Conflicts of interest-the importance of knowing

The following post was written by Phil Reynolds of Kreston Reeves and is being reproduced here with his permission. The original article can be read here.

A recent publicised investigation report into an academy trust by the EFA has once again raised their ‘hot topic’ on conflicts of interest. It appears to be the issue that just will not go away and therefore it is imperative academy trust boards do their utmost to ensure they are compliant with the EFA’s expectations, the Academies Financial Handbook and the academy trust’s very own Articles of Association.

Although completing the business interest declaration forms can be a mundane task, it is imperative that all interests such as family members are listed to avoid any unknown conflicts arising. In this particular investigation report there was many family members who were employed by the Trust but not listed on the register of business interests which resulted in a breach of the trustees’ duties per paragraphs 1.5.13 and 3.1.11 – 3.1.20 of the Academies Financial Handbook. The form only has to be completed once a year and any changes should be declared at the start of each trustees’ meeting – a good way to ensure this is to have this as an agenda item at each meeting.

Where family members are employed by the Trust it is also vital to ensure that the correct procedures are undertaken as set out in the Articles of Association. In summary this requires that:
•Such employment or remuneration must be agreed at a trustee meeting
•The trustee who is related to the prospective employee must be absent from any discussion/vote
•The remaining trustees must agree that it is in the interests of the Trust to employ the person connected with the trustee rather than someone not connected

These procedures are highly unlikely to take place unless an accurate register of interests is maintained. It would also be beneficial to ensure that copies of the register are provided to those in charge of making employment of purchasing decisions i.e. the Finance Department and Headteacher to avoid any such appointments/purchases being made without prior knowledge.

Therefore in summary our top tips are:
•Ensure your business interests register is up to date and fully complete
•Have ‘business interests’ as an agenda item at every trustee meeting
•Ensure copies of the register are provided to those who need this information prior to making purchases or offers of employment

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