The commission opened an operational compliance case relating to the Life Changing Ministries International Church South Cheshire Trust after receiving a complaint from a member of the public in February 2012, alleging that trustees of the charity were personally benefitting from the charity’s funds.

The inquiry looked at potential unauthorised trustee benefits, the management of conflicts of interest and the sale of charity property to a trustee. It found that initial concerns that a property was gifted to the charity and subsequently sold to a trustee in breach of charity law requirements were not substantiated, and the charity was not a party of the transaction. H

However, the inquiry advised the trustees to consider obtaining independent professional advice as to whether gift aid was properly claimed by the charity on a donation made to the charity by the purchasers of the property, which they did. The trustees have stated that they ‘are willing to repay the gift aid, on condition it is found to be the legal requirement. However, the trustees remain to be convinced of this, as the [individual] concerned in this private arrangement agreed for the gift aid to be paid to the charity’.

The inquiry was not satisfied that evidence had been provided that payments made to two trustees, who were husband and wife, were properly made nor authorised. As a result of the regulator’s intervention, the funds amounting to £100,000 were repaid to the charity.

The investigation also concluded that the charity did not have proper financial controls in place, such as policies on expenses, and was relying on credit and loans to operate. Charity funds were also being banked in personal accounts.

As a result, the commission directed the trustees to take actions to ensure that charitable funds are held within bank accounts under the charity’s control. The trustees have also sought independent professional advice and introduced new financial procedures, and have confirmed that the charity has no credit card debt, outstanding trustee loans or any other creditors.

Michelle Russell, director of investigations, monitoring and enforcement at the Charity Commission, said: ‘This case is a reminder to all charities about how important it is that trustees actively manage a charity’s finances and any conflicts of interests that may arise.

'Charities must ensure any payments and transactions to trustees are properly authorised and dealt with and there are clear audit trails to show this.

‘It’s really important that trustees put clear policies and procedures in place to identify and manage conflicts when they arise. In this case the charity has acted now to appoint additional trustees - this action will help ensure conflicts are capable of being appropriately managed going forward.’

The Life Changing Ministries International Church South Cheshire Trust, which was registered as a charity in October 1997, has objects to advance the Christian faith, and education in accordance with Christian principles, and to help those who are elderly, sick or in need.