Decision

Afghan Orphans

Published 22 May 2017

This decision was withdrawn on 15 October 2019

This inquiry report has been archived because it is over 2 years old.

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

A statement of the results of the class inquiry into double defaulter charities in particular Afghan Orphans (registered charity number 1121117) (‘the charity’).

Published on 22 May 2017.

The class inquiry

On 20 September 2013, the Charity Commission (‘the Commission’) opened a statutory class inquiry (‘the inquiry’) into charities that were in default of their statutory obligations to meet reporting requirements by failing to file their annual documents for 2 or more years in the last 5 years and met certain criteria, including that:

• the charities were recently (or in the case of charities that would become part of it in due course, would be) given final warnings to comply by a specified date

• on the day after the specified date they were still in default (partially or otherwise)

At the point a charity met the criteria they would become part of the inquiry. Charities that have been identified for inclusion in the class inquiry have a last known annual income of at least £150,000.

The charity

Afghan Orphans was registered on 9 October 2007. It is a charitable company governed by memorandum and articles of association incorporated 8 November 2006 as amended 10 December 2006.

The charity’s objects are:

  a) to advance the education of the children of Afghanistan by providing and assisting in the provision of facilities for education

  b) the relief of financial hardship, either generally or individually, of people living in Afghanistan by making grants of money for providing or paying for items services or facilities

  c) the relief of the sick and poor living in Afghanistan either generally or individually through the provision of grants, goods or services

More details about the charity are available on the register of charities.

Issues under investigation

The charity had failed to submit its annual accounts, reports and annual returns to the Commission for the financial years ending 30 November 2014 and 2015 within the statutory deadlines. Although reminders were sent the charity remained in default of its obligations under the Charities Act 2011 (‘the act’).

In addition, a final warning letter was issued on 30 January 2017 requesting that the missing documents be provided by 14 February 2017, and warning the charity that if it remained in default it would become part of the inquiry. The charity became part of the inquiry on 15 February 2017 because it failed to supply the outstanding annual accounting information by the deadline.

The inquiry is confined to dealing with the trustees’ mismanagement and misconduct^{[footnote 1]} and remedying the non-compliance in connection with the annual accounting documents.

The outstanding accounting documents were submitted on 29 March 2017.

A charity trustee informed the Commission that delays were incurred during preparation of the accounts. This does not excuse the failure of the trustees to fulfil their statutory obligations.

When the charity’s missing documents were submitted, the accounts were referred for scrutiny by the Commission’s accountants. Any issues arising from that scrutiny will be followed up separately.

Conclusions

The charity’s trustees were in default of their legal obligations to file accounting information with the Commission. This was mismanagement and misconduct in the administration of the charity and a breach of their legal duties.

As a result of the inquiry, the Commission ensured the charity complied with its legal obligations to submit their annual accounting information. The outstanding accounts were filed and as a result £361,357 of charitable income is now accounted for.

The charity ceased to be part of the inquiry when it was no longer in default of its accounting obligations. This happened on 29 March 2017 when the charity filed the missing documents.

Regulatory action taken

The Commission used its information gathering powers under section 52 of the act to order and obtain bank records and financial information of the charity relating to the missing years accounts. These will be used in connection with the Commission’s scrutiny of the accounts.

On 8 March 2017 the inquiry exercised powers under section 84 of the act to direct the trustees to prepare and complete the relevant missing annual accounts, reports and returns for the charity and provide copies of these to the Commission.

The Commission provided regulatory advice and guidance about the trustees’ duty to file the charity’s annual accounting information.

Issues for the wider sector

Trustees of charities with an income of over £25,000 are under a legal duty as charity trustees to submit annual returns, annual reports and accounting documents to the Commission as the regulator of charities. Even if the charity’s annual income is not greater than £25,000 trustees are under a legal duty to prepare annual accounts and reports and should be able to provide these on request. All charities with an income over £10,000 must submit an annual return.

Failure to submit accounts and accompanying documents to the Commission is a criminal offence. The Commission also regards it as mismanagement and misconduct in the administration of the charity.

The Commission will not hesitate to exercise its statutory powers to ensure that a charity’s annual reports, annual accounts and annual returns are submitted to the Commission within the statutory deadlines where trustees persistently fail to comply with their legal duties.

1. The terms misconduct and mismanagement are taken from section 76 of the act. Misconduct includes any act (or failure to act) in the administration of the charity which the person committing it knew (or ought to have known) was criminal, unlawful or improper. Mismanagement includes any act (or failure to act) in the administration of the charity that may result in significant charitable resources being misused or the people who benefit from the charity being put at risk. A charity’s reputation may be regarded as property of the charity. ↩