Related Party Transactions

Related Party Transactions Policy

 

In order to comply with state and federal regulations as well as Generally Accepted

Accounting Principles, the following procedures will be followed with regard to Related

Party Transactions.

1. Definitions

A related party is defined as an administrator or manager, or relatives of these individuals. In the context of ServiceNet's organization, this would include members of the Management Team and Board of Directors, and their relatives. (It should be noted that the definition also includes related or affiliated organizations, but at this point ServiceNet has none.)

Transactions include most regular business transactions, such as purchases and sales of goods or services, rental or transfer of property, loans, and gifts.

2. Policy and Required Reporting

Before a transaction a entered into with possible related parties, the Chief Financial Officer or Director of Administration and Finance should be consulted to review the proposed transaction and determine whether it falls within the definition. If the transaction is determined to be a reportable related party transaction, the program manager proposing the transaction will obtain documentation from a relevant third party as to an appropriate market rate or market value for the transaction. Once this information is obtained, if the transaction appears to be in the best interests of the organization, the CEO or Director of A & F will approve the transaction.

The details of the transaction, including the position of the related party, his/her relationship to ServiceNet, the dollar value of the transaction, documentation of the "fair market value", and the benefit to the agency, will be reported by the CFO to ServiceNet's "primary purchasing agency" at the earliest opportunity. The same information will be reported to the Finance Committee of the Board of Directors at its next regularly scheduled meeting.

 

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