Social Housing Decarbonisation Fund Hive – Wave 2 financial reconciliation resource hub

Financial reconciliation confirms the amount of Social Housing Decarbonisation Fund Wave 2 funding spent on eligible costs within the financial year. 

This process provides assurance that reported expenditure (both grant and co-funding) has been spent in line with scheme rules, supports audit readiness and assists with cross-government reporting and auditing obligations.

Your April submissions are particularly important as it serves as the final reconciliation for the previous financial year.

Our February 2026 finance webinar provided additional guidance to support grant recipients through the year two (Y2) financial reconciliation and evidence review (covering 1 April 2024 to 31 March 2025).

Key reminders for grant recipients:

• the year two review is based on a ‘point in time’ position as at 31 March 2025 and evidence must support costs as submitted at that date
• financial reconciliation templates (FRTs) should not be resubmitted to include invoices received after this date, any later adjustments will be addressed at programme closure
• changes arising from project change requests (PCRs) or updates after March 2025 will be managed through the closure process rather than the year two review
• grant recipients should continue to engage proactively with the delivery partner (DP) and respond to evidence queries within stated deadlines

The delivery partner (DP), PwC, will be initiating financial reconciliation and evidence discussions with grant recipients as you close out year two financial reconciliation and evidence checks.

Please keep an eye on your inbox for the relevant template and guidance to support this activity and continue to proactively engage with the DP when evidence checks are required.

Please liaise with your SPOC as your first port-of-call.

If your SPOC is unable to support your query, the department is happy to arrange one-to-one calls for further support. 

Requests for additional support from the department should be made via your SPOC. 

Responding to evidence requests

Once your financial reconciliation template (FRT) has been validated, a sample of transactions will be required [HS1] for evidence review.

Standard timelines are indicated below

• initial evidence return: within five working days (flexibility available if requested in advance)
• follow-up clarification queries: within three working days

If you need to make changes or submit missing documentation, please contact your SPOC or the delivery partner as soon as possible.

Overview

The co-funding reconciliation and evidence review for 2025/2026 spend will begin once your:

• year two (Y2) reconciliation has been completed and signed off, and
• project has reached closure and all co-funding spend has been incurred

Once both conditions are met, grant recipients will receive the co-funding financial reconciliation template (FRT) and supporting guidance.

A minimum of four weeks will be provided for submission.

Scope of the year three (Y3) co-funding review

Co-funding reconciliation will cover:

• the financial period (1 April 2025 to project completion date), and
• all co-funding expenditure incurred during this period

If no co-funding spend occurred during year three, grant recipients should notify the delivery partner as soon as possible so that reconciliation requirements can be confirmed. 

Preparing for your submission

When completing the co-funding financial reconciliation template (FRT):

• only include co-funding expenditure incurred within the year three reconciliation period
• do not include adjustments relating to earlier financial years, these will be managed through the programme closure process
• estimated values may be submitted where invoices have not yet been received, supported by appropriate evidence (for example valuations), any subsequent adjustments will be addressed at closure
• administration and ancillary (A&A) and capital costs must be clearly separated and recorded on individual transaction lines
• ensure totals reconcile to monthly reporting or provide a clear explanation where differences arise

Evidence expectations

Following submission of the FRT:

1.    A sample of transactions will be selected for evidence review
2.    grant recipients will be asked to provide supporting documentation within five working days
3.    any clarification queries should be addressed within three working days

Providing complete responses and addressing all queries in full will help avoid delays to closure.

Supporting evidence must:

• clearly describe the service or works delivered
• reconcile to the transaction listing (supplier, value and description)
• demonstrate eligibility and correct categorisation
• include a clear audit trail where values do not directly match

Typical supporting evidence includes:

• invoices and payment certificates
• valuations (with third-party confirmation)
• internal staff cost records (for example timesheets and payroll evidence)

Providing complete responses and addressing all queries in full will support timely closure of the review.

• Including ineligible costs (e.g. costs from outside the financial year or reclaimable VAT)
• Missing evidence for sampled transactions
• Misclassifying costs between capital and A&A
• Failing to explain changes from earlier submissions

Taking time to review your submission before sending it in can help avoid delays later.

Additional issues identified during year two review:

• valuations submitted without third-party confirmation (for example supplier email or matching invoice)
• mixed-cost invoices without explanation of the Social Housing Decarbonisation Fund (SHDF)-eligible portion
• incorrect categorisation between administration and ancillary (A&A) and capital costs
• missing supporting detail for internal staff costs (for example time apportionment or pay calculations)

Where invoices include multiple cost types, use the narrative column within the FRT to explain the eligible amount being claimed.