Trustees breached duty to report on annual accounts
Charity Commission publishes report of inquiry into Sheffield Reclamation Limited.
The Charity Commission, the regulator of charities in England and Wales, has concluded that the trustees of a Sheffield recycling charity breached their legal duties by failing to file their annual returns with the commission. However the commission found no evidence that the trustees’ failure to submit the accounting information reflected any wider concerns regarding the trustees’ ability to comply with their legal duties and responsibilities as charity trustees.
Sheffield Reclamation Limited was registered in 1993 and operates a recycling plant in Sheffield which offers employment to approximately 40 men and women with special needs. The charity uses the proceeds from the sale of recycling materials to fund its activities.
The commission opened a statutory inquiry into the charity in February 2015 to investigate, among other things, the trustee’s failure to file accounts, the financial management of the charity and to what extent the charities activities furthered its objects of providing work placed rehabilitation for people with learning disabilities and mental health problems.
The commission used its legal powers to ensure that the trustees complied with their obligations to submit their annual accounting information and as a result over £165,000 of charitable income is now transparently and publicly accounted for on the register. The trustees were also able to demonstrate to the commission that the charity was carrying out its activities in line with its objects.
The commission found that the charity’s premises had suffered from a fire in 2013 and that the trustees had taken steps following the fire to return the factory to full strength. During this time they had neglected their duty to file their annual returns with the commission. The commission does not regard this as justification for non-compliance but accepts it as a mitigating factor in this case. The trustees accepted that they were legally responsible for ensuring the annual reports and accounts were prepared and submitted. The charity’s annual report also failed to reflect the extent and nature of the charitable activities carried out by the charity.
The commission satisfied its concerns about the administration of the charity after meeting with the charities trustees, conducting a tour of the charity’s premises and examining its banking information.
Michelle Russell said:
This case is about the basic duties to prepare and file accounts with the commission, ensure that the financial activities of charities are properly recorded and financial governance is transparent. Trustees must make sure that they are accurately describing the activities of their charity. Charities are accountable to their donors, beneficiaries and the public. Donors to charity are entitled to have confidence that their money is going to legitimate causes and reaches the places that it is intended to.
It’s also a reminder of how some charities, particularly smaller ones rely heavily on trustees in a time of crisis. In this case, a trustee took out a personal loan, secured on his personal property when the charity was unable to obtain finance at that time in its own right. Where trustees lend money to charities it is important that issues of conflict of interest and personal benefit are handled well.
The full report is available on GOV.UK.
Notes to editors
- The Charity Commission is the independent regulator and registrar of charities in England and Wales.
- We act in the public’s interest to ensure that charities know what they have to do, the public know what charities do, and charities are held to account.
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Published: 15 December 2015
From: The Charity Commission