The government is clamping down on academy trusts buying alcoholic drinks or excessive gifts with public money.
The Education and Skills Funding Agency has highlighted the purchase of alcohol as an example of “irregularity and impropriety” which have come to light during its investigations of academy trusts.
Its new Academy Accounts Direction (AAD) warns that alcohol and excessive gifts are now classed as irregular expenditure and will be seen as not using public money “for the purpose it was intended.”
The updated directions for academy trusts has also tightened up the government’s approach to related-party transactions.
This is when an academy or MAT deals with a company connected to an individual at the same trust.
ESFA say from now on trusts will have to include confirmation that any related party transaction above £2,500 has been provided at cost. This will need to be supported by a statement from the related party confirming this.
Phil Reynolds, from accountancy firm Kreston Reeves, said this was the first time the DfE has given academy trusts guidance on the purchase of alcohol.
He said: “The issue of the purchase of alcohol by Academy Trusts has been a touchy subject. Many ESFA investigation reports highlight any alcohol purchases. This suggests the ESFA are not happy with this, however, there has never been any clear guidance on this issue.
“For example, is buying a member of staff a bottle of wine for £5 as a ‘thank you’ any different to buying them a box of chocolates at the same value?
“It all comes down to public perception, ultimately. Are the parents going to be happy the trust has spent £5 of public money on some alcohol?
“Thankfully, the AAD has helped clarify the situation and it probably comes as no surprise that it states that the purchases of alcohol or excessive gifts are an example of irregular expenditure.
“Therefore, going forward Trusts should rethink the purchase of any mulled wine for those Christmas concerts.”
Tes revealed last year that there had been a 50 per cent increase in the number of related-party transactions in academy trusts.
