Academy Update
Guidance on declaring related party transactions has been released
The ESFA has released guidance on declaring related party transactions in advance of new reporting requirements coming into force on 1 April 2019.
From 1 April 2019, all related party transactions must be declared in advance of being agreed with the supplier. Any related party transactions in excess of £20,000 need to be approved in advance by the ESFA.
Highlights from the ESFA Guidance now available:
- The new rules apply to any new agreements with related parties on or after 1 April 2019.
- The rules apply to spending only. At present, income from related parties does not need to be reported (this is to be reviewed in September 2019).
- ESFA approval is required when a single transaction or total contract payments in the financial year exceed £20,000.
- Declaration or approval is made through the related party transactions online form through your IDMAS account. The form must be completed in full in one sitting and cannot be partially completed and then returned to.
- The form requires related party suppliers to be set up using the supplier name, address and company number. You will need to make various declarations on the relationship with the supplier.
- Each transaction will need to include a description and cost of the goods/services provided and any relevant contract dates.
- In order to obtain approval for transactions/contracts in excess of £20,000, in addition to a copy of the agreement, you will need to provide evidence of the methods/procedures taken to agree the transaction including the consideration of any conflict of interest.
- The online form submitted is irrecoverable so be sure to review the information provided on the “check answers” page before submitting. You will then be emailed a reference for the transaction.
- Once the form is submitted, any mistakes should be reported to the ESFA using the transaction reference given.
- Subject to the appropriate information being provided on submission, approval for larger transactions/contracts should be received from the ESFA within 10 working days.
- In Church Schools, services that are fundamental to the school’s religious ethos and must be provided by the diocese need only be declared (approval is not required). Contracts or transactions in excess of £20,000 must be supported by an upload of appropriate evidence.
Full ESFA guidance is available through the link:
https://www.gov.uk/government/publications/related-party-transactions-information-for-academy-trusts/declare-or-seek-approval-for-related-party-transactions-summary-guidance