Feedback from ESFA continue to highlight that trusts are relying on the standard wording and templates included within the model of set of accounts. Is now the right time to start thinking of preparing the report to avoid that last minute rush to get the financial statements finished for meetings and filing deadlines?
Key elements of the trustees' report
It is a requirement of the Academies Accounts Direction (1.17) that a trustees reporting is included and should support the financial statements. The trustees’ report must cover off certain elements and should include the following:
- Reference and administrative details
- Information on the structure, governance and management of the academy trust
- constitution of the academy trust
- members liability
- trustees’ indemnities
- method of recruitment and appointment or election of trustees
- policies and procedures adopted for the induction and training of trustees
- organisation structure
- arrangements for setting pay and remuneration of key management
- trade union facility time
- related parties and connected charities and organisations
- engagement with employees (including disabled persons) (if average number of employees are over 250)
- engagement with suppliers, customers and others in a business relationship with the academy trust.
- Objectives and activities
- objects and aims
- objectives strategies and activities
- public benefit
- A strategic report
- key performance indicators
- Going concern
- Promoting the success of the company (section 172) *large only
- A financial review
- overview of the academy financial year
- reserves policy
- investment policy
- Principal risks and uncertainties
- Fundraising
- Streamlined energy carbon report * large only
- Plans for future periods
- Funds Held as custodian on behalf of others, and
- A disclosure to the auditor.
Updated guidance on reserves policy for academy trusts
Further guidance was issued in respect of the trust’s reserves policy published in the Academies Trust Handbook, emphasising that trusts’ reserves policy needs to include a clear plan for managing reserves, The board of trustees must:
- ensure that financial plans are prepared and monitored, satisfying itself that the trust remains a going concern and financially sustainable
- take a longer term view of the trust’s financial plans consistent with the requirement to submit three-year budget forecasts to ESFA
- set a policy for holding reserves, and explain it in its annual report, including a clear plan for managing reserves.
ESFA Good practice guide: understanding and managing reserves
The ESFA Good practice guide on Academy Trust Reserves is an excellent resource and we would recommend that all Accounting Officers, Trustees and Chief Financial Officers read this guidance if they have not done so recently. This helpful guide defines reserves, why they are needed, and sets out the regulatory requirements. It also helps boards finalise a reserves policy and poses questions that boards may wish to consider, to ensure their trust is using its funding adequately for current and future pupils.
The end of the guide includes some further useful links, including one to a Charity Commission publication ‘Charity reserves: building resilience’. Our Insight article on 20 May 2024 explores some of the thoughts around reserves and may help you to understand the ESFA guide, and it explains how we have seen some clients approached by the ESFA and asked to justify the level of reserves they are holding.
The Academies model accounts are a great starting point and include a lot of guidance of what should be included.
*large refers to academy trusts if two or more of the following apply in two consecutive financial years:
- gross annual income over £36m
- gross (total) assets over £18m
- more than 250 employees
The next step
If your school requires support, please get in touch with Kimberly Burton on k.burton@uhy-manchester.com or your usual UHY academy adviser.
