Regulator finds misconduct and mismanagement at charity

Three trustees of a Hereford and Worcester-based charity have resigned after a regulatory inquiry uncovered a string of failures in its governance, finances and safeguarding

The Jalalabad Association’s objects are to advance Islam around Hereford and Worcester. In November 2017 it was placed into a class inquiry, along with several other charities, for failing to submit their financial information, for four years.

The charity continued to fail to submit the required financial information to the Charity Commission, which amounted to five consecutive years without accounts and so, in December 2018, a separate inquiry was opened to examine wider concerns at the Jalalabad Association.

Following the opening of the inquiry, the three founder trustees all resigned their posts. The inquiry found there were three further trustees, who had never been registered with the Commission, nor did they know they were trustees, despite legally holding this position.

The inquiry found that no one had taken overall responsibility for the administration of the charity, which included its safeguarding and financial arrangements.

Until 2017 the charity had been providing after school education at the mosque, however, the trustees could not show that any safeguarding measures, such as DBS (disclosure and barring service) checks, had been carried out or considered. This could have put the charity and its beneficiaries at risk.

In addition, the Commission found that three of the former trustees had been in post since the charity was founded, without ever standing for re-election, while none of them had read the constitution and the charity was operating with an insufficient number of trustees.

Apart from bank statements, there was little evidence of the details of the charity’s income or expenditure with only limited records of membership fees and no invoices, receipts or other records.

The inquiry found the charity’s accounts had never been overseen by the former trustee board or presented to the Annual General Meeting (AGM), as required by the constitution. The former trustee board had abrogated the responsibility of preparing the accounts to their accountant, without putting any oversight or monitoring processes in place.

As a consequence, the charity had been in default of their accounting submissions from April 2013 to April 2019.

The charity had no financial controls policy or cash handling protocols in place and the treasurer had not received any training for his role. Notwithstanding the charity’s previous accountancy firm confirming to the inquiry that they had lost two years of the charity’s records, there was very little evidence of income and expenditure outside of those two years maintained by the charity.

The inquiry also found that the charity did not have a reserves policy and it was unclear how the trustees managed restricted funds and ensured they were only spent on the purposes for which they were raised.

The charity did not implement guidance provided by the Commission when it was subject to a class inquiry and failed to comply with a legal direction requiring them to submit their accounts in 2017. Failure to comply with a direction is misconduct and mismanagement on the part of all of the charity’s trustees.

The Commission has now issued an order directing the charity’s executive committee to undertake a series of actions by December 2019.

This includes a direction on safeguarding, and the introduction of new financial controls.

Amy Spiller, the Charity Commission’s head of investigations team, said: ‘Our inquiry found that the founder trustees of the Jalalabad Association lacked the skills to cope with their responsibilities and the trust people placed in them.

‘This included failing to account for the money donated to them and worryingly they operated an after-school club, without safeguarding arrangements being in place. It’s therefore right that the founder trustees – those most responsible - have resigned.’

‘The current trustees have already made some important changes to their charity and we expect the charity to continue to learn and improve from our engagement.’

The Commission requested and obtained a written undertaking from the three founder trustees that they will not take on any future trustee roles for this or any other charity for a period of 10 years.

Charity Inquiry: Jalalabad Association

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