes many changes in several areas, but in the accounting areas the main changes are these.

  • Mandatory component depreciation
    • Affects the income statement more even, when major maintenance is accounted for as changes of components rather than large expenses at once
    • Today component depreciation is prohibited in K2 but mandatory for larger entities and groups applying K3
  • Mandatory cash flow statement
    • Today a cash flow statement is voluntary in K2 but mandatory for larger entities and groups applying K3
  • Mandatory additional financial ratios applicable for housing associations, such as
    • Annual fee/square meter
    • Depreciation and maintenance deposition/square meter
    • Debts/square meter
    • Interest sensitivity
    • Energy expenses/square meter

The changes are proposed for all housing associations, regardless of their sizes.

The draft doesn’t include detailed regulations for the financial statements, but proposes that the governmental body The Swedish Accounting Standards Board (Bokföringsnämnden, BFN) shall produce a new standard for financial statements of housing associations.


My Books

My book “Performance and Income Planning” (Resultat- och inkomstplanering) from 2015 relate to housing associations in two sections.

  • Corporate: Evaluate the depreciation plans and methods regularly in your performance planning, especially housing associations have frequently made bad assumptions historically (chapter 3.1 Balance Sheet, page 34-36)
  • Private: Choose your housing association wisely, so you’ll get a low cost living with high quality as a part of your income planning and retirement planning (chapter 5.5 Overall Issues, page 155-156)

My book “Real Estates” (Fastigheter) from 2016 relate to housing associations in numerous sections, but particularly here.

  • Corporate: Component depreciation is described, discussed and mentioned as a preferred alternative, with a high number of examples and references (chapter 4 “Depreciation”, section 4.1.3 “Component depreciation”, page 135-145)

Lectures / Föreläsningar

Keep yourself updated by education! I give lectures on legislation and standards for accounting, as well as other economic topics.

Håll dig uppdaterad genom att gå på kurs! Jag håller föreläsningar om lagstiftning och K-regler för redovisning, liksom om andra företagsekonomiska ämnen.

  1. Choose lecture / Välj föreläsning (Publications & Lectures)
  2. Book / Boka (Contact)
  3. And-or buy the books! / Och-eller köp böckerna! (Publications & Lectures)

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Resultat- och inkomstplanering Fastigheter Bulletinen Svensk Skattetidning SvSkt Pågående arbeten Tantiem

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