Academy Trust Year-End Guidance: Trustees’ Reports, Audit Preparation and Reserves Management

Academy Trust Financial Reporting: Trustees’ Reports, Audit Preparation and Reserves Strategy

Financial reporting for academy trusts involves more than simply producing compliant accounts. It requires trustees and finance teams to demonstrate strong governance, financial stewardship and long-term sustainability.

Three areas frequently determine how smoothly the reporting process runs and how confidently regulators assess a trust’s financial management:

the quality and timing of the trustees’ report
preparation of the trial balance ahead of audit
the management and explanation of reserves

Each of these areas plays a distinct role in supporting transparency and accountability within academy trusts. Regulators including the Department for Education rely on these disclosures to understand how trusts manage public funds and plan for future financial pressures.

When these elements are well prepared — with clear governance reporting, a robust financial close process and a well-explained reserves strategy — trusts can reduce audit delays, improve transparency and provide confidence to stakeholders.

Key Takeaways for Academy Trust Trustees and Finance Teams

The trustees’ report is more than a compliance document — it is a key governance and transparency statement reviewed by regulators and stakeholders.
Preparing the report early in the financial reporting cycle helps ensure accurate governance disclosures and reduces audit queries.
A well-prepared trial balance significantly improves audit efficiency and reduces delays during the accounts process.
Academy trusts should complete year-end adjustments before the audit begins, including accruals, prepayments and depreciation.
Maintaining appropriate financial reserves supports long-term sustainability, allowing trusts to manage capital investment, risk and unexpected financial pressures.
Clear explanation of reserves policy and future plans within the trustees’ report helps demonstrate strong financial stewardship.

This three-part academy trust video series provides practical guidance on year-end reporting, audit preparation and financial sustainability.

Designed for trustees, CFOs and academy trust finance teams, the sessions explain:

How to prepare a compliant Trustees’ Report under the Academies Accounts Direction
How to ensure your trial balance is audit-ready and avoid audit delays
How to manage academy trust reserves responsibly and transparently

The focus throughout is on governance, regulatory compliance, transparency and long-term financial resilience.

Each video addresses common challenges trusts face and provides clear, actionable steps aligned with Department for Education (DfE) and ESFA expectations.

Trustees’ Reports -Timing and Templates

Carly Pinkus and Ed Passmore discuss why the Academy Trust Trustees’ Report is far more than a compliance requirement. It is one of the key documents reviewed by the Department for Education (DfE), the ESFA, auditors and other stakeholders to understand how a trust is governed, how funds are being used and what its future plans look like.

They explain how trusts can approach the report more effectively – starting preparation early, using templates aligned with the Academies Accounts Direction (AAD) and ensuring the report clearly reflects the trust’s strategy, governance and financial stewardship.

Reserves – Getting the Balance Right

Carly Pinkus and Ed Passmore explain why reserves are an important measure of financial sustainability for academy trusts.

While trusts must prioritise spending on education and pupil outcomes today, they also need to plan for future pressures such as capital investment, inflation and unexpected costs.

Carly and Ed discuss how trustees can approach reserves in a balanced and practical way – considering sector benchmarks, linking reserves to risk management and long-term strategy, and explaining the trust’s approach clearly in the Trustees’ Report so regulators, auditors and other stakeholders understand how financial resilience is being managed.

Getting Your Trial Balance Ready for Audit

Carly Pinkus and Nayim Rahman discuss why preparing a clean and accurate trial balance is one of the most important steps in ensuring a smooth academy trust audit.

A well-prepared trial balance helps reduce delays, minimise last-minute adjustments and gives trustees confidence that the numbers are complete before accounts are finalised.

They talk through the most common issues that slow audits down such as unreconciled control accounts, missing year-end adjustments and incomplete fixed asset records and share practical steps finance teams can take to prepare early and keep the year-end process on track ahead of the 31 December ESFA submission deadline.

Academy trusts must produce audited annual accounts under the Academies Accounts Direction, which include governance reporting, financial statements and strategic commentary.

Why This Matters

Financial reporting demonstrates how academy trusts manage public funding and plan for long-term sustainability.

Key Consideration

Preparation across governance reporting, financial close and reserves management improves transparency and reduces audit risk.

Who This Applies To

Academy trusts
Multi-academy trusts
Trustees and governors
Academy trust finance directors
Finance teams responsible for year-end reporting

Trustees’ Reports: Governance and Transparency

The trustees’ report is often viewed as a compliance requirement within the accounts process. In practice, it is one of the most important narrative documents in academy trust reporting.

