The Nightmare of Reporting

As I woke up one day, the strangest event had occurred. Suddenly and permanently the requirement to report audited financials had been lifted and no longer required. Just like that, no more annual accounting protocols, costs, or deadlines, no regulators, no fines and no shaming in red.


As I switched on the TV news, there was chaos all over the world. The Stock markets had crashed as investors were pulling out. Investments had been made based on guesstimates and bias representations from companies that did not materialise. Safe businesses were suffering huge losses and companies were running out of cash and being forced to close.


As legal disputes between shareholders and company managements were being drawn up by expensive lawyers, masses were being made redundant and risked losing their homes and livelihoods.


The Government was up in arms as suddenly there was a huge hole in their coffers as many companies understated their results for tax purposes. Hence, the public finances took a hit with many hospitals and schools now risked facing closure.


I frantically went online to assess the situation in the charity sector and was taken back by the result. Although there was no shareholding or profit making, the impact was equally severe.


Many Institutional funders pulled out from funding charities to implement their projects. These charities had failed to pass the minimum due diligence that came with annual audited accounts. As charities pitched for funding, they overstated their ability to deliver and ended up wasting and losing funds meant for beneficiaries in dire need.


The public trust on charities took a hit as there no longer was a credible mechanism to assess if these charities kept their accounts in proper order and if their accounts were true and fair.

What shocked me the most was the sudden holes in the finances that many charities were reporting. As if cash had disappeared. I had considered these charities to be strong in financial governance. These charities were now facing significant error or fraud in their accounts and there was no easy answer as there was no reference to an independent professional check. Consequently, many Trustees and CEO’s were removed from their positions in disgrace.


The World had ended up in chaos and it seemed no one was left immune, the rich and poor were equally and adversely impacted. All organisations were paying the price of this catastrophic change in the World.


As my confusion and shock peaked, I felt a tap on my head, and it was my wife waking me up for the morning prayer. She was waking me up from this never-ending nightmare.


As I sat on my prayer mat after my prayer, it dawned on me how important the annual financial reporting process is to the current World order and trust when dealing with finances. Organisations that take the annual financial reporting seriously not only fulfil a regulatory need they contribute to today’s World order and transparency.


I also learnt that preparing and compiling year end accounts process not only fulfils external reporting needs, it also has an effect of providing assurances internally that the accounts are free from any material misstatement, error or fraud.


Humans make mistakes and are susceptible to greed or quick wins. If gone unchecked this can accumulate significant harm in finances in the short and the long run. The role of external scrutiny of the accounts is to keep this in check and have a credible reference for internal and external stakeholders.


The external reporting process is important to financial governance and therefore requires priority, investment, and attention by those charged with governance of their organisations. They can either treat it as a box ticking exercise or an exercise that keeps their nightmares at bay.


End –


Author: Nasir Rafiq BA FCA is a widely experienced Finance Professional and Governance Expert. He works with business and charity organisations of all sizes and complexities.

Nasir is the Founder Director of Dua Governance Chartered Accountants and Business Advisors. A firm that specialises on governance advisory services to the charity and business sector

Charities and Banks – A difficult relationship

Banks are the most important stakeholder for charities with international operations. The relief they provide saves lives and protects dignity of beneficiaries in the most remote and desperate places worldwide. However, they can do this properly only when the banks allow them to do so.


The role of banks is often misunderstood – is it a regulator? is it an evil business? is it a money transfer agent? or is it a government spy? The answer is No, it can be all of that and more.

The role of banks is often misunderstood – is it a regulator? is it an evil business? is it a money transfer agent? or is it a government spy? The answer is No, it can be all of that and more.

Banks are private or public limited businesses and have all the pressures a business has – Yes, they can go bust and as we saw during the 1990s banking crisis, size did not matter. The failed banks had an effect of destroying livelihoods and dreams of many.


We live in a digital world; no activity be it a noble or a criminal can exist without it. ALL use banks and the banks then suddenly become the conduits in promoting the good and the bad – this is where the government regulation comes in, mainly aimed at stopping the bad as defined by the government and backed by hefty penalty regimes and licenses.


