Guidance for academy trusts with a religious authority: report or seek approval for related party transactions
Updated 2 September 2024
Applies to England
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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. Reporting 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 reported to the Education and Skills Funding Agency (ESFA) but do not require approval.
Summary guidance describes the requirement for academy trusts to report 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 report 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.
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.
If the transaction with a related party is novel, contentious or repercussive or is for the appointment of an Accounting Officer or Chief Financial Officer who is not an employee of the academy trust, separate ESFA approval is required.
3. Using the online form
You will need a DfE Sign-in account to use the form. Register for a DfE Sign-in account if you do not have one already.
The form is for academy trusts to report 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 ESFA, contact us using the customer help portal.