UHY Hacker Young | Chartered Accountants

Are your monthly management accounts in line with the new 2019 Financial Handbook?

10 July 2019

The 2018 Financial Handbook (effective from 1 September 2018) requires all trusts to produce monthly management accounts which must be shared with the chair of trustees every month irrespective of trust size, and also with the other trustees at least six times a year.

The format of the management accounts must be flexed to the needs of various users and should contain summaries and explanations where appropriate. These requirements can be burdensome to some trusts, especially those smaller in size.

New Handbook effective from 1 September 2019

The 2019 Financial Handbook was released last week and will be effective from 1 September 2019. Read our summary of the key changes here. The new Handbook covers more on the requirements for producing management accounts including what they contain:

  • Section 2.18 – The trust must prepare management accounts every month setting out its financial performance and position. Managers must take appropriate action to ensure ongoing viability.
  • Section 2.21 – The format of management accounts must include an income and expenditure account, variation to budget report, cash flows and balance sheet.
  • Section 2.23 – Where the board has concerns about financial performance, it should act quickly, ensuring the trust has adequate financial skills in place.

The new Handbook requirements should prompt a review of your processes for the delivery of management accounts. Most trusts are accustomed to monthly income and expenditure reports and variation to budget reports, but are these trusts now geared up for timely delivery of cash flows and balance sheets, without compromising on quality?

Consistent, clear and concise

Management accounts need to be presented in a consistent, clear and concise way to the key decision-makers of the trust. It is important to note that many of the key decision-makers will not have a financial background, so the management accounts pack should be presented in a way that users will understand. The aim of the management accounts is to assist the key decision-makers in the financial monitoring of trust activities, to ensure the trust is being run in a financially viable way.

Management accounts packs should contain summaries of year to date financial performance as well as projections to assist decision making in the future. They should present detail on areas of concern to the board as well as areas of interest or projects for the future.

Late delivery can be harmful

Management accounts must be delivered in a timely manner to the key decision-makers. Late delivery or out of date information can be harmful to the trust, so trusts should review their procedures now to see if they need adapting to accommodate the new Handbook requirements.

UHY can help you review and adapt your current processes for the delivery of management accounts.  We also assist you in building a monthly management accounts reporting package. We sense-check your reports before they are delivered to the trustees, or we can provide training in this area for your finance team or key decision-makers.

For further information on this or any other aspect of audit or taxation, please contact me or your local UHY specialist.

Alternatively, fill out our Contact Form here.