To stop the bad and to avoid penalties, the banks adjust their business practices. Each bank will have its own risk appetite, and this will dictate how they manage their customers, be it a business or a charity.


International charities can be a risky business for banks as they can and have been used to launder money to fund terrorist activities, evade taxes and used to hide personal wealth.


International charities can be a risky business for banks as they can and have been used to launder money to fund terrorist activities, evade taxes and used to hide personal wealth.


Banks design their systems to pick up the bad and money laundering – these systems are often sophisticated and based on artificial intelligence (AI) reflecting decades of banking transactional behavior.


To ensure business and commercial conflicts are managed by banks, many banks have in recent years centralised their anti money laundering checks and related decision making. As a consequence, local bank managers and relationship managers no longer have a say or control like they had in the past.


International money routes


Another layer of complication for international charities is the international nature of bank transfers.


In between the charity’s own bank and the bank receiving funds in another country, there are different intermediary banks subject to different regulatory regimes.


Each banking side (i.e. sending and receiving) does not necessarily control the banks in between. International transfers are only made possible when the intermediary banks allow them.

To understand this point, staying within your own country, we don’t need visa or custom and bag checks, however travelling outside the country, we are subject to all sorts of checks and regulations and depending on what passport you hold, your treatment will differ.


This is also the case with international bank transfers, like roads and flight paths there are various international money transfer routes with different intermediary banks in between. Each route is subject to its own compliance regime, regulator and political sanction regime.


It is in this context of money laundering risks, international charities can struggle to open a bank account, transfer money internationally or in extreme cases have their accounts closed (de-risked) with no recourse or remedy. I see this too often.


In my opinion, this necessarily is not because of a personal, an anti-charity or an anti faith agenda by the banks. It’s often a simple matter of compliance to anti-money laundering rules set by regulators and political governments.


Know Your Clients (KYC)


Banks need to update their systems with KYC (Know Your Client) details and below are the three main questions that they need to answer for money coming in and going out the banks:

  1. Who is donating to the charity? Does the charity itself know and make checks to ensure this is not dirty money?

  2. Who is the money transferred to? Is the bank account receiving money owned and controlled by a locally registered charity that has the permission to receive the monies by the local government or regulator?

  3. The money that is being transferred to a country, project or beneficiary – are there any sanction implications?

Once the money is in the banking system and transferred abroad, the bank becomes a facilitator, so they need to know and be satisfied that these questions can be answered.


Many times, charities fail to understand the importance of these questions and often lack the policies, systems and processes that can help them answer the banking concerns.


In the banking world, the banks do not wait for charities to develop their system, they expect them to have all the answers before any money is put into the banking system –


Banks are businesses and take a business approach to due diligence and anti-money laundering checks. If the bank feels the charity business is more risk than benefit in commercial terms, then it will simply fail the transactions or de-risk the charity. Banks are not obliged to give their custom to charities.

The impact of the pandemic – worst for charities


The pandemic has had the effect of escalating the move to a cashless economy.


Government Covid19 grants required businesses to have bank accounts, many small businesses did not. All this created a significant backlog in banks for business accounts. With staff shortages, working from home, closed bank branches and fewer staff, this all together has compounded the issue for charities specifically.


Unfortunately, it seems the banks have put charities way down down in the priority order. What was cumbersome and difficult in normal times has become impossible after the pandemic and this is most likely to stay like this for years to come.


Unfortunately, it seems the banks have put charities way down down in the priority order. What was cumbersome and difficult in normal times has become impossible after the pandemic and this is most likely to stay like this for years to come.


Charities need to up their game to stay relevant


In this environment, my advice to individual charities with international operations is as follows:

  1. Partner with charities that have proper systems in place that meet the banking anti money laundering requirements

  2. Invest in your back-office operations and do not underestimate the importance of treasury advise and protocols, especially in relation to anti money laundering processes and due diligence processes.

  3. Treat your finance function as a compliance function and not just a money transfer function. Recruit finance professionals with this in mind and relevant experience.

  4. Don’t take risks with money transfers, always assume each transfer will be questioned. Taking risks can backfire with the whole charity operation ending up in jeopardy. Ensure proper paperwork is in place before transfers are made.

