The amount held in local authority reserves in England has increased to £29bn this year from £19bn in 2019/20, the latest figures shows.
However, CIPFA's 2022 Financial Resilience Index warns that the long-term outlook is less positive as only £4bn of these have been unallocated for distribution in the early part of the financial year.
CIPFA also warned that central government funding payments to councils were made late in 2020/21 which left insufficient time for local authorities to use the funding before the end of the financial year.
Rob Whiteman, CIPFA CEO said: 'While the reserves position gives the appearance of health, this masks a much more complicated picture. The short and medium term outlook still remain unclear, so we need to be cautious. Reserves that have already been allocated are likely to be depleted extremely quickly when demand returns.
'While the financial resilience index can shine a light on areas of possible risk to generate a local discussion, it is essential that a national conversation on funding remains a priority and that local authorities continue to focus on medium and longer-term planning.'
