The Charity Commission has opened an inquiry into a charity that underestimated its own annual income by almost £500,000, or 78 per cent.
The Jewish charity Chessed L’Yisroel Ltd aims to advance religion in accordance with the Jewish faith and relieve poverty.
But investigators found its trustees reported its income as 78 per cent lower than it really was, and that the charity had a record of borrowing money and not making repayments. The charity's auditors had also qualified its accounts.
It was added to the regulator’s class inquiry into charities in default of their statutory reporting obligations, after it failed to file accounts before its annual due date for a period of four years.
Accounts subsequently received by the Commission, raised “significant regulatory concerns”, the regulator said.
Annual accounts for the years ending 2009 and 2010 contained no independent audit – in breach of the Charities Act, given the charities income – while a further analysis of the charity’s bank statements for the year 2011, revealed “significant discrepancy” with the financial activity reported in its annual accounts for the same year.
While the charity’s accounts reported an income and expenditure of £140,000 and £139,000 respectively, its bank statements revealed the true income as £632,000 and expenditure as £724,000.
During the same year, the charity failed to meet repayments on a loan, resulting in the repossession of charity property with a loss to the charity of £256,084. Shortly after, it took out a loan of £131,489 which has not been repayed, the Commission said.
The regulator said the charity “failed to adequately explain why it did not make its repayment obligations or what it did with the money it borrowed”.
The inquiry will examine the “reliability and accuracy of the charity’s financial reporting” and the “adequacy” of its financial management controls, to determine if this has resulted in a “substantial level of charity finds being lost, misappropriated or misapplied”.
Chassed L’Yisroel was approached for comment but did not respond by the time of going to press.
