The regulator announced today that it had launched the inquiry into the organisation, which works in Uganda, on 25 October.
It initially opened a compliance case into the charity in April to examine concerns, raised by Comic Relief, that insufficient accounting records had been made available to confirm sufficiently how funds were applied.
The commission said these concerns were raised with the Busoga Association UK and a "books and records inspection" conducted, which identified further regulatory concerns about the charity’s governance, due diligence and monitoring procedures.
The Busoga Association UK, whose charitable objectives include the relief of poverty and the advancement of education for people from African communities in the UK and Africa, has run projects with women in Uganda and various community initiatives in the UK, according to its website. It registered with the commission in 2000 and had an income of £131,296 in the year to 31 January 2012.
The regulator added in a statement that the regulatory concerns about the administration of the charity had been compounded by the trustees’ failure to engage with the commission, which raised serious concerns about the risk to the charity’s funds. It has frozen the charity’s bank accounts, meaning payments cannot be made without the commission’s consent.
The investigation will determine whether charitable funds have been misapplied or misappropriated and the general and financial management of the charity is adequate. It will also look at whether there has been mismanagement or misconduct by the trustees in the administration of the charity and whether they have complied with and fulfilled their legal duties and responsibilities as trustees.
A spokeswoman for the Charity Commission said the information about the Busoga Association was shared with it by Comic Relief under the commission’s Reporting Serious Incidents regime, which allows charities to make the regulator aware of any risks to the charity.
She said that the commission did not have any regulatory engagement with Comic Relief in connection with the Busoga Association UK.
A spokeswoman for Comic Relief said the charity did not comment on cases before the final outcome. But she said: "Comic Relief vigorously pursues any abuse of funding by the projects it funds. As soon as our own checking systems raised concerns about the Busoga Association we alerted the Charity Commission.
"This case is testimony to Comic Relief’s rigorous approach to making grants and ensuring the money awarded in grants is spent as agreed. This includes making phased payments and monitoring how the money has been spent before giving the next instalment.
"In our experience of making more than £800m of grants since 1985, cases of wilful misappropriation of funds are extremely rare."
Third Sector was unable to reach the Busoga Association UK for comment.