5. What steps should you take to maintain and monitor reserves at target level?
Once the reserves policy has been set it is important that you understand how your current financial position compares with the required level of reserves.
You need to actively monitor the level of reserves that the charity is actually holding to make sure you are aware of reserves going up or down unexpectedly.
If reserves during the year are below target or exceed target you should consider whether this is a short term situation or an indicator of a long-term issue. You may need to take action to replenish or spend reserves. Where reserves fall below target this may be an indicator of financial problems within the charity and you should consider any issues arising. Changes should be made as necessary and the reserves policy kept up to date.
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