  5. Anti-money laundering checks must be made on large donations (i.e. £5000 and above).

  6. Use the mainstream banking system and avoid using cash transfer agents. The audit trail often fails with cash transfer agents and increases the risk to banks.

  7. Work with local partners that have proper local registrations and due diligence in place.

  8. Large charities should establish a good working relationship with their bank relationship manager by treating this position as a key stakeholder of the charity. A transparent relationship should be forged with ongoing issues and future plans. This all helps to keep the bank informed with update to date KYCs.


In short, international relief should not be a about a mad rush for raising money and spending money abroad irresponsibly. It has to be done properly with proper policies, systems and processes for it to be sustainable and impactful for the beneficiaries in the short and long term.


Unfortunately charities can’t change banking behavior, they need to adapt to the new reality to ensure the lifeline they provide to the most desperate for their sake continues.


End –


Author: Nasir Rafiq BA, FCA is the Managing Partner of Dua Governance Chartered Accountants, an ICAEW firm specialising in charity financial governance and internal audit.


Nasir has directed treasury functions in large UK charities with operations worldwide.



Lets take a risk

Things can go wrong in many of the most well run organisations. As humans this shows our imperfections and limitations.

In modern times and especially in the West as management sciences developed, “how to manage risks” became one of the main tools for planning and good governance in organisations. This is why some of the best governed organisations have the best “risk management” in place.

One thing is clear taking risk is not an issue, many successful businesses, organisations and people took risks that brought them success they then enjoyed. Its how this risk was managed helped to keep their heads above the water and avoid the real and present circling sharks.

Another important aspect of risk management is that all risks cannot necessarily be managed to a point where they cant materialise. Even when they are best managed, they can still occur. Only difference being that good management of them means, the organisation is better placed to weather the storm when it comes. This may not be the case without managing them.


Trained in Big 4 accountancy firms in risk management, I had the opportunity to audit risk management in local government, housing associations, central government agencies and education sector. After leaving the Big 4, I moved to a FTSE giant where as a senior Internal auditor, I reviewed risk registers of EMEA region countries and led risk workshops of complex large businesses, such as the North Sea business. As I now work in the charity sector, strengthening good governance in organisations, disseminating my professional learning, I am pleased to see many INGOs recognising the need to manage risks. Be it very much behind the government and corporate sector for various reasons, they try to punch above their weight. In dealing with risk management in the charity sector, especially the INGO sector, I have the following observations:

Where do risks come from

I too often see a misunderstanding of “relevant” risks. Organisations too often led by academics and theory or with the desire of simply copying “others” often fall in this trap.

Identifying risk becomes, a tick box exercise and most of the time risks end up outwardly looking, ignoring the internal and external needs of organisations.


Risks become very much focused on weaknesses and threats, ignoring strengths and opportunities. As I mentioned above sometimes organisations need to be bold to succeed. This may require taking risks.

Every organisation like humans can be different from each other. How the organisation was formed, the recruitment, HR practices, type of CEO and trustees, ethos, stakeholders, business relationships, contracts and brands, can make organisations unique. The associated risks should reflect this. The controlling of risks

In risk registers, I see listing of controls against risks and then a sense of content from organisations that the box is ticked and risk is managed. This is not risk management instead this can turn into a false sense of security. The process of matching risks with controls requires a robust assessment of the controls. This should lead to identifying gaps with meaningful action plans.

An effective risk management process leads to more work, more strengthening, more investment, more focus and more hunger to succeed. This cannot be just a tick box. The INGO sector has a long way to go. Being able to manage risks, can mean a difference of life and death, a full belly or an empty belly for the beneficiaries of INGOs.


The funds raised can travel further in meeting objectives that the most vulnerable depend on. In all this, my work with INGOs continues. Nasir Rafiq is a financial governance expert and the founding director of Dua Governance Chartered Accountants, specialising in the charity sector and internal audit.


Succession – When is the best time to let go

Its hard to let go when you have grown an organisation, be it a business or a charity with personal sacrifice, commitment and / or investment

Sometimes this question leads to breakdown of relationships, disagreements and even legal fights or regulatory action. Humans are mere mortals, and this question always hangs over every Leader, Founder and Owner. This question can be answered in many ways successfully and sometimes unfortunately by force.

