Regulator publishes four inquiry reports into 'double defaulting' charities (March 2014)
Double defaulting charities were part of class inquiry.
The Charity Commission, the independent regulator of charities in England and Wales, has today published inquiry reports into four of the charities that were under investigation as a result of double defaulting on their accounts.
The first phase of the inquiry, targeting ‘double defaulting’ charities with an income over £500,000, began on 20 September 2013, when the class inquiry opened. The Commission started the second phase on 11 November 2013, focusing on charities with a last known income of between £250,000 and £500,000. Failure to submit annual documents when required to the Commission is a criminal offence and the regulator says that it amounts to mismanagement and/or misconduct in the administration of a charity.
Sixteen of the twenty-four charities which have entered the class inquiry have now complied with their reporting obligations and four of these are reported on today:
- Crawley Islamic Centre and Mosque (274153)
- Michael Davies Charitable Settlement (1000574)
- The Muslim Cultural Society of Birmingham (1099763)
- Bradford Christian School (1027573)
As part of the investigations, the Commission issued an order to obtain bank records and financial information for all four charities (see endnote 1). In addition, the regulator exercised its statutory power to direct the trustees of all four charities to prepare and submit the missing information (see endnote 2), and to extend the deadline for the trustees of one charity to submit their outstanding documents (see endnote 3).
Once the charities’ missing documents were submitted, the accounts were referred for scrutiny by the Commission’s accountants and any issues arising have been or are being followed up separately.
The regulator concludes that the charities’ trustees were in default of their legal obligations to file accounting information with the Commission, and this was mismanagement and misconduct in the administration of the Charity and a breach of trustees’ legal duties.
The reports also include the responses from the trustees about why the accounts were submitted late. Lack of action by accountants, alongside trustees’ and accountants’ health and family issues, featured. Even if reporting responsibilities are delegated, ensuring the accounts are submitted on time remains the legal duty of the charity trustees.
Michelle Russell, Head of Investigations and Enforcement, today said:
As the class inquiry into double defaulting charities carries on and reports continue to be published, we can see a number of different excuses featuring from the charities about why their accounts were late. None of these excuses relieve the trustees from their legal responsibility to file accounts with the Commission, or their duty to help maintain public trust and confidence in charities.
On occasion, a trustee may experience ill health, need to take a period of absence or encounter circumstances which mean they cannot carry out their role. The other trustees must make sure that they collectively continue to carry out their legal duties and ensure the charity continues to run effectively. If the issues continue then the affected trustee(s) should consider whether they are able to continue in their role and the charity may need to take action, for example appointing new trustees.
Failing to submit accounts, or submitting them late, raises serious concerns with the Commission and, with research showing 3 out of 4 donors would not give to a charity overdue on its accounts (see endnote 4), trustees should be making absolutely sure that their organisation is remaining accountable to the public.
Currently, 8 charities remain part of the on-going class inquiry.
As a result of the regulator’s action in the inquiry, 37 sets of accounts have been filed by those charities no longer part of the inquiry, resulting in over £28 million of charitable income now being transparently and publicly accounted for on the Register of Charities.
The end of December, January and March are popular financial year ends; our message to charities is, don’t wait until your 10 month deadline approaches - get on with preparing them now and file your accounts as soon as you can.
The four inquiry reports today can be viewed on the Charity Commission’s website.
For press enquiries contact the press office.
Notes to editors
- The Charity Commission is the independent regulator of charities in England and Wales.
- Our mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
- charities know what they have to do
- the public know what charities do
- charities are held to account
- The Commission used its information gathering powers under section 52 of the Charities Act 2011 (the ‘Act’) to order and obtain bank records and financial information of Crawley Islamic Centre and Mosque (274153), Michael Davies Charitable Settlement (1000574), The Muslim Cultural Society of Birmingham (1099763) and Bradford Christian School (1027573) relating to the missing years accounts. These will be used in connection with the scrutiny of the accounts.
- The Commission exercised its powers under section 84 of the Act to direct the trustees of Crawley Islamic Centre and Mosque (274153), Michael Davies Charitable Settlement (1000574), The Muslim Cultural Society of Birmingham (1099763) and Bradford Christian School (1027573) to prepare and complete the relevant missing annual accounts, reports and returns for the Charity and provide copies of these to the Commission.
- The Commission exercised its powers under section 336 of the Act to extend the deadline for the trustees of Crawley Islamic Centre and Mosque (274153) to submit their outstanding documents following correspondence with the trustees and the Charity’s accountants.
- The Charity Commission and FRSB commissioned ICM to conduct a survey. ICM interviewed a random sample of 1162 adults aged 18+ via telephone in the UK between 22 and 24 November 2013. Surveys were conducted across the country and the results have been weighted to the profile of all adults. ICM is a member of the British Polling Council and abides by its rules. Further information at www.icmresearch.com