Related parties – state-integrated schools
These examples of related-party disclosure notes cover the most common disclosures that your school may need to make in the financial statements.
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All boards of state-integrated schools must provide accurate and faithful reporting to the Ministry of Education. Related parties notes are mandatory as part of reporting, and is the responsibility of the board to use their professional judgement when providing relevant information.
- About the notes
- Related-party transactions
- Religious instruction
- Collection of donations and dues
- Capital works
- Total owing at 31 December
- Use of land and buildings
All integrated schools have a proprietor. Under current financial reporting standards the proprietor is a related party for all state-integrated schools because it has representatives on the board, meaning it "has an interest in the entity that gives it a significant influence over the entity".
The model notes below also deal with disclosures about the unlawfulness of some related-party transactions with proprietors. The first disclosure will be relevant to all schools. Many of the remaining disclosures won't be relevant for your school so you don't need to include them in your financial statements.
All state-integrated schools must include this note.
The proprietor of the school [name of proprietor] is a related party of the board because the proprietor appoints representatives to the board, giving the proprietor significant influence over the board. Any services or contributions between the board and proprietor are disclosed with an indication of the amount if relevant.
The following transactions occurred between the board and the proprietor during 202X.
Include only the transactions that apply to your school.
The proprietor provides religious instruction to pupils of the school. This service is provided free of charge in accordance with the Education and Training Act 2020.
The proprietor provides religious instruction to pupils of the school. The board paid the proprietor $...... for this service during 202X. The payment by the board was unlawful under Schedule 6 cl 53(3)(external link) of the Education and Training Act 2020, which prohibits boards paying the salaries of people employed by the proprietors to provide religious instruction. The board is taking steps to recover the funds.
Under an agency agreement the proprietor collected [describe the locally raised funds collected] on behalf of the board. This service was provided free of charge.
Under an agency agreement the proprietor collected [describe the locally raised funds collected] on behalf of the board. The board paid the proprietor $...... during 202X for this service.
Under an agency agreement the board collected attendance dues and voluntary financial contributions on behalf of the proprietor. This service was provided free of charge.
Under an agency agreement the board collected attendance dues and voluntary financial contributions on behalf of the proprietor. The proprietor paid the board $...... during 202X for this service.
The proprietor provides hostel services that are used by some of the pupils at the school in accordance with a contract between the board and the proprietor.
The board paid $...... to the proprietor during 202X to assist with the development of [description of the capital works]. The board’s funding of these capital works was approved by the Ministry of Education and the board’s interest has been recognised by the proprietor by means of an equitable lease.
The board paid $...... to the proprietor during 202X to assist with the development of [description of the capital works]. The board’s funding of these capital works was unlawful because the Ministry of Education has not approved it and the proprietor has not recognised the board’s interest.
During 201X, the proprietor held funds on behalf of the board. At 31 December 202X, the amount held by the proprietor was $...... This investment of funds was unlawful as section 161 of the Crown Entities Act 2004 restricts the ability of schools to invest funds in certain institutions without the approval of the Ministers of Education and Finance. [If interest was payable on the investment you will need to disclose the interest rate and the amount of interest paid during the year.]
During 201X, the board borrowed $...... from the proprietor interest free. At 31 December 202X, $...... remained outstanding. [If interest was charged on the loan you will need to disclose the interest rate and the amount of interest paid during the year.]
The proprietor paid additional remuneration to the following employees of the board during 202X for carrying out normal school duties:
[Name of employee] $......
[Name of employee] $......
The payment by the proprietor was unlawful under schedule 6 clause 5(4) of the Education and Training Act 2020(external link), which prohibits proprietors paying employees of a board any remuneration for services for which they are paid by the board.
As a result of the above related-party transactions, the amount owing to the board by the proprietor at 31 December 202X was $......, and the amount owing to the proprietor by the board at the same date was $......
The proprietor provides land and buildings free of charge for use by the board as noted in note 1(c). The estimated value of this use during 202X is included in the income statement as "Use of land and buildings".
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