In my professional capacity, I have worked to answer this question in the business and charity sectors. My starting position has always been to question and understand the motive of the question as the answers lies therein.

Succession should be about success of the business or charity

Succession must always lead to success – this is when it becomes utmost important to define what that “success” actually looks like.

Does success mean becoming a bigger business or profitable one? Is it about becoming a larger charity or better governed one? Is it about changing the way the organisation is run or just about retiring and passing the mantle?

In defining the parameters of success, the timing matters as it focuses the minds and rewards.

When the question of “succession” is considered without working out the question of “success”, it risks leading to the wrong answer. Not all business successes require successions. And if not careful, unnecessary successions can lead to disasters and failures due to losing history, commitment, and profile of the leader internally and externally. Artificial term times don’t always work, especially when copy / pasted from other organisations.

What success looks like may even require other solutions other than succession. For example, advisors / new positions under the leader, more delegation or just good and better business planning or resources.

However, when the succession discussion is underpinned by the need of a clearly identifiable success then difficult discussions become easier to digest and problems turn the mind to “win-win” solutions. Succession planning becomes meaningful and desirable.


Good strong successors don’t grow on trees

In a family business or a family / friend run charity, the perceptions of control can dominate the succession discussion over the need for real organisational success. Not all seats on the board table mean control – the wrong successor can compromise success – without the real success, control means nothing.

However once succession is on the cards, finding the right successor can become an impossible task. The identified success parameters should determine the type of successor required – Leaders don’t grow on trees and may not be just plucked out of thin air. Promoting an amateur and / or choosing an untried hand can be a risky affair – this is why a timely succession planning is always a cornerstone of good governance.

Below are some examples of how succession planning works in good governed organisations:

  1. Delegation nourishes leadership. This can be achieved in a controlled and a phased manner. The delegation matrix should be meaningful and there should be succession planning thought behind it – This should not just be a HR tool to use when things go wrong.

  2. Input leads to outputs. Every great leader started from a junior position and worked their way up. Never underestimate a good effective recruitment strategy at junior grades. These are the stones that can be carved into eye-catching statues of tomorrow. Graduate recruitment of great corporates is designed with this in mind.

  3. Mentoring should not be accidently achieved – it should be planned. This is a fruit that can be produced through an effective HR function and through good performance management protocols. Effective leaders budget their time for mentoring – these are the seeds that can grow into the trees of tomorrow.

  4. Nepotism can be costly. It comes at the cost of achieving real success. It suppresses real leadership and opportunity. Organisations that keep nepotism in check make succession planning work effectively. These are the organisations that are designed to succeed in their organisational objectives. Those that don’t, lose in the long run.


End –


Author: Nasir Rafiq BA FCA is a widely experienced Finance Professional and Governance Expert. He works with organisations of all sizes and complexities.


Nasir is the Founder Director of Dua Governance Chartered Accountants and Business Advisors. A firm that specialises on governance advisory services to the charity sector.

When assumptions don’t work

Those that run organisations are expected to make decisions. These can be trivial and some with significant long-term impacts. They are often presented with scenarios where they are required to make decisions for the betterment of their organisations. These decisions could relate to appointments, procurements, ending or starting partnerships, strategic direction or related to communications.

How these decisions are taken determines how risk is managed and disasters averted within an organisation. Bad decisions can indicate Bad governance.

The quality of decision is based on the quality of the source. Is it based on assumptions or assurances? The difference between both is crucial and can be explained by how a surgeon conducts surgery.

A surgeon when conducting lifesaving surgery must also make decisions. How these decisions are made gives us a glimpse on how assumptions can differ from assurances.

A surgeon regardless of his skill and experiences must rely on assurances provided by test results, machine sounds, camera, touch, tools and importantly opinion of other professionals. The more complicated the surgery, the more assurance is needed. This is how risk is managed.

All these together give the experienced surgeon assurances on how much risk he/she can take and/or if the surgery is on track.

Just imagine, if the surgeon decides to ignore all and just uses “assumptions” based on past experiences or what he/she may have heard or read from elsewhere to conduct the complex and life-saving surgery. One can imagine, this surgeon is playing with life and risking death on the table.

