The Education and Skills Funding Agency (ESFA) has used an online form for declaring or seeking approval for related party transactions since 2019 without significant changes until now.
Failure to comply with these rules has been one of the most common reasons for auditors issuing a modified regularity opinion in the 2021-2022 and 2022-2023 reporting periods.
Change of rules
From 1 September 2023, the rules around related party transactions have been relaxed, with the key changes included in the Academy Trust Handbook 2023 being:
- The threshold for which prior approval being required to enter into a contract or agreement has doubled from £20,000 to £40,000 in any financial year ending 31 August;
- Approval is not required when entering into contracts or agreements for the supply of goods or services to a trust by;
- colleges, universities and schools which are sponsors of the academy trust
- state funded schools and colleges, including academies
- Approval is not required for the provision of services to an academy trust with a religious designation, for essential functions fundamental to the academy trust’s religious character and ethos which can only be provided by their religious authority.
Furthermore, the ‘at cost’ requirement is presumed to have been achieved in respect of contracts or agreements with a college, university or school which is a sponsor of the academy trust, or with any other state funded school (including an academy) or college.
The next step
If you have any further questions regarding this insight, please contact Jack Wilkinson at jack.wilkinson@uhybirmingham.co.uk or your usual UHY adviser.
