Managing Related Party Transactions - SLSQ Administration Operations Manual

There are a number of steps clubs, branches should take to properly manage their related party transactions. These actions are based on record-keeping, proper disclosure, and effective policies and procedures.

Maintain a register

For each related party transaction, the register should keep enough information about the related party and the transaction. The information will help charities to meet the reporting requirements in the Annual Information Statement or for the relevant disclosure note in the financial statement.

The ACNC has developed a template register of related party transactions for small charities to use. Any register of related party transactions should be retained by charities for their own use; it does not need to be forwarded or submitted to the ACNC.

ACNC Template register of related party transactions

Have an appropriate policy and procedure

We recommend that each charity has a policy and procedure for dealing with related party transactions. A policy and procedure will help ensure that the charity records and discloses related party transactions appropriately.

A policy and procedure will also clarify who should be involved in making decisions about related party transactions and what criteria should be met before for entering into a related party transaction. This will reduce the risk that the charity’s decisions are influenced by the interests of others.

Manage conflicts of interest

Related party transactions can give rise to a perceived, potential, or actual conflict of interest.

Governance Standard 5 requires a charity to take reasonable steps to make sure its Responsible People meet certain duties, including:

to act honestly and fairly in the best interests of the charity and for its charitable purposes
to not misuse their position
to disclose any actual or perceived conflict of interest
to ensure that the charity’s financial affairs are managed responsibly.

Conflicts of interest (whether actual or perceived) may arise when a related party has an interest that may conflict with the best interests of the charity. If a Responsible Person has an interest with a related party, it may be difficult to demonstrate that they are acting in the best interests of the charity.

Charity Responsible People should declare any potential conflicts of interest and the charity should record these in a register. When it is time for the charity to make a decision, anyone with a conflict (whether actual or perceived) should not be involved in the decision-making process. See more about managing conflicts of interest.

ACNC conflict of interest policy template