The more experienced the surgeon, the keener he/she will be on relying on assurances from data, test results, tools, and opinion of other professionals. This is not about being weak or being undermined. This is about quality of professional decision making to save lives.

Those that run organisations can learn from this example.


Those charged with governance that rely on assurances tend to get it right compared to those that rely on assumptions and hearsay. Personal experiences of founders and leaders can be important but also dangerous when ignored over other means of assurances when making important decisions.


The larger the organisation, the more need for robust assurance mechanisms. Below are some examples of assurances that can be used in decision making context:


Comparing and Contrasting is a skill that leaders must have

Management regularly reports to their Boards. The Board members in their positions should have the ability to compare and contrast that information with other sources of information. Sometimes these alternative sources must be created for this purpose. For example:

  1. Does the reported finance information agree back to independently audited accounts?

  2. Does the HR report agree back to staff surveys or outcomes of tribunal cases / HR compliant investigations?

  3. Does the operations reporting agree back to independent evaluations and client / beneficiary feedback surveys?

  4. Is the Management submission on a matter supported by robust legal and finance advice?

  5. Do Management individually report to the Board and are these position holders consistent in their representations?

  6. Is there an independent and competent Internal Audit function that provides a robust professional assurance to the Board on ALL aspects of the organisation?


If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur


Professionals can be individuals or firms. A good widely experienced professional can provide an independent assessment beyond the organisation’s internal politics and embedded assumptions.


Home truths from independent professionals can do wonders for cleaning up an organisation. Those leaders that surround themselves with “Yes Men” tend to fall in their own dug holes as they miss them when they eventually appear.


Good Governance is about how organisations are run in achieving their objectives. Decision making is part of this. It therefore matters how these decisions are made using assumptions or assurances.


End –

Author: Nasir Rafiq is the Founder and Director of Dua Governance Chartered Accountants and Business Advisors, a firm specialising on financial governance.


Nasir is a widely experienced Fellow Chartered Accountant (ICAEW) and a Charity Financial Governance Expert.



Islamic Finance, Mosques & Charities – the Missed Opportunity

This blog represents the well received presentation by the author, he gave as a guest at the launch of the Birmingham City University’s UK’s first Islamic Finance undergraduate degree course.


Islamic Finance has become a multi-billion dollar industry and is fast growing. Despite this growth and reach, this industry has had little to offer Mosques, charities and for the wider uplifting of the state and economies of disadvantaged Muslim societies worldwide.


Islamic Finance has worked to make wealthy Muslims wealthier by helping them avoid the guilt that comes with breaching shariah guidelines – Although there is nothing wrong with that, in my opinion Islamic Finance has a bigger role to play in promoting the finances and impact of Mosques and charities, especially in the UK context.


Islamic Finance is a component of the Islamic Economic system which aims to create a fairer and just society in which hard work is rewarded, those that are at disadvantage are supported, business and entrepreneurship is promoted, and infrastructure is built that benefits all – Mosques and charities play an equally important role in achieving these objectives.


In UK, the top 20 International Muslim charities raise around £400m with around £100m raised in Ramadan alone (see blog). In total when combined, the UK Muslim charity sector can be estimated to be raising around £500m each year. This is despite it being a relatively young sector (only 30 years +) but a fast-growing sector.


Mosques are built using Qard-e-Hasan financing

The majority of Mosques in UK are successfully built using Qard-e-Hasan, interest free community loans, and this is also the case when they extend their facilities. There is no Islamic Finance solution in UK that provides this interest free facility to Mosques in spite of the underpinning strong business model of Mosques.


Each Mosque has a ever growing number of worshippers and donors. They are engaged in a never-ending cycle of Friday prayers and Ramadan worship, during which funds are raised to return the loans.


Mosques are the heart of Muslim community – this is where everything starts from (i.e. marriages), sustains (i.e. prayers and education) and ends (i.e. funerals) – promoting them should be the first priority of the Islamic Finance sector.


Islamic loans for buildings and ICT systems


The UK Muslim INGOs have seen a significant growth in their income. With this growth, a time comes to upscale the back-office facilities and the ICT systems – this is crucial for good governance. Some of these required investments are significant and can’t be covered by the general funds raised in one year and therefore the financing solution makes business sense.


