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Updated guidance on the Trusts Reserves Policy | |
In November 2023, the ESFA published updated guidance on the trust reserves policy.
As part of the Academy Trust Handbook, all trusts are required to have a well-developed reserve policy in place which should be documented in the financial statements on an annual basis and detailed as to why set levels of reserves are necessary.
The reserves policy should also be reviewed regularly to ensure it is fit for purpose and adjusted accordingly when there are significant changes to trust operations or potential changes in future plans. | |
What are considered available reserves for trusts Trusts usually deem their available reserves as being any unspent unrestricted funds, plus the balance of unspent general annual grant (GAG). The ESFA does however note that unspent GAG is usually only permitted for the use of the running of the trusts core activities. | | | |
Other trust reserves may also include (these are not considered available reserves): - Restricted fixed asset fund
- Restricted general fund (excluding GAG), where funding has been granted for a specific use by an external party
- Designated funds set aside to meet essential spending which could not be covered by future income. This future spend can be determined internally by the trust
- Commitments that have been provided for a liability in the accounts
Most trusts will hold set levels of reserves for the following reasons: - Operational cashflow
- Contingency (including future change and uncertainty)
- Planned investment and improvement.
- Strategic development and growth
The ESFA does not state a specific level of reserves to be held but it does stipulate that the policy should be sufficient and robust to help mitigate any financial risk that the trust may face in the future.
Trusts are therefore given an element of freedom of how they set a sufficient policy, however, have to be able to demonstrate its suitability through actual financial performance/results.
Trusts will have to consider several factors (but not limited to) when determining a reserves policy which may include the following: - Size of the trust
- Estate strategy
- Future plans
- Upcoming risks and opportunities
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Register for our upcoming webinar: Kreston Academies Benchmark Report 2024 | |
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Rebecca Foy Senior Manager | | | |
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We are currently in the process of producing the 12th annual Kreston UK Academies Benchmark report which will provide insights into the trends within the sector from a survey of over 300 Trusts representing over 2000 schools. The report is conducted by the UK Academies Group of Kreston Global - the global network of independent accountancy firms.
We are delighted to invite you to join our free webinar 'Kreston Academies Benchmark Report 2024', during which our Academy specialists, Darren O'Connor and Rebecca Foy, will look deeper into the detail of the report and issues faced by Academies and Multi-Academy Trusts to provide you with insights into what 2024 may have to hold for the sector. There will be interesting content for everyone, whether you are a Trustee, Governor, Head Teacher, School Business Manager or Director. | |
Date: Thursday 29th February
Time: 11:00am - 11:45am | |
Venue: Your desk (Zoom)
Cost: Free
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If you happen to miss our webinar, we will email you a recorded version. | |
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If you would like to arrange a virtual meeting to discuss your specific circumstances in relation to any of the above, please get in touch with your usual contact within James Cowper Kreston or contact me using the details below.
Rebecca Foy Senior Manager T: +44 (0)7769 735400 | E: rfoy@jamescowper.co.uk | |
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The information in this newsletter must not be relied on as giving sufficient advice in any specific case. | | | |
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