Restricted Funds

Posted by alphanumeric PM | on Tue, 10/01/2012 - 11:09  1784  2 comments | report

Hi All,

I have come accross a situation where the trustees of charity decided to use restricted funds for un-restricted purpose. Their explanation is that this is just a short-term loan to cover some repair expenses and will be reimbursed once the funding of repairs have been received from other sources. Please someone explain whether it is possible to use restricted funds like this and what implication will be in terms of disclosures in the financial statements.

Thank you.

 

Comments

No, restricted funds should

jpcc1 | Tue, 10/01/2012 - 11:21 | Permalink

No, restricted funds should not be used for other than the restricted purpose.

If this has happened as you set out above, then the trustees must rectify the situation as quickly as possible. They should disclose in the accounts, in the interim, the extent of the situation, the reasons for it and the steps being taken to rectify the situation.

My understanding may be wrong but I would say that they are in breach of trust and may be personally liable for any loss of restricted funds if they are not recovered.

scalloway's picture

Charity Commission Guidance

scalloway | Tue, 10/01/2012 - 11:32 | Permalink

I would think that this happens from to time with many charities. If you are sufficiently concerned there is Charity Commission guidance here

http://www.charitycommission.gov.uk/publications/cc32.aspx#appendix%205

 

 

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