Despite the fact that these charities have stable income and have the ability to payback loans, there are no interest free solutions available to them. The existing solutions are too focused on private and commercial initiatives.


Ultimately the beneficiaries suffering in the most remote parts of the world pay the price for the inefficiencies and weak governance caused by this lack of investment.


Foreign exchange (forex) costs with no hedging solutions


UK Muslim charities transfer around £250m each year worldwide to support beneficiaries. Sometimes the transferred currency has to exchanged up to three times before it reaches the beneficiaries. This poses a significant cost on the charity finances.


Unlike the mainstream non-Muslim charities where they have hedging products available to mitigate their forex costs, the UK Muslim charities have none.


Surplus cash – nowhere to go


In 2020, I analysed the accounts of the top 20 Muslim charities and noted that they held around £107m in cash balances (see blog). UK Muslim charities raise around 40% of their annual income in the month of Ramadan. This is then spent through out the year based on the need and ability to deliver.


The business model of the UK International Muslim charities is such that there will always be surplus cash held by them. It is unfortunate that there are lack of suitable Islamic Finance short term investment / finance solutions in place that can provide low risk returns and at the same time provide benefit to the UK community.


Islamic Finance products – Sustainable relief of poverty


The UK Muslim sector often lacks the required focus and priority on activities that are at the heart of sustainability and capacity building for the long term relief and impact in UK and worldwide. The nature of these activities requires Islamic Finance input and initiative. For example:


a) Micro Finance – building capacity and self-reliance


These are small interest free loans to the poor and disadvantaged individuals for business and self-reliance. Micro finance projects are carried out by some household UK Muslim charities worldwide but not on the scale needed and required on the ground – partly because this is not popular with UK fundraisers and also due to local registration restrictions.


However, In my opinion this activity has a significant potential in UK where a significant number of unemployed or disadvantaged youth and old can benefit. For this to work, an Islamic Finance approach is needed where businesses, professionals, charities, and government agencies need to partner and devise solutions.


b) Endowments (Waqf) – investment in the future


Waqf has historically been at the heart of Muslim charity with its long-term benefits in this world and in the hereafter. However, this approach is often ignored by donors over activities that provide benefit today (i.e. food projects) and also by charities due to their lack of ability to deliver such projects – these projects could be investments in self-sustaining buildings, infrastructure and businesses.


Endowments are investments and although are a charitable product, there delivery is no different from any commercial endeavor. This requires the right and experienced business and commercial skill, hence endowments projects to succeed have to be large in scale so that they can afford the required delivery cost efficiently and effectively.


Muslim charities often lack the right corporate structure, skill and will (due to the long-term nature) to understand and manage the risks associated with endowment projects – this is where Islamic Finance sector can play a role in coming up with large scale funds and delivery partners.


In summary, there is a significant role Islamic Finance sector can play within the Mosque and Muslim charity sector – this is often ignored over profits for the wealthy. By focusing on the Mosque and charity sector, the impact of Islamic Finance can reach far and wider in UK and beyond.


End –


Author: Nasir Rafiq is the Founder and Director of Dua Governance Chartered Accountants and Business Advisors – He is a widely experienced Fellow Chartered Accountant (ICAEW) and a Charity Financial Governance Expert.



Reading between the lines – Human Appeal Inquiry

The Charity Commission on the 28th October 2021 published its decision of its 3 ½ year long inquiry into Human Appeal. This was a comprehensive investigation that has had a profound impact on the charity itself and some of the individuals involved.


This decision has caught my attention as I feel it has some important governance learning for the wider Muslim charity sector, especially charities with international operations.


In 2019, I analysed the accounts of 20 of the largest international relief charities. I found collectively, they raised £350m in UK of which around £80m was raised alone in Ramadan. Hence, there is a lot at stake, and it is imperative that charities learn lessons from such Inquiries.


Background to Human Appeal Inquiry


On 18th April 2019, the Commission opened a statutory inquiry (a serious inquiry) into Human Appeal. The inquiry focused on how Human Appeal trustees conducted themselves in relation to their duties, decision making, due diligence and financial controls.


