Charity unable to account for £100,000 amid ‘poor record keeping’ concerns

The Charity Commission has criticised a special educational needs charity for “poor record keeping” including a failure to account for £100,000 paid out to its chair.

The regulator’s inquiry found that Birmingham based One Community Organisation’s trustees had signed off a plan whereby its chair would make payments on behalf of the charity from his personal account as it didn’t have its own bank card.

Through this plan the chair was allowed to reimburse himself without the supervision or authorisation of another board member.

While investigating this arrangement the charity was unable to provide the Commission with any supporting documents for a reimbursement of £100,000 to the chair, “meaning the inquiry could not conclude that the money was spent solely” on the charity, said the regulator.

Transactions made by the chair through his own bank account were not included in the charity’s accounts for the year ending December in 2017 and 2018. The charity’s income and spending were understated by as much as £80,000 over this period, the regulator found.

Further criticism is made of the trustees by the Commission, which slams them for lacking “a basic understanding of the charity’s governing document and their duties as trustees”.

This led to several governance failures, including the charity operating outside of its key geographic area, a failure to manage conflicts of interest and making decisions without the required number of trustees.

In concluding that the trustees are responsible for financial and governance misconduct and/or mismanagement, the Commission has issued the charity with an Action Plan detailing improvements to be made.

This includes updating the charity’s financial controls policy, improving trustee understanding of conflicts of interest, and appointing a professional accountant to assist with record keeping.

The regulator says that the trustees have since implemented this plan.

“The trustees’ failures in this case resulted in significant amounts of charity money being unaccounted for,” said the Commission’s head of investigations Amy Spiller.

“This is unacceptable and amounts to misconduct and/or mismanagement.

“I hope that the Commission’s intervention in this case means the charity is now able to deliver on its charitable purposes and improve the lives of the people it was set up to support.”

Poor financial practice fears

Earlier this month a coalition of voluntary sector leaders warned that small charities are being forced into poor financial practices, such as using their personal accounts, due to lack of access to banking services.

Branch closures, lack of access to online services and limited opening hours are disproportionately impacting on small charities, the Civil Society Group coalition found.

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