Charity pair in doghouse over accounting failures
17 Jan 2020
The charity watchdog has disqualified a married couple who were former trustees of a dog charity for serious misconduct, which meant over £300,000 in donations was unaccounted for
17 Jan 2020
The Charity Commission was alerted to problems at the Chichester and District Dog Rescue Society by an independent examiner in March 2017, who had found discrepancies in the charity’s bookkeeping.
The charity operates in East Sussex and Hampshire and aims to care and support stray and unwanted dogs in these areas. Funding is received via legacies, donations and proceeds from two charity shops.
A statutory inquiry opened in September 2017 found there had been serious mismanagement and misconduct in the charity’s governance, management and administration by the two former trustees, who were a married couple.
Conflicts of interest were not managed appropriately; this led to decisions such as allowing the former trustees and some of their family members to live rent-free at the charity’s centrally heated property, and to spend £1,455 of charity funds on a decorative log burner for the house, as well as taking a holiday with family members paid for from the charity’s funds.
The inquiry found that between October 2013 and May 2017, £316,120 had been withdrawn, in cash, from the charity’s bank account.
There was no documentary evidence to show what this amount had been used for, and when asked for further details, the former trustees were unable to precisely specify what these funds had been applied for. The Commission has referred this matter to the police.
Following a review of the charity’s invoices the inquiry identified discrepancies in the records and concerns over funds which were unaccounted for.
The charity had requested a £100 rehoming donation, which rose to £150 during the course of the inquiry, from individuals who adopted dogs from the charity. No record of these amounts was found by the inquiry, despite the claim that the charity had rehomed at least 100 dogs.
The inquiry found that the former trustees failed to keep accounting records for the charity’s transactions, and that the charity had no financial control procedures.
Funds were collected from the charity’s shops and kept in unsecure locations within the former trustees’ home. Banking was not undertaken on a regular basis and there were no reconciliations of shop takings.
The charity had a credit card account, with associated card. The card appeared to have been used frequently but both the former trustees denied using the card.
The inquiry found the former trustees failed to maintain oversight of the financial matters of the charity and failed to ensure that the charitable property was adequately safeguarded.
The trustees were also found to have failed in their duty to file financial accounts and the annual report on time, with the years 2016 and 2017 outstanding.
The inquiry discovered that the two charity shops were in a state of dilapidation. The former trustees did not take any responsibility for the shops and made no provision for the management and maintenance of them.
In addition, the regulator established that the charity had been in breach of its governing document. At the beginning of the inquiry it became clear that charity funds were used in circumstances where dog owners were unable to pay for veterinary services themselves.
The charity’s governing document states clearly that funds should be expended only for the rescuing, boarding and placing in good homes of stray and unwanted dogs.
The inquiry found that there had been an alleged theft as some funds were missing from the charity which had not been reported to the police.
The former trustees’ mismanagement of the charity’s resources led to the current board contemplating the closure of the charity. However, the receipt of a substantial legacy to the charity, during the inquiry, ensured that the charity could continue to function.
A new trustee board was appointed in November 2018 and the Commission reported the charity is now operating effectively and is fully compliant with its filing obligations.
Both former trustees have been disqualified from acting as a charity trustee or trustee of any charity and/or from holding an office or employment with a senior management function in charities generally in England and Wales, for a period of seven years.
Amy Spiller, head of investigations team at the Charity Commission, said: ‘Trustees are under an obligation to act in the best interests of their charity –by handling donations with care and stewarding funds towards the good cause they serve.
‘The former trustees of this charity failed to deliver on this expectation – they were reckless with the charity’s money and used funds for their own personal expenses. This almost cost the charity’s future and will have let down people who trusted this charity to help a cause they care about.’