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FRED 50 Draft Abstract 1 Residential Management Companies' Financial Statements

The Financial Reporting Council (FRC) has issued FRED 50 setting out the proposed Abstract for Residential Management Companies' Financial Statements.

Published: 5 August 2013
Comments by: 11 November 2013.


In May 2012, the UITF issued Information Sheet 92 Residential Management Companies’ Financial Statements. The main aim of the paper was to assist residential management companies (RMCs) to determine whether they are acting as principal or agent when undertaking residential service transactions with third parties, and thereby determine which transactions should be recognised in their financial statements. In response to the proposals, ICAEW submitted representation letter 167/12.

The FRC has now responded to the feedback received and on 5 August 2013 issued FRED 50 Residential Management Companies’ Financial Statements.


The main proposals include:

  • A RMC always acts as principal (not agent) when entering into transactions, with third party suppliers, relating to the management of maintenance and provision of services to a property
  • Service charge expenses incurred by the RMC and the income from drawing on the service charge cash received from tenants should be concurrently recognised in the RMC’s profit and loss
  • The cash and other assets arising from service charges received from contributing tenants are held in statutory trust and are not assets of the company. They should not be recognised in the statutory accounts of the RMC but should be disclosed in the notes.

Proposed effective date

It is proposed that the Abstract would be adopted for periods beginning on or after 1 January 2015.