The charity was established 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 Commission opened a statutory inquiry into My Community UK in February 2014 after an earlier examination of the charity’s financial information raised concerns over the trustees’ failure to adequately account for the charity’s finances and its use of funds.

The inquiry looked at whether the trustees had properly managed conflicts of interest including related party transactions and could properly account for expenditure of funds including payments made to connected parties linked to the trustees, as well as administration, governance and management issues.

The inquiry found that the charity’s accounting records were incomplete. For the period between July 2010 and April 2011 there were significant gaps, with a large discrepancy between income and expenditure on the charity’s submitted annual return and the charity’s bank statements.

One of the original trustees had allowed the charity’s bank account to be used inappropriately as a banking facility for an external project; and around £130,000 of income is unaccounted for, for the financial year ended April 2011.

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.

‘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.’

The Commission has now issued an order requiring the current trustees to take professional advice on the merits of seeking recovery of funds from the former trustee and report back to the commission by 30 September 2015.

The current trustees are also required to implement an action plan to deal with conflicts of interest and related party transactions identified during the inquiry. The commission says it recognises that they have taken steps to improve the governance and accountability of the charity and will monitor their compliance with the order and the progress of the action plan.

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