A recent inquiry into a charity has revealed significant financial mismanagement. The investigation was prompted by concerns over the organization’s handling of funds and its vast network of over 100 bank accounts.
Key Findings from the Inquiry
The inquiry uncovered that trustees of the charity lacked proper oversight and control. With more than 100 bank accounts operated by individual branches, the organization’s finances were at considerable risk. The complexity of its structure, which expanded from a few branches to over 90 locations, exacerbated these issues.
- Branches operated independently, often opening bank accounts without central oversight.
- Inaccurate financial reporting and failure to report income promptly endangered charitable funds.
- Many branches made significant financial decisions, such as property purchases, without trustee consent.
Consequences of Financial Mismanagement
The lack of trustee oversight led to substantial financial losses. Notably, some branches occupied properties without obtaining necessary planning permissions, leading to costly legal disputes. Moreover, the failure to regularize employment contracts resulted in additional payments to settle disputes.
Regulatory Actions Taken
In response to these alarming findings, the Charity Commission took decisive action. They froze the charity’s assets to prevent further losses. An interim manager was appointed to implement essential financial controls and improve governance within the organization.
The interim manager’s appointment, lasting until September 2024, was extended due to the complexities of the required reforms and legal delays. After completing the necessary reforms, the Commission directed the charity to follow a regulatory action plan focused on governance and policy changes.
Current Status and Future Outlook
The Commission is now confident that the trustees have complied with the mandatory action plan. Amy Spiller, Head of Investigations at the Charity Commission, highlighted the risks associated with rapid growth in charities. She emphasized that the trustees’ inability to maintain financial controls jeopardized donor funds across the charity’s network.
With the intervention of the Charity Commission and the interim manager, the trustees have made significant progress. The charity can now effectively focus on its objectives, ensuring that donor contributions are secure and utilized appropriately.
For further details, the full report is available on El-Balad.
