Decision

Maidenhall Community Pre-School: Inquiry report

Published 30 June 2017

This decision was withdrawn on 15 October 2019

This inquiry report has been archived because it is over 2 years old.

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

The class inquiry

On 20 September 2013, the Charity Commission (‘the Commission’) opened a statutory class inquiry (‘the inquiry’) into charities that were in default of their statutory obligations to meet reporting requirements by failing to file their annual documents for 2 or more years in the last 5 years and met certain criteria, including that:

• the charities were recently (or in the case of charities that would become part of it in due course, would be) given final warnings to comply by a specified date
• on the day after the specified date they were still in default (partially or otherwise)

At the point a charity met the criteria they would become part of the inquiry. Charities that have been identified for inclusion in the class inquiry have a last known annual income of at least £150,000.

The charity

Maidenhall Community Pre-School was registered on 22 March 2012. It is an unincorporated association governed by a constitution dated 2 July 2009.

The charity’s object is to enhance the development and education of children, primarily those under statutory school age.

More details about the charity are available on the register of charities (‘the register’).

Issues under investigation

The charity had failed to submit its annual accounts, report and annual return to the Commission for the financial year ending 28 February 2016 within the statutory deadlines, (its outstanding accounting documents for the year ending 28 February 2015 were submitted on 5 February 2017 before the charity became part of the inquiry). Although reminders were sent the charity remained in default of its obligations under the Charities Act 2011 (‘the act’).

In addition, a final warning letter was issued on 30 January 2017 requesting that the missing documents be provided by 14 February 2017, and warning the charity that if it remained in default it would become part of the inquiry. The charity became part of the inquiry on 15 February 2017 because it failed to supply the outstanding annual accounting information by the deadline.

The inquiry is confined to dealing with the trustees’ mismanagement and misconduct^{[footnote 1]} and remedying the non-compliance in connection with the annual accounting documents.

The outstanding accounting documents for the financial year ending 28 February 2016 were submitted to the Commission on 21 March 2017.

A charity representative informed the Commission that delays had occurred in the preparation of the accounts due their accountant being ill over a lengthy period of time. This does not excuse the failure of the trustees to fulfil their statutory obligations, as the trustees have the overall responsibility for ensuring that accounting documents are filed on time, and could have made alternative arrangements to have the accounts completed.

When the charity’s missing documents were submitted, the accounts were referred for scrutiny by the Commission’s accountants. Any issues arising from that scrutiny will be followed up separately.

Conclusions

The charity’s trustees were in default of their legal obligations to file accounting information with the Commission. This was mismanagement and misconduct in the administration of the charity and a breach of their legal duties.

As a result of the inquiry, the Commission ensured the charity complied with its legal obligations to submit their annual accounting information. One set of accounts were filed and as a result £168,652 of charitable income is now transparently and publicly accounted for on the register.

The charity ceased to be part of the inquiry when it was no longer in default of its accounting obligations. This happened on 21 March 2017 when the charity filed the missing documents.

Regulatory action taken

The Commission used its information gathering powers under section 52 of the act to order and obtain bank records and financial information of the charity relating to the missing years accounts.

On 7 March 2017 the inquiry exercised powers under section 84 of the act to direct the trustees 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 provided regulatory advice and guidance about the trustees’ duty to file the charity’s annual accounting information.

Issues for the wider sector

Trustees of charities with an income of over £25,000 are under a legal duty as charity trustees to submit annual returns, annual reports and accounting documents to the Commission as the regulator of charities. Even if the charity’s annual income is not greater than £25,000 trustees are under a legal duty to prepare annual accounts and reports and should be able to provide these on request. All charities with an income over £10,000 must submit an annual return.

Failure to submit accounts and accompanying documents to the Commission is a criminal offence. The Commission also regards it as mismanagement and misconduct in the administration of the charity.

The Commission will not hesitate to exercise its statutory powers to ensure that a charity’s annual reports, annual accounts and annual returns are submitted to the Commission within the statutory deadlines where trustees persistently fail to comply with their legal duties.

Mismanagement includes any act (or failure to act) that may cause charitable resources to be misused or the people who benefit from the charity to be put at risk.

1. The terms misconduct and mismanagement are taken from section 76 of the act. Misconduct includes any act (or failure to act) that the person committing it knew (or ought to have known) was criminal, unlawful or improper. ↩