With budgets becoming ever tighter, cash flow will be a key focus for Trusts and this has been recognised and further encouraged by the Education & Skills Funding Agency (ESFA). Trusts must apply rigorous and robust management of cash incorporating close monitoring.
This has led to a change in emphasis in the Academies Financial Handbook 2018 from should to must in many areas. A Trust must show that it is managing its cash position appropriately. If there are concerns about financial management, the ESFA may require a Trust to report on its cash position on a more regular basis.
The AFH 2018 now states that each Trust must prepare management accounts on a monthly basis setting out it’s financial performance and position, with supporting budget variance reports and cash flow forecasts with sufficient information to manage cash in bank, debtors and creditors.
In addition to this, management accounts must also be shared with the Chair of Trustees on a monthly basis irrespective of the size of the Trust, and with the other trustees six times a year. The board must ensure appropriate action is being taken to maintain financial sustainability including addressing differences between budgeted versus actual.
Key financial performance indicators (or KPIs) are now to become both standard and reportable with immediate effect as it is now a must under the Academies Accounts Direction 2018. Look out for our next blog on this area.
For the majority of trusts this will be new territory with upskilling of both staff and governors required. If you think we might be able to assist with the new changes for your Academy Trust, please contact Doug Skinner at doug.skinner@drbsas.co.uk. We have experienced and qualified staff and can offer a full range of services from accountancy based support as well as training for governors/trustees, ensuring your Academy Trust is both compliant and fully aware of any potential future risks.
