The Charity Commission has frozen the bank accounts of an animal charity after it failed to submit accounts and appeared to be operating with insufficient trustees.
The commission announced today that it had opened a statutory inquiry into Action Aid for Animals to investigate the charity’s financial controls, administration and governance, and to examine whether there had been any mismanagement or misconduct.
The charity, which works to rescue and care for animals in Romania and Croatia, has strongly refuted any implication of dishonesty in the handling of its finances and said every penny had been spent on its charitable activities.
The commission said it had been in contact with Action Aid for Animals in relation to its governance since 2012, and in November 2015 issued an action plan ordering the charity to improve and to file its accounts, which had been overdue since 2013.
The charity filed accounts for the year to 5 July 2013 on 29 June 2016, 786 days late, and has not submitted accounts for the next two years. Kendra Pinder, the charity’s chair, told Third Sector she expected to file the 2013/14 accounts this week, more than 500 days overdue.
A commission statement, published today, said trustees had failed to comply with the regulator’s action plan and it was possible the charity was operating with too few trustees.
The charity’s entry on the commission website lists just two existing trustees, though Pinder said the charity had three board members.
The commission opened a statutory inquiry into the charity on 27 July and has issued an order preventing trustees from parting with assets without the regulator’s permission and restricting transactions relating to the charity’s operations overseas.
"The continued failure of the trustees to properly administer their charity gives rise to serious regulatory concerns that trustees are not acting in accordance with their legal duties and responsibilities, and that the charity’s assets are at significant risk," the commission statement said.
The investigation will also examine whether the trustees acted prudently and exercised reasonable care in the day-to-day running of the charity, and whether it was fulfilling its objects and operating for the public benefit.
Pinder said: "We welcome this investigation because I have absolutely no concerns and I know that every penny coming into our accounts can be shown to have been spent on the animals."
Pinder said a rapid expansion of the charity to deal with the sheer scale of the need for the charity’s services had led to the financial difficulties. She said she had put £42,000 of her own money into the charity this year to allow it to continue its activities.
The last submitted accounts for 2012/13 show the charity had an income of £249,500 and spending of £248,500, 10 times the income and spending in the year to 5 July 2011.
Pinder said the charity had five trustees last year, but three had left and another had joined. She said there were not enough people to ensure the charity’s administrative work was kept up to date, and some of those who had left had taken information with them and could not be contacted.
A volunteer had also thrown away in error several receipts needed for the accounts last year, she said.
"At the end of the day we do have our faults," Pinder said. "We know that the records haven’t been kept updated but I can’t say why that hasn’t happened.
"But every single penny is shown coming in and out of our accounts. We have nothing to hide."
Action Aid for Animals was among the top 10 most-complained-about charities last year, according to a request made to the Charity Commission under the Freedom of Information Act by Third Sector, which followed up four complaints about the charity.