It provides a clear explanation of:

the trust’s governance structure
how public funding has been used
educational priorities and strategic objectives
financial sustainability and future plans

For regulators and stakeholders, the trustees’ report is often the first document reviewed when assessing the trust’s performance and governance.

Why early preparation matters

Trustees frequently balance governance responsibilities alongside other professional commitments. As a result, the trustees’ report is sometimes drafted late in the audit process.

This approach can lead to:

incomplete disclosures
outdated governance information
inconsistencies with the financial statements

Starting preparation earlier – ideally alongside the year-end close —allows trustees to properly consider strategic messaging and ensure that governance decisions and future priorities are accurately reflected.

Using compliant templates

The trustees’ report must follow the requirements of the Academies Accounts Direction, which is updated annually.

Using a structured template (we provide a tailored template to each of our academy audit clients annually) aligned with the Academies Accounts Direction helps ensure required disclosures are included while allowing trustees to provide additional narrative explaining the trust’s position and impact.

Emerging disclosures

Some academy trusts are now considering additional disclosures beyond the standard framework, including sustainability reporting.

Under the Streamlined Energy and Carbon Reporting Regulations 2018, organisations must report energy and carbon information if they meet two of the following thresholds:

turnover or income above £36 million
balance sheet assets above £18 million
more than 250 employees

There is also a low-energy exemption for organisations using less than 40,000 kWh annually.

Alongside this, education settings are increasingly expected to appoint sustainability leads and maintain climate action plans.

Trial Balance Preparation: Avoiding Audit Delays

A well-prepared trial balance significantly improves the efficiency of the audit process.

Academy trusts have a financial year end of 31 August, with audited accounts typically required to be submitted to the Education and Skills Funding Agency by 31 December.

As the year end coincides with the Summer holiday period, finance teams may experience reduced capacity, which can create challenges when preparing for audit.

Common causes of audit delay

Three issues frequently cause delays during academy trust audits:

Unexpected revisions to the trial balance
Accounting adjustments not posted before audit
Control accounts that have not been reconciled

These issues can lead to additional queries from auditors and increase the time required to finalise accounts.

A strong financial close process

A robust year-end close process should include:

reviewing income and expenditure for completeness
reconciling key balance sheet accounts such as bank, VAT, debtors and creditors
ensuring the trial balance is final before the audit begins

Completing these steps early reduces the need for late adjustments during the audit.

Key year-end adjustments

Finance teams should ensure that standard year-end adjustments are completed before the audit begins, including:

accruals – ensuring costs are recognised in the correct accounting period
prepayments – allocating payments across the correct financial year
depreciation – posting year-end depreciation entries
fixed asset register updates – to reflect all assets held by the trust as at the relevant year end

Delays in posting these adjustments can significantly slow the audit process.

Trusts should also review the treatment of capital grants such as CIF funding to ensure income recognition aligns with the relevant conditions.

Managing Reserves: Balancing Sustainability and Investment

Reserves are one of the most important indicators of financial sustainability within an academy trust.

They allow trusts to manage financial risks, plan capital investment and respond to unexpected challenges.

However, reserves can also attract scrutiny if stakeholders believe funds should instead be used to support pupils immediately.

The balancing act

Trustees must balance two competing priorities:

investing in educational outcomes today
maintaining financial resilience for the future

Trusts face a range of financial pressures, including:

building maintenance and capital expenditure
inflationary pressures on operating costs
increases in staff costs
unexpected structural issues in buildings

Recent building safety concerns in the education sector have demonstrated why maintaining appropriate financial reserves can be essential.

Reserve benchmarks

Many academy trusts consider a reserves range of 520% of income as a general acceptable range.

However, this is not a fixed rule.

Different trusts may require different reserve levels depending on factors such as:

size and complexity of the trust
planned capital projects
financial risk exposure
long-term strategy

Trusts should also analyse reserves by separating ring-fenced funds for specific projects from general reserves.

Communicating reserves clearly

The trustees’ report provides an opportunity to explain the trust’s reserves policy and the rationale behind reserve levels.

Where reserves are higher than sector averages, trustees should clearly explain the reasons — for example planned capital investment or risk management considerations.

Transparent communication helps demonstrate strong financial stewardship.

Common Reporting Risks

Academy trusts preparing their annual accounts should be aware of several common issues.

