West Monmouth School
Published 24 July 2017
Applies to England and Wales
© Crown copyright 2017
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A statement of the results of the class inquiry into double defaulter charities in particular West Monmouth School (registered charity number 1065001) (‘the charity’).
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
West Monmouth School was registered on 23 October 1997. It is an unincorporated association governed by a constitution adopted 25 June 1997.
The charity’s object is to advance the education of the pupils in West Monmouth School, particularly through the provision of scholarships.
More details about the charity are available on the register of charities (‘the register’).
Issues under investigation
The charity had failed to submit the annual accounts and reports required for the financial years ending 31 March 2011, 2012, 2014 and 2015 to the Commission. 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 8 August 2016 requesting that the missing documents be provided by 14 September 2016, 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 September 2016 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 charity submitted completed accounting documents in October and November 2016, however, they were not provided in the correct accounting format. The Commission instructed the trustees to re-submit the documents, and provided them with regulatory advice regarding their statutory accounting requirements. The charity re-submitted the outstanding accounting documents in March 2017.
A charity representative informed the Commission that delays occurred in the preparation of the accounting documents due to the trustees not being aware of their statutory accounting duties. This does not excuse the failure of the trustees to fulfil their statutory obligations.
When the charity’s outstanding accounting documents were re-submitted, the accounts were referred for scrutiny by the Commission’s accountants. Any issues identified from that scrutiny will be followed up separately with the charity.
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. Four sets of accounts were filed and as a result £546,230 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 10 March 2017 when the charity filed the outstanding accounting 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.
On 28 September 2016 the inquiry exercised powers under section 84 of the act to direct the trustees to prepare and complete the relevant missing annual accounts, and reports 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, and the need for them to review their procedures and practices to ensure that they fully complied with their statutory responsibilities in future.
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.
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The terms misconduct and mismanagement are taken from section 76 of the act. Misconduct includes any act (or failure to act) that the person committing it knew (or ought to have known) was criminal, unlawful or improper. Mismanagement includes any act (or failure to act) that may cause charitable resources to be misused or the people who benefit from the charity to be put at risk. ↩