At the time the Inquiry opened, the charity was of a significant size with an income of £36m, operations in 24 countries and over 100 full-time staff including six directors and a CEO.


My reading of the Inquiry report


The Commission report is a valuable read and trustees of all Muslim charities should read and understand the findings in this report, as much of it, is relevant to all International NGOs.


I will set out my observations below, reading between the lines.


The Trustees can’t wash their hands off overall responsibility

In large charities, trustees employ the executive and delegate responsibilities to them. This does not mean trustees have no responsibility and when something goes wrong, the trustees can simply blame the CEO and get away with it.


The Inquiry concluded that there had been misconduct and/or mismanagement in the administration of the charity by its then Trustees and identified that a significant factor in the misconduct and/or mismanagement was insufficient oversight of the charity’s executive by the then Trustees.


Steve Roake, Head of Compliance Visits and Inspections at the Charity Commission, said “While trustees of larger charities will delegate certain tasks to staff members, we and the law are clear that trustees retain ultimate responsibility for running their charity. and our guidance is clear that trustees must ensure that robust reporting procedures are in place. Responsibility for ensuring they have sufficient information and are adequately informed to make decisions rests with the charity trustees”.


It should be noted that in the detailed report, the Commission did not single out the CEO for misconduct, never mind gross misconduct.


Ignorance of Trustee(s) is not a defence


The Commission report states that part of a trustee’s role is to review proposals and challenge assumptions critically and objectively in making decisions.


No one should be able to direct the trustees or drive decisions through without sufficient consideration. Trustees who simply defer to the opinions and decisions of others aren’t fulfilling their duties.

In large charities (especially), it is imperative that formal systems and process are in place that provide scrutiny over Executive decision making – this does not mean, the Executive are deprived of decision making – This is one bicycle that requires both tyres to run in sync for good governance.


Trustees approve the strategy and budget. The Executive run the charity and provide timely and robust feedback to Trustees so that they are adequately and collectively assured and informed.


It is insufficient for the CEO to rely on informal relationships with the Chair of Trustees or a small of group of trustees.


It is not enough for due diligence to be done by management; Trustees must have systems in place that can adequately assure them that due diligence is actually done


Often when asked, trustees assume due diligence of donors and partners is done by management because they are paid to do it. When public funds and donor monies are involved, this is not sufficient or a responsible answer by any standard.


There is a stark difference between assumption and assurance. When someone else’s money is involved which is the case with donor monies in charities, trustees should not be relying on assumptions and mere alone representations from the executive.


A system of internal control, policy and independent assurance on their effectiveness is something that should be in place as a standard in large charities.


The Muslim charities are often lacking in this area, often because trustees have never experienced similar systems in place elsewhere and there is no compulsion within the sector for such systems to exist. This attitude needs to change – the level of funds and risks involved in the sector demands this.


Submitting true and fair statutory returns on time matters and it’s the trustees that are ultimately responsible

Charities with annual income above £1m require a statutory audit of their year end financial statements. The External Auditors are required to give an “opinion” on whether the charity’s financial statements are true and fair presentation of charity finances and activities.


There are two main types of opinion – Unqualified opinion: means a clean opinion where the auditors consider the financial statement true and fair. Qualified opinion: means a bad / adverse opinion where the auditors raise serious concerns over the financial statements.


Human Appeals submitted 2017, 2018 and 2019 (last three years) financial statements consistently show a qualified opinion disclaimer from its External Auditors.


The reason for these qualified disclaimers is due to unreliable financial records and a risk of material misstatement in its reported income and expenditure. The qualified opinion also relates to a material uncertainty that the auditors felt exists that may cast significant doubt on the charity’s ability to continue as a going concern.


This is a damning verdict on the state of Human Appeal finances, how they are managed and recorded from an independent Auditor. For a charity that raises Zakat and Sadqa monies, this is problematic, more so, as questions can be raised on its ability to account for Zakat monies properly.


The Commission recognised the qualifications of Human Appeal accounts in their Inquiry and were critical of the late and non-submission of the accounts. The Commission considered this to be misconduct and/or mismanagement in the administration of the charity and the Inquiry finds that the trustees of the charity at the time are responsible for this.