Copying previous reports without updating content

Governance structures, priorities and financial conditions may have changed since the previous year.

Missing governance updates

Changes in trustees, committee structures or governance arrangements should be reflected accurately.

Incomplete disclosures

New reporting requirements or emerging expectations may require additional disclosures.

Failing to update the trustees’ report appropriately can result in unnecessary questions from regulators and stakeholders.

Frequently Asked Questions: Academy Trust Financial Reporting

What is the purpose of a trustees’ report for academy trusts?

The trustees’ report explains how an academy trust has governed its operations, managed public funding and delivered its strategic objectives during the year. It provides transparency for regulators, stakeholders and the public and forms part of the trust’s annual accounts prepared under the Academies Accounts Direction (AAD).

Who reviews academy trust trustees’ reports?

Trustees’ reports are reviewed by regulators including the Department for Education, as well as auditors, trustees, governance boards and other stakeholders.

When must academy trusts submit audited accounts?

Academy trusts have a financial year end of 31 August. Audited accounts must normally be submitted to the Department for Education by 31 December following the year end, via the online portal.

What should be included in an academy trust trustees’ report?

A trustees’ report should explain the trust’s governance structure, objectives, financial performance, reserves policy and future plans. It should also describe how the trust manages risks and uses funding to deliver educational outcomes.

When should academy trusts start preparing their annual accounts?

Preparation should begin before the audit starts, ideally during the year-end close process immediately following the 31 August year end. Early preparation helps ensure balances are reviewed, adjustments are posted and the trial balance is final before the audit begins.

Why is trial balance preparation important for academy trust audits?

A well-prepared trial balance helps auditors verify financial information efficiently. It reduces the need for late adjustments and helps ensure accounts can be finalised within the required reporting timeline.

What adjustments should be posted before an academy trust audit?

Common year-end adjustments include:

Accruals to ensure costs are recorded in the correct accounting period
Prepayments for expenditure paid in advance
Depreciation on fixed assets
Updates to the fixed asset register
Reconciliation of control accounts such as bank, VAT, debtors and creditors
Posting these adjustments before the audit begins helps reduce delays and audit queries.

Why do academy trust audits sometimes take longer than expected?

Audit delays typically occur when financial information changes during the audit process. This may include revisions to the trial balance, unreconciled control accounts or accounting adjustments that have not been posted before the audit begins.

A structured year-end close process helps minimise these issues.

What reserve levels are typical for academy trusts?

Many academy trusts operate with reserves in the region of 520% of annual non-capital income, although the appropriate level varies depending on the trust’s circumstances, planned capital expenditure and risk profile.

Reserve levels should be considered alongside long-term financial strategy rather than relying solely on sector benchmarks.

How should academy trusts explain their reserves policy?

Trusts should explain:

Why reserves are held
The level of reserves considered appropriate
How reserves support financial sustainability
Any planned use of reserves for future projects
Clear explanation within the trustees’ report helps demonstrate responsible financial stewardship.

Do academy trusts need to report carbon emissions?

Some larger trusts may be required to report energy use and carbon emissions under the Streamlined Energy and Carbon Reporting Regulations 2018 (SECR) if they meet thresholds relating to income, assets or employee numbers.

Even where this is not mandatory, sustainability reporting and climate action planning are becoming increasingly relevant across the education sector.

What are common mistakes academy trusts make in their trustees’ reports?

Common issues include:

Copying previous reports without updating information
Failing to reflect changes in governance structure
Incomplete disclosure of reserves policy or future plans
Inconsistencies between narrative reporting and financial statements
These issues can lead to additional queries from regulators or auditors.

How can academy trusts reduce delays in the annual audit process?

Trusts can reduce audit delays by:

Completing a structured year-end close process
Reviewing balances and posting adjustments early
Ensuring control accounts are reconciled
Confirming the trial balance is final before the audit begins
Preparing governance disclosures in advance
Early preparation helps ensure the audit progresses efficiently and accounts can be approved within required reporting timelines.

Next steps

If you would like tailored guidance on preparing your academy trust Trustees’ Report, improving audit readiness, or reviewing your reserves strategy, our education specialists are here to help.

We work closely with trustees, CFOs and finance teams to strengthen governance, ensure compliance with the Academies Accounts Direction and support confident, sustainable financial decision-making.

Get in touch to discuss your trust’s year-end planning and explore how we can support you with practical, sector-focused advice.