A charity has been ordered to seek independent advice on reclaiming £130,000 of missing income after a former trustee used the charity’s bank account for an “external project”.
A Charity Commission statutory inquiry into the Manchester-based poverty relief charity My Community UK, found “misconduct” and “mismanagement” among three former trustees, including issues around conflicts of interest and inappropriate use of bank accounts.
The inquiry found “insufficient records” to demonstrate how charity funds were spent, relating to a period between July 2010 and April 2011 when a former trustee used the bank account for an external fundraising project known as the Ikhlas Coalition Project.
The inquiry also revealed “conflicting loyalties" around “related party transactions” and payment of funds made to “parties linked to the trustees”.
The report revealed “connected party transactions between the original trustees and two other private companies (company B and C) that provided computer software and services to the charity”.
“The former trustee was a director of company B and the directors of company C were a current trustee who is related to the former trustee and her husband,” the report said.
But the inquiry said current trustees had made efforts to improve the governance and accountability of the charity.
“The commission has used its legal powers to require the current trustees to consider, take legal advice and any appropriate steps to recover funds from the former trustee,” the report said.
Steve Law, head of investigations at the Charity Commission said: “This case clearly shows the charity’s failure to keep accurate accounting records. Trustees have a legal duty to ensure that a charity’s funds are used solely and reasonably in furtherance of its objects, and they must be able to demonstrate that this is the case.
“All trustees must take an active role and responsibility for ensuring charity funds are spent properly. It is absolutely vital that robust financial controls and procedures are in place and implemented. This includes ensuring there are audit trails for decisions, keeping accounting and financial records for both the receipt and use of funds, and that payments to trustees are well documented, under transparent procedures that deal with conflicts of interest.”
My Community UK was established in 2010 to “relieve poverty, advance education and promote the good health of individuals in need, in particular, but not exclusively, members of the Muslim community”, the report said.
The charity’s website was “down for maintenance” this morning. Civil Society News approached the charity for comment but did not receive a reply by the time of going to press.
The inquiry closed today but the charity was ordered to report back to the Commission by 30 September 2015.
