Related party transaction

These transactions are not automatically wrong. Many are entirely proper. What matters is that they are identified, authorised and disclosed.

The SORP requires disclosure of related party transactions in the accounts, and the annual return asks about them separately. Disclosure is required whether or not the transaction was on normal commercial terms.

Note that the SORP’s “related party” is not the same as charity law’s connected person — one governs disclosure, the other governs whether the transaction is permitted at all. Keep a standing register: see the related party register.