Guidance

Declare or seek approval for related party transactions: guidance for academy trusts with a religious authority

Updated 1 September 2023

Applies to England

This page covers information and advice on reporting requirements for related party transactions (RPTs) where the supplier is the academy trust’s religious authority.

1. Declaring related party transactions with a religious authority

All transactions with a religious authority for the provision of services that are fundamental to the academy trust’s religious character and ethos are regarded as meeting the ‘at cost’ requirements. These transactions must be declared to the ESFA but do not require approval.

Summary guidance describes the requirement for academy trusts to declare an intention to enter into a transaction with a related party before confirming the transaction. This includes transactions being renewed with a related party supplier.

All expenditure transactions with a religious authority must be reported using the online form.

Academy trusts do not need to declare income transactions with related parties. For an expenditure related party transaction with a new supplier, academy trusts must confirm whether they have previously received a donation from the related party.

In line with paragraph 5.43 of the Academy Trust Handbook (ATH), salaries and other payments made by an academy trust to a related party under a contract of employment through the academy trust’s payroll are not in scope of this reporting requirement.

Academy trusts must report all related party transactions, including those with a religious authority, regardless of value, in their annual financial statements as set out in the Academies Accounts Direction.

2. Seeking approval for related party transactions with a religious authority

Transactions starting on or after 1 September 2023 with a religious authority over £40,000 which are for traded services do require prior approval and the summary guidance should be followed. Traded services are goods or services which are purchased from the trust’s religious authority, but which are not essential to maintaining the religious character and ethos of the school.

Transactions starting on or before 31 August 2023 with a religious authority, where the cumulative threshold is over £20,000, and which are for traded services do require prior approval, as set out in the Academy Trust Handbook 2022 (5.42).

If the RPT is novel, contentious and/or repercussive (ATH 5.44) or is for the appointment of an Accounting Officer or Chief Financial Officer who is not an employee of the academy trust (ATH 1.28 and 1.38), separate ESFA approval is required.

3. Using the online form

You need an Identity and Access Management System (IDAMS) account to use the form. You can register for an IDAMS account and set up other users to report related party transactions.

The form is for academy trusts to declare all expenditure transactions and seek approval where necessary for a transaction with a related party before it’s confirmed with the supplier.

’Using the online form’ guidance explains how to complete and submit the online form. Some sections of the online form only apply to transactions with a religious authority. This guidance describes those sections in more detail.

When creating a new supplier, you will need to enter the supplier’s details and choose from a list which best describes the supplier. You will be asked if the supplier is your religious authority. Choose this option and continue the form to completion.

For all new suppliers, you must confirm whether the academy trust has previously received a donation from the related party and the type of donation: cash, in kind, both, or other.

The transaction information page requests confirmation that the goods or services included in the transaction are provided by the religious authority for the sole purpose of maintaining the religious character and ethos of the academy trust and do not relate to traded services.

When ’no’ is selected, approval is required if the transaction value exceeds £40,000 (£20,000 for 2022 transactions with start date on or before 31 August 2023).

Where ’yes’ is selected, the academy trust is confirming that the provision of services delivered by the religious authority are essential functions fundamental to the religious character and ethos of the academy trust. In this case, the form will confirm approval is not required for this transaction.

If part of the transaction relates to traded services, you must submit this transaction separately.

4. Do you have any questions?

For all enquiries for the Education and Skills Funding Agency, please contact us using the enquiry form.