The Charity Commission has concluded inquiries into two charities where trustees “were responsible for mismanagement” by not submitting annual reports on time.
The Islamic Education Centre and Mosque, based in Sunderland, and the Children Care Centre in London were subject to statutory inquiries in February and June 2022 respectively.
The IECM submitted its accounts late for eight years in a row between 2016 and 2023.
The Children Care Centre failed to submit its annual returns to the regulator for the financial years ending in March 2020 and 2021.
Its accounting information for the financial years ending in 2018 and 2019 were filed 988 and 623 days late respectively.
The regulator said that for the IECM there was a “lack of relevant governance and management written policies and procedures at the charity”.
There were also issues with the renovation of the charity’s mosque, the regulator concluded.
“The inquiry found that the trustees were unable to account for large amounts of cash withdrawals relating to this project,” said the regulator.
“The trustees explained to the inquiry that the majority of these withdrawals were as a result of the contractor receiving cash payments for work undertaken.”
The regulator said its inquiry found the IECM was also “in breach of its governing document” by failing to keep records of its meetings.
Prior to opening an inquiry, the regulator issued a section 84 order in 2020 directing the then-trustees to complete missing accounting information.
Trustees failed to post the information in time, which the regulator said constitutes “misconduct and mismanagement in the administration of the charity”.
A further section 84 order was issued in August 2022, with trustees submitting accounts in time but with “multiple deficiencies”.
Correct accounts were submitted to the regulator in March 2023.
The regulator said: “The commission acknowledges that the trustees faced some challenges while striving to comply with the section 84 order and have taken steps to ensure these issues do not occur in the future.”
The inquiry into the Children Care Centre found trustees had received “repeated advice and guidance from the commission regarding their reporting obligations”.
The regulator said it had previously extended deadlines to the charity but trustees had still failed to submit accounting information on time.
The Children Care Centre was also subject to two section 84 orders in March 2020 and September 2021 for the financial years ending 31 March 2018 and 2019.
The regulator said trustees claimed delays were caused by health issues and pandemic restrictions.
The Children Care Centre also provides grants to Bacho Ka Ghar Amod, an orphanage in Gujarat, India, to support its day-to-day running costs.
In a July 2022 meeting with the regulator, trustees said the orphanage did not require money from the charity at that time.
The regulator said: “The inquiry found that in 2022 the trustees had undertaken fundraising with misleading materials suggesting that the orphanage was in need of funding and that funds raised would be directed to the orphanage.”
Accumulated funds at the charity were spent on 12 residential properties, purchased between May 1995 and October 2018, which are held in the name of the trustees for the benefit of the charity.
“The inquiry found that the properties were rented out at below market rate,” said the regulator.
“The trustees intended to provide low-cost rental accommodation to benefit individuals in need of such housing.
“However, when making these property purchases, the inquiry found that the trustees failed to evidence whether they had properly considered whether this was charitable activity in furtherance of the charity’s objects, or investments for the purpose of raising funds for the charity.”
Other issues found in the inquiry were the trustees’ lack of investment policy and failure to recognise funds raised for the orphanage were restricted.
“The trustees made good progress against the actions required and kept the inquiry team informed with updates,” said the regulator.
“The commission is satisfied that the trustees have now taken positive steps in completing the directions under the section 84 order and implemented changes to improve the governance of the charity as well as compliance with their legal duties.
“The trustees have filed the outstanding accounts, reviewed the trustee board, [and] appointed an accountancy firm and a law firm to provide ongoing professional advice.”