The most significant changes relate to budget monitoring. The Academies Financial Handbook now states that the trust must prepare management accounts every month setting out its financial performance and position. This needs to include:
- Budget variance reports
- Cash flow forecasts
- Sufficient information to manage cash, debtors and creditors.
Management accounts must also be shared with the chair of trustees every month irrespective of the size of the trust, and with the other trustees six times a year. The board must consider these when it meets and ensure appropriate action is being taken to maintain financial viability, including addressing variances between the budget and actual income and expenditure.
The format of management accounts should be adjusted to be suitable for different users, including summaries and supporting narrative as appropriate.
Trusts must also select key financial performance indicators and measure their financial performance against them regularly, including analysis in the annual trustees’ report. Where the board has concerns about financial performance, it should consider whether additional financial reporting is appropriate.
View the Academies Financial Handbook here.
Contact us today for assistance in meeting these new requirements.