In the 2018 edition, some of the new requirements were instead stated to take effect for 1 April 2019 and you should have in place processes to meet these new requirements.
What are the key changes for this year?
Related Party Transactions - Notifications
All related party transactions (RPTs) must be reported to the ESFA via an online form in advance of the transaction taking place. This includes RPTs where you receive a payment, and not just where you make one.
Related Party Transactions - £20,000 Threshold
In some instances, you will be required to obtain the consent of the ESFA before entering into an RPT. This is the case where:
- the contract exceeds £20,000
- the value of the contract would take the total value of all contracts with that related party beyond £20,000 in the same financial year
- the contract is of any value but the cumulative value of contracts with that related party has already exceeded £20,000 in the same financial year
Again, the ESFA's online form should be used for this purpose.
Related Party Transactions - Novel, Contentious and/or Repercussive
Where an RPT is "novel, contentious and/or repercussive", you must obtain prior consent from the ESFA regardless of whether the £20,000 threshold will be reached.
You should carefully consider the impact of this requirement and its relevance to transactions involving the Chair of Trustees and the Accounting Officer.
By way of reminder, the Handbook defines these sorts of transactions as:
- novel transactions - those of which the Trust has no experience, or are outside its range of normal business
- contentious transactions - those that might cause criticism of the Trust by Parliament, the public or the media
- repercussive transactions - those likely to cause pressure on other Trusts to take a similar approach and hence have wider financial implications
The ESFA's online form should also be used.
Keeping on Top of the New Requirements
- Does your register of interests capture all relevant business and pecuniary interests of the Trust's members and trustees? Does this include the capture of 'close family relationships'?
- Are members and trustees asked to review their interests annually even if only to make a 'nil return'?
- Are members and trustees aware they should keep the Trust updated with any new and changing interests in between their annual reviews? Is there a standard form to update interests between annual reviews?
- Does the clerk to trustees (or some other person) have responsibility for monitoring the disclosure of interests?
- Is there a standing agenda item for every meeting asking members and trustees to declare any interests in the business of the meeting?
- Does the clerk to trustees (or some other person) have responsibility for keeping records of RPTs made during each financial year?
- Is there a designated person taking responsibility for notifying the ESFA and /or obtaining ESFA consent as necessary for RPTs?
For a template business interests and pecuniary interests form, and detailed information about the Handbook requirements, please visit Academies OnStream.
If you would like to discuss the new Academies Financial Handbook with a specialist, please contact Rosie Phillips in our Charity Law team on 0117 314 5695, or complete the below form.