Page 13 - 2018-19_Annual_Report_and_Financial_Statements
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 DIOCESE OF CHICHESTER ACADEMY TRUST TRUSTEES' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2019
Reserves policy
The trustees of the Trust require a reserves policy in order to protect their operations, establishing reserves that protect the operation of the Trust and contribute towards its smooth running. This is good practice and forms part of its overall financial control and governance framework. Levels of reserves which are too high tie up funds which should be spent on current activities.
The reserves policy assists in strategic planning by considering how new projects or activities will be funded, informs the budget process by considering whether reserves need to be utilised during the financial year, or built up for future projects and informs the budget and risk management process by identifying any areas of uncertainty in future income streams.
General reserves are to be maintained at a level so that when added to any current reserves set up by the academy, they are at least 3% of the gross income of the academies. It is anticipated that the 3% will be built up over a three-year period.
General reserves includes unrestricted income and/or grants, and any in-year deficits will be resourced from this fund as far as possible.
The reserves policy sets out the principles that the Diocese of Chichester Academy Trust has adopted and presents a detailed policy for the Trust to abide by.
The Trust has adopted the following principles:
• Reserves must have a specific purpose related to future spending or covering current and future risks;
• The size of the reserves should balance the benefit of current spending with the risk the reserves cover;
• The purpose of the reserves should be transparent and maintain the link with the purpose for which the
income was given;
• The purpose of the reserves should ensure that sufficient resources are available so that unexpected
events can be accommodated without causing current year problems, generating a deficit or cash flow
issues, and;
• Whilst the DfE require reserves to be limited to a level where its use in the future is known, there is an
overriding need to ensure that value for money is achieved.
The following purposes are considered appropriate for a Multi-academy Trust:
• Current reserves that are established to manage known risks which are not insurable or where insurance does not provide value for money;
• Equalisation reserves set up to smooth out irregular spending;
• Specific capital reserves established in order to fund capital expenditure and other investments that
would not be affordable if financed from a single year's funding;
• General reserve to provide for unexpected and unpredictable needs, and;
• Cashflow management reserves used to enable variable cash demands across the Trust or specific
parts of the Trust to be managed.
Further detail is included within the Reserves policy.
The restricted fixed asset fund is £244,340 (2018: £116,221) which consists of carried forward grant income. Details of funds held at the year end are included within the financial review section above.
Disclosure of funds in deficit is also included in the Funds Note in the financial statements (note 18).
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