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Academies Update

Excessive High Pay to Employees

Excessive high pay to employees’ remains a key concern for the Education and Skills Funding Agency (ESFA) concerns.

The ESFA has recently published a letter sent by Lord Agnew to 28 Academy Trusts, requesting that:

  • the Trusts explains how they propose to address the issue of high pay in their Trusts; and
  • the Trusts provide certain information relating to those individuals earning more than £100k.

The full text of Lord Agnew’s letter can be found here, along with the names of the 28 Trusts concerned.

Related Party Transactions

The ESFA continues to strengthen its monitoring of related party transactions, as high profile cases of inappropriate behaviour continue to adversely impact the sector.

With effect from 1 April 2019, the Academies Financial Handbook 2018 requires that:

  • all related party transactions are reported to ESFA using a new online form, prior to the transaction taking place; and
  • supply of goods or services from a related party that exceed £20,000 in a financial year to 31 August require prior approval from ESFA.  The £20,000 threshold applies to an individual contract over that amount; a contract of any amount that brings annual spending with the related party to more than £20,000; and all contracts, of any amount, where the £20,000 threshold has already been exceeded in that year.  Approval will be through ESFA’s online form.

These additional oversight and approval requirements follow criticism of the scope of related party transactions by the Public Accounts Committee in 2018 and add to existing requirements to keep and publish registers of business and pecuniary interests and for certain transactions to be ‘at cost’ and to obtain ESFA approval for novel, contentious and/or repercussive related party transactions. 

We are expecting further guidance by the ESFA prior to the application date of these requirements.

For more information please contact our specialist academy advisory team on 01743 273273 or email academies@wrllp.co.uk

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