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Management accounts

26 Feb 2019 | by Sarah Chambers


It’s an AFH requirement to produce monthly management accounts, to be shared with the Chair of Trustees each month and the rest of the Board six times a year. But what to include?








The AFH states they should cover:

  • Financial performance and position
  • Budget variance reports
  • Cash flow forecasts
  • Sufficient information to manage cash, debtors and creditors
  • Summaries and supporting narrative as appropriate
  • Key financial performance indicators


Your management accounts are your number 1 tool for managing your Trust finances and for enabling Trustees to meet their governance responsibilities and hold management to account. Let the numbers tell the story. But how?

Summary year to date income and expenditure:  finance packages generally include income / expenditure reporting. As a minimum, include actual year to date results compared to your budget for the whole Trust. Personally, I find month data less useful. Consider your readers’ needs: how numerate are they, and what level of detail is appropriate?

Needs vary depending on the size and complexity of the Trust. Trust level information is appropriate for your Board; heads of school need operational detail to enable us to understand trends and take corrective action where necessary. Check your finance package allows you to quickly and easily present different levels of data; or allow the users to access it directly.

A word of warning: check the data in the finance system before publication. Ensure you understand the data and the variances – a rigorous month end process and published timetable will help you with this.


Include Narrative explanations of key variances against budget, either as notes against the figures, or in a separate written document (easily updated each month once you have a template). Make sure that you add value with your commentary. It’s not enough to just state what the variance is. Think:

  • adverse or favorable variance?
  • timing difference, or will this variance still be around at the end of the year?
  • change in assumptions?
  • Any implications for next year’s budget?
  • corrective action, if any?
  • Impact of any changes, year to date and full year?
  • Variances on a school by school basis?


Focus on the key variances and keep your commentary punchy. Bullet points are fine.

Having gained an understanding of your variances, you could ask, “So what?”. Include forecast income and expenditure to the end of the year. This will help users understand the impact of our year to date position and will change over time. Are we really going to breakeven this year, and what’s the impact on reserves, and next year, if we don’t? Update your budget during the year (re-forecast) so that you and your leadership team have an idea of what the year end position will be. Is there scope to do the “nice to haves”? Or does something need to be trimmed?


Take care when using forecasts derived by your finance system. They are often based on actual YTD plus budgets for the rest of the year. If your budget or phasing is out of date, they can be meaningless. Scrutinise the forecast and adjust if necessary.

Forecast income and expenditure should cover revenue and capital expenditure. If you have large capital projects, consider more detailed reporting – including looking at cost to complete.

Cashflow forecasting is a must. It doesn’t have to be complicated – a simple spreadsheet forecasting income and expenditure month by month is enough. Reconcile it back to your actual bank balance and make sure you include any big one offs (e.g. CIF income or capital project expenditure). Include summary information on debtors and creditors to support the movements you show, consider aged debtors and creditors reports where significant. Comment on any significant changes.

Key Performance Indicators: many budgeting tools will calculate financial KPI’s such as % expenditure on staff / leadership, pupil teacher ratios and even integrated curriculum financial planning (ICFP) data such as cost per pupil / lesson. These could be included in your summary financial information or narrative. They can be helpful in identifying trends over time and benchmarking your Trust against others.


Other information: some suggestions

  • Key budget assumptions e.g. pupil numbers vs actuals

  • summary balance sheet information: good practice, although not currently a requirement but a central part of the accounts and readily available from your finance system. Compare to the last set of audited balance sheet figures.

  • Qualitative data such as key contracts for renewal in year – as these may impact your forecast / decisions.


Happy to help with any queries. More advice is available on the ISBL website. Good luck!