Treasury management is a central function of the CLF and is managed by the Finance Operations team led by the Deputy Finance Director. This includes the management of all cash resources and funding requirements of the CLF and its subsidiary companies and the control of associated risks.
The treasury management policy considers the following requirements and principles:
This policy is reviewed by the Finance Executive Committee and approved by the CLF Trustees. The policy will be reviewed on an annual basis.
The objectives of this policy are to ensure that the Federation:
The Federation acknowledges that effective treasury management will provide support towards the achievement of its business and service objectives. It is therefore committed to the principles of achieving best value in treasury management, and to employing suitable performance measurement techniques within the context of effective risk management.
This policy relates to the Federation’s cash balances identified as being available for investment. The principles contained within the policy do not relate to cash balances needed for day to day operations held with the Federation’s bankers.
The Academy Trust Handbook does not specifically mention any requirements regarding Treasury Management. The only stipulations are:
The Federation’s Board has overall responsibility for the security and management of funds as set out in the Academies Trust Handbook and the Federation’s Financial Regulations.
Executive decisions concerning borrowing, investment or financing (within policy parameters agreed by the Board and Regulators) are delegated to the Chief Operating Officer and the management of the treasury function performed by the Deputy Finance Director.
The Chief Operating Officer must report to the Board annually on the activities of the treasury management operation and on the exercising of delegated treasury management powers. This is included in the management accounts pack issued to the Board for all full Board meetings.
The Federation is committed to the effective management of its funds, accordingly the treasury management function and its activities will be undertaken with openness and transparency, honesty, integrity and accountability.
The Deputy Finance Director will provide a minimum rolling 12-month cash flow forecast to the Board as part of the package of monthly financial reporting, identifying cash balances throughout the year available for investment opportunities and to provide early warning of low cash balances. The forecast will be available to be scrutinised in detail at the Finance Executive Group.
The Federation will operate an interest-bearing current account and maintain sufficient balances to ensure there are adequate liquid funds to cover all immediate and forthcoming financial commitments, including maintaining a sufficient contingency for unexpected payments.
Where applicable surplus monies to the working requirements will be invested in term deposits with a range of financial institutions in line with the following principles:
The Federation will not invest in equities or cryptocurrencies.
In line with the Academies Trust Handbook the Board of Trustees may look at other investments to further the Federation's charitable aims ensuring the investment risk is properly managed. When considering an investment, the Board must;
In making an investment selection The Board must follow the Charity Commission's guidance referenced in CC14 Charities and investment matters: A guide for trustees. For novel, contentious and/or repercussive investments the ESFA’s prior approval must be obtained.
The federation may utilise an established investment platform solution as a mechanism to manage all or part of the investment portfolio to access preferential rates and increase the investment return. All investments through the platform will be subject to the same requirements and principles as investments direct with financial institutions.
The Board delegates authority to the Chief Operating Officer acting as the Chief Finance Officer to place deposits in the Trust’s name, at approved institutions (approved by the Trust Board as and when necessary), subject to the agreed limits within this policy. No deposits will be placed without prior agreement with the CEO or other signatory subject to the relevant limits, as set out in the Federations Finance Regulations.
The Deputy Finance Director will maintain a register of all deposits/investments held which will record
The Federation will maintain full records of its treasury management decisions, demonstrating reasonable steps are taken to ensure all relevant risks to investment decisions are considered.
The Chief Operating Officer will present the Register of Deposits to the Board on an annual basis.
Periodically (at least annually) the Deputy Finance Director will review interest rates and with the support of appropriate professional advice where appropriate, compare with alternative relevant investment opportunities in the market place and produce a report for consideration by the Board, following review and recommendation by the Finance Executive Group.
The Federation will only invest with institutions regulated by the Financial Services Authority and protected by the Financial Services Compensation Scheme and where the institution has the following minimum credit rating criteria provided by any one of the following ratings agency:
The financial institution will need to hold the single rating in its own right rather than a decision be based on whether it is a subsidiary of a parent institution which has an acceptable credit rating. Please see Appendix 2 for a full list of long-term credit ratings from Fitch, Moody’s and S&P.
The Deputy Finance Director is responsible for monitoring the credit standing of all approved investment institutions and for identifying and using appropriate external information services. In the event of an approved investment institution being downgraded below the Federation’s minimum credit criteria, invested funds will be removed upon maturity, the appropriate withdrawal notices to be given for “notice” accounts and instant access funds to be withdrawn as soon as is practicable.
The Federation is not permitted to borrow funds without the Board’s or the ESFA’s prior approval (including finance leases and overdraft facilities) from any source where the borrowing is to be repaid from grant monies or secured on assets funded by grant monies regardless of the interest rate chargeable.
Credit cards must only be used for business (not personal) expenditure, and balances cleared before interest accrues.
The Secretary of State’s general position is to only grant permission for borrowing in exceptional circumstances such as schemes introduced to meet the broader policy objectives examples being Department’s Condition Improvement Fund for capital projects, and the Salix scheme supporting energy saving.
The Federation will account for its treasury management activities in accordance with accounting practices and standards.
The Federation will ensure that its auditors, and those charged with regulatory reviews, have access to all information and papers supporting the activities of the treasury management function.
The Federation will consider investments in the budgeting process, including returns and movements on investments to support the Federation’s day to day activities and longer-term capital projects.
The Federation recognises the potential value of employing external providers of treasury management services, in order to acquire access to specialist skills and resources and to be alerted to changes in legislation. When service providers and appointed the reasons will be fully evaluated and a full costs and benefits review completed. All terms of appointment and the methods of evaluations will be assessed, agreed, documented, and subjected to review. Where services are subject to formal tender arrangements the process within the Finance Regulations will be followed.
