Weak financial controls delayed discovery of embezzlement by charity's finance director, says report by the watchdog
Weaknesses in the London Philharmonic Orchestra's financial controls prevented the charity from detecting a fraud that cost the charity an estimated £2.1m, according to a report today from the Charity Commission.
The charity's former finance director, Cameron Poole, siphoned off about £666,000 of the charity's funds between June 2005 and August 2009, the report says.
He was sentenced to four years in prison after pleading guilty in August to fraud by abuse of position, and acquiring and using stolen property.
A forensic investigation into the fraud by accountancy experts revealed that Poole stole two-thirds of the money by forging signatures on cheques.
The charity estimated that the fraud had cost it about £2.1m in total because, in an attempt to conceal the fraud, its income had been overstated and its forecast expenditure had been understated. This meant the charity spent more money than it would otherwise have done, and was forced to use its reserves to fund this expenditure.
The Charity Commission's report on the London Philharmonic Orchestra, published today, says: "There had been a number of weaknesses in the charity's internal financial controls. This exposed the charity to greater risks and may have contributed to preventing the trustees from detecting the fraud at an earlier stage."
The report says trustees told the commission during its investigation that the orchestra's former auditors had confirmed that that the charity's financial controls had been "adequate and appropriate".
However, it says, "it was not clear to the commission, from the information available to it, that such a focused review of the charity's internal financial controls had been within the scope of the work the former auditors had undertaken for the charity".
It also says the trustees acted responsibly once they discovered the fraud had taken place. This included appointing an independent accountancy firm and a public relations company.
The charity was awarded £2.35m from a civil claim against Poole and has so far recovered £1.2m, the commission's report adds.