Charity Commission publishes inquiry into Higher Education College

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Earlier this year the Charity Commission published a report of its statutory inquiry into AA Hamilton College Limited.

The investigation centred on concerns about financial controls and management at the College, and unauthorised charity trustee benefits. The Commission began its investigation in January 2011 and was concerned to find evidence of non submission of accounts and annual returns, potential unauthorised benefits received by directors and problems with financial controls and director decision making.

Once the College was made aware that the benefits to the directors were unauthorised, the two directors involved ceased to receive any funds from the College and resigned as directors and from their paid posts. Two new directors were then appointed and the Commission has since been satisfied that the College has complied with the steps in its designated action plan and that the book keeping and accounting procedures have now improved.

Most Higher Education institutions are charities, either as an exempt charity or a charity registered with the Charity Commission. Regardless of whether they are exempt or registered, in all cases there is a legal obligation for them to comply with charity law.

Certain issues for the wider Higher Education sector have been highlighted by this inquiry. The key points arising from the inquiry are the need for members of the governing body (directors or governors) to protect the property of the institution through adequate administrative and financial controls and to ensure that any benefits received by directors or governors are legally authorised.

Key action points:

  • Higher Education institutions should ensure that they have robust administrative and financial procedures in place to enable directors or governors to fulfil their duty of protecting the institution's property; and
  • if a director or governor is receiving a benefit from the institution then the other directors or governors must ensure that this is properly authorised and must obtain Charity Commission consent if necessary.

If you require any advice as to whether a benefit to a director or governor is properly authorised please do not hesitate to contact us.