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New arrangements for related-party transactions come into force

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From Monday 1 April 2019,  the Education and Skills Funding Agency (ESFA) has introduced a new policy where academy trusts must declare a related-party transaction before they agree it with their supplier. They must also seek approval from ESFA before they agree any related-party transactions over £20,000.

Academy trusts do not need to declare income transactions with related parties, including donations to the academy trust from related parties, between April and September 2019. ESFA will be reviewing its approach for reporting these transactions before September 2019.

The reporting requirement has not changed the scope of what is deemed a related-party transaction. You can read about the principles applying to related party transactions in section 3.10 of the Academies Financial Handbook.

Seeking approval for related-party transactions

Academy trusts must seek prior approval from ESFA when:

  • a single contract or agreement with a related party exceeds £20,000;
  • a contract or agreement of any value means the total value of contracts or agreements with the same related party exceeds £20,000 in a financial year.

To support schools with this new policy, ESFA has published academy trust related party transactions guidance. This has information about what academy trusts need to do before completing the online form. 

You can access the full details here.

First published 29 March 2019