It’s the responsibility of the trustees to ensure adequate and capable resources are secured and in place for reliable financial records. International charity accounts are complex accounts with significant compliance burden, this should never be underestimated and ignored by trustees.


My conclusions


Fundraisers work hard to raise funds, they become the face of the charity. They use various strategies to convince donors on the credibility of the charities they represent.


As a result of their work, the money they raise is not just money, it represents someone’s emotions, trust, a memory of a deceased loved one or a simple sacrifice of personal funds.


It is sad when the trustees of that charity let their fundraisers and donors down by not fulfilling their legal and moral responsibilities.


The Commission in the report recognised the progress made during the Inquiry by the current Human Appeal trustees and as a result the charity is in a stronger position going forward.


However, the Commission also recognised remaining areas where significant improvements are still required. Reading through the report, the state of finances maybe one of them.


Author: Nasir Rafiq is the founder and director of Dua Governance Chartered Accountants and Business Advisors –


He is a widely experienced Fellow Chartered Accountant and a charity financial governance specialist.


End –

Webinar to simplify Covid19 Grants and Loans


Update on Q&A

Bounce Bank Loans and Charities

The condition for having more than 50% of the Business income from its trading activity does not apply to charities including Mosques.


Rental Income

Rental income is generally classed as non trading income, being investment income. For Bounce back loan purposes this may not be classed as trading activity.


Webinar Speakers

Nasir Rafiq BA FCA (Founder and Director @Dua Governance Chartered Accountant)


He is a widely experienced Chartered Accountant with over 20 years of professional experience. He specialises in helping organisations improve their financial governance and performance. He works with all size charities and businesses.


He graduated in Business Economics from University of Leicester and then qualified as a Chartered Accountant (ICAEW) with KPMG (UK). Having worked with PwC (UK) and KPMG (UK) for over seven years in the public sector, he later joined the world’s largest contract catering company, Compass Group PLC (FTSE 100). In his role as a Group Internal Auditor, he worked in the Middle East, South East Asia and Europe.


Nasir also worked as a Director and an Associate Partner at a Top 20 Accountancy firm in UK, leading the firms Business Governance Advisory service nationally covering the charity and business sectors.

Webinar: Furlough is Changing from 1 July. Is your Mosque / Charity ready


Webinar Speakers

Nasir Rafiq BA, FCA (Found Director @Dua Governance)

Nasir is a widely experienced Chartered Accountant and an expert in Financial Governance. He has extensive experience of working with charities of all sizes. He also advises many small to medium size businesses. During the lock down crisis he has been writing blogs on and supporting many charities as they responded to the crisis.


Omar Rashid MCIPD (Director @The HR Dept)

Omar is CIPD qualified HR professional with widespread generalist and strategic experience. With a proven ability to work with senior managers to influence and integrate HR best practice into overall operational strategy. Omar has been working with charities and business during the lock down crisis, helping them to respond professionally and effectively.

Basic Finance for Charity Trustees

Blood flow in the body is vital for a living and healthy human being.


Finance in charities is like blood in the body. There is no charity activity without it. Money buys the goods and services for the most in need and connects the donating hand to the one that receives it.

In humans high blood pressure and cholesterol can lead to disease, heart attacks and death. Like humans charities follow the same path.

Cashflow problems, banking freeze, fraud, bad accounting and waste of money leads to beneficiaries losing out and in extreme cases a bust charity – unlike local government, charities are not bailed out and die their death. Recent Covid19 crisis has shown this far and wide.


To stay healthy humans need to work on their diet, regularly exercise and see the doctor for check-ups.


Charities are no different.

The political and social environment is constantly changing and the economic conditions are not always favorable. Quality of staff, training, regular performance reviews and checks by internal and external professionals, keeps the finances strong and healthy.

To be healthy, we don’t need to be health experts. We just need to know and do the basics. These basics can be life and death in the long term.

We have organised a Webinar – Finance Basics for Charity Trustees to discuss the basics of finance that should matter to Trustees of any size charity.


As a trustee, you don’t need to be a finance expert. All you need is to ask the right questions at the right time from the right people – our webinar is designed to equip you with just that.

Register now @ All registrants will receive a copy of the recording.