Academy trusts: management accounts

Management accounts must include:  

• an income and expenditure account 

• a variation to budget report 

• rolling cash flow forecasts 

• a balance sheet every month setting out your financial performance and position 

These areas are reviewed in the next section below.  

It is also important to include commentary within the management accounts: 

• explaining any significant variances between the budget and the actual position 

• noting any common trends 

• highlighting any potential areas of risk 

Academy trusts may also choose to include key financial performance indicators. Tailoring KPIs to your academy trust’s context ensures they reflect what matters most – whether that’s pupil-teacher ratios, staff costs, or attendance trends. 

The CFO/Business Manager should make sure that the format of the management accounts continues to reflect the needs of the trust. There is no set format, however the DfE have published a suggested management accounts layout template.  

To include: 

• the actual results against budget for the month just ended, and variance (value and percentage) 

• the actual results against budget for the academic year to date, and variance (value and percentage) 

• the latest forecast outturn against budget for the full academic year, and variance (value and percentage). 

Trustees may wish to set a threshold beyond which variances are to be explained. 

It is recommended that there are separate income and expenditure accounts for recurrent and capital funds. This is also particularly helpful for CIF and SCA projects.  

DfE guidance states key areas to review: 

• debtors – include a separate ‘aged debtor’ analysis of this figure and that appropriate action is being taken to pursue overdue amounts and assess recoverability. 

• cash at bank – check that the bank balance has not been overdrawn during the period. 

• creditors and accruals – consider invoices received and payable by the academy trust plus commitments made where the invoice has not yet been received. 

• net current assets – check that these are positive, a negative balance is indicative of potential cash flow problems. 

While this list is not comprehensive, it addresses several key considerations. Trusts may wish to identify and assess additional relevant or appropriate areas for review. 

A cash flow forecast serves as a vital instrument for assessing whether the academy trust will maintain adequate liquidity to support its operations over the course of the year. Your cashflow must cover a 12 month rolling period. We often see this missing from management accounts.  

DfE guidance also states that academy trusts should make sure: 

• a cash buffer is being maintained in line with the academy trust’s cash in bank policy 

• cash movements are in line with predictions 

• trends, such as cash balances continually moving away from predictions are investigated and addressed. 

As part of your month end process the following reconciliations should be made:  

• reconcile all bank accounts (including credit cards) 

• reconcile the VAT account 

• reconcile payroll – have the journals for the month being reviewed been signed as authorised 

• calculate necessary prepayments or accruals – have the relevant journals been entered onto the finance systems 

• reconcile the debtors and creditors accounts 

• update the fixed asset register – has depreciation been calculated for the month and a relevant journal been entered onto the system 

Reconciliations should be reviewed and signed off in line with your academy trust’s financial regulations and evidence kept to support this. 

Automating the management accounts process to the greatest extent feasible would streamline the preparation of monthly accounts and significantly reduce processing time. Some finance packages will have an in-built feature which will allow finance teams to produce the relevant reports. Moving to the DfE chart of accounts will also help with better financial reporting and consistency.