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What is Viability?Financial viability is about being able to generatesufficient income to meet operating paymentsand debt commitments as they fall due, whilemaintaining service levels.The Code requires that AHBs be financially viable andhave adequate resources to meet both current andfuture business and financial commitments. The IrishState has invested and is continuing to invest in thegrowth of social and affordable housing for those whoneed it. We must ensure this investment is managedeffectively and that homes are safeguarded. Once AHBshave signed up to the Regulation Code, they havecommitted to demonstrating financial viability. Thedetail of how the Regulation Office assesses financialviability (both short term and longer term viability), whatinformation is required from AHBs, and the purpose ofgathering this information is outlined below.6.1 Short-term viabilityIn assessing short-term viability, the Regulator isestablishing whether an AHB has access to sufficientcash as required. This is assessed by monitoringliquidity and cash flow which we do by reviewingthe following:n Audited financial statements of the AHB for theyear just ended, as well as auditor’s managementletter (and where necessary the AHBs response tothe management letter)n Annual Financial Returns (AFR). For Tier 3 AHBs,the full AFR requires 4 years information, being thelatest audited financial statements (historic), thecurrent year’s information and two years forecasted.For Tier 2 AHBs the AFR requires details of latestaudited financial statements. Tier 1 AHBs will notbe required to complete an Annual FinancialReturn but rather will submit detailed auditedaccounts containing comprehensive income andexpenditure account, balance sheet and cash flown Cash from operations (it is expected each AHBshould be cash-generative and it is a cause forconcern if this is marginal or negative)n Sources of income, including level of relianceon fundraisingn Liquidity – i.e. measuring the funds readilyavailable to meet current liabilitiesn Uses of cash as per Cash Flow Statementsn Whether there is a reliance on an overdraft“ Financial viability is about being able to generatesufficient income to meet operating paymentsand debt commitments as they fall due, whilemaintaining service levels.”The Financial Standard and Assessment Framework15