Press release

Regulator publishes four inquiry reports into 'double defaulting' charities (January 2014)

4 inquiry reports published.

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Charity Commission
Charity Commission

The Charity Commission 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 focussing on ‘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, turning to 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 Commission says that it amounts to mismanagement and/or misconduct in the administration of a charity.

Fourteen 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. (Five of the charities that have complied were reported on in November 2013 and five more reports are due to be published next month.) As part of the investigations, the regulator issued an order to obtain bank records and financial information for all four charities (see endnote 1). In addition, the Commission exercised its statutory power to direct the trustees of two of the four charities to prepare and submit the missing information (see endnote 2).

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 Commission 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 what caused the accounts to be submitted late. Not knowing who is responsible for submitting the accounts or not properly anticipating the time the process would take both featured. These were common issue among the previously reported on charities that had been under inquiry. At the time Sam Younger, Chief Executive of the Charity Commission, explained that even if trustees delegate reporting responsibilities to charity staff or to accountants, making sure the accounts are submitted on time remains the legal duty of the trustees of the charity.

Michelle Russell, Head of Investigations and Enforcement today said:

The reports published today feature a number of different excuses from the charities about why their accounts were late. None of these reasons alleviate the trustees from the duty to file accounts with the Commission on time.

Not submitting accounts or submitting accounts late raises serious concerns with the Commission and we now also know that 3 out of 4 charity donors would not give their money to a charity overdue on its accounts (see endnote 3). Trustees should take heed of this.

The Commission supports this cautious public attitude because if trustees can’t get the financial basics right, the question on everyone’s mind should be is this charity being run responsibly; why should I trust them with my money?

Currently, ten charities remain part of the on-going class inquiry.

The end of December, January and March are popular financial year ends; the Commission’s advice 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 published today can be viewed on the Commission’s website.

Ends

PR 04/14

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Notes to Editors

  1. The Charity Commission is the independent regulator of charities in England and Wales.
  2. 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
  3. For information about statutory inquiries, please see Statutory inquiries into charities: guidance for charities and their advisers (CC46).

Endnotes

  1. 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 Azhar Academy (1080849), Society of Friends of the Torah (238230), The Apostolic Faith Mission International Ministries UK (1096543) and The Parochial Church Council of the Ecclesiastical Parish of St Peter, Notting Hill (1133807) relating to the missing years accounts. These will be used in connection with scrutiny of the accounts.
  2. The Charity Commission exercised its powers under section 84 of the Act to direct the trustees of The Apostolic Faith Mission International Ministries UK (1096543) and Azhar Academy (1080849) to prepare and complete the relevant missing annual accounts, reports and returns for the Charity and provide copies of these to the Commission.
  3. 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 November 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
Published 24 January 2014