An Islamic charity has been criticised by the Charity Commission for having poor financial controls and failing to submit accounts.
A funder complained to the commission in 2007 that New Mind, which runs a Muslim school in London, did not keep adequate financial records and had not submitted any accounts since it registered in 1997.
The commission opened a formal inquiry in March 2008 after discovering that payments of £10,000 and £14,000 into the charity's bank account had almost immediately been transferred to the personal bank account of one of its trustees.
The inquiry, which closed in January, accepted the charity's explanation that the sums were repayment for personal loans made by the trustee and had been paid into the charity's account by mistake.
But the commission's inquiry report said the confusion was symptomatic of the "significant weaknesses" in the charity's financial controls and record-keeping. The investigation uncovered a lack of clear audit trails and a chaotic system of dealing with petty cash that "led to a situation in which it was difficult to determine how much was owed by the charity and to whom".
The trustees accepted the commission's guidance on how to improve financial controls and have now submitted accounts for 2005 to 2008, when the charity's income was above the legal threshold for submission.
Another three trustees have been appointed after one of the original three resigned, leaving the charity temporarily unable to make decisions because it had insufficient board members.
The commission acknowledged that the trustees, who cooperated fully with the inquiry, had personally given significant financial support to the charity, which had played a major part in enabling it to continue operating when its future was in doubt.