Academy update – Related Party Transactions

From 1 April 2019, Academy trusts are required to declare all related party transactions in advance. Any related party transactions in excess of £20,000 need to have prior approval from the EFSA.  This excludes salary and related payments regarding an individual on the Academy’s payroll.

It is hoped that the move will reduce the risk of negative public attention and reputational damage to the sector as a result of poorly managed or controlled transactions with individuals/businesses that have a relationship with the Trust.

The Financial Handbook for Academies (Section 3.10) details the requirements of Related Party Transactions and relationships.
A related party is any individual or organisation that can exert control over the Academy, the financial handbook defines this as:
  • any member or trustee of the academy trust or
  • any individual or organisation that is related to the trustee or member.
Academies should consider the usual “value for money” and required tendering processes with any transactions that are undertaken.

Further information on how declarations/approvals are to be made will be released in the week commencing 18 March.
 

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