Final Published Audit Report

Bashir

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• Publié par: Nisig
• Nombre de lectures: 32
• Langue: English

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In the Name of Allah, The Most Beneficent, The Most Merciful

KINGSTON MUSLIM ASSOCIATION

AUDIT COMMITTEE REPORT

September 2005

TABLE OF CONTENTS

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PURPOSE, DEFINITIONS, INTERPRETATION, OWNERSHIP AND DISCLAIMER 2

EXECUTIVE SUMMARY 3

SECTION ONE: RESEARCH AND METHODOLOGY 5

SECTION TWO: ALLEGATIONS, EVIDENCES, FINDINGS, AUDIT OPINION AND RECOMMENDATIONS 6

SECTION THREE: ADDITIONAL RECOMMENDATIONS AND OBSERVATIONS 11

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Purpose, Definitions and Interpretation This Report sets out the investigation, finding(s) and the opinion of the Audit Committee for the sole purpose and use of the Kingston Muslim Association (KMA). In this Report unless the context otherwise requires: - “REPORT” means the Audit Committee Report. “KMA” means the Kingston Muslim Association as a whole, i.e. the General Body which consists of the Kingston Muslim Jamaat, the Board of Trustees, the Executive Committee, the Committee Members and the Ordinary Members. “THE AUDIT COMMITTEE” means the KMAAC, i.e. the Kingston Muslim Association Audit Committee. “KMAMC” means the elected body, Kingston Muslim Association Management Committee. “THE EXECUTIVE COMMITTEE” means the office bearers of the KMAMC, i.e. Chairman, Vice Chairman, Secretary, Assistant Secretary, Treasurer and Assistant Treasurer. “AGM” means the Annual General Meeting. “Accused” means one or more person. “Accuser” means one or more person.

Ownership This Report is the sole-property of the KMAAC and no part of this Report may be used for any purpose whatsoever without the prior written permission of the KMAAC. Disclaimer No part of this Report may be relied upon by any third party for any reason whatsoever. No part of this Report may be used for any legal purposes whatsoever. No part of this Report may be used as evidence or to bring legal proceedings against any member of the KMAAC or any Accused or Accuser disclosed in this Report.

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EXECUTIVE SUMMARY

Dedication With genuine humility, we, the members of the Audit Committee, acknowledge Your aid, O Allah ! Without Your guidance and help this work would not have been possible. We thank You, O Allah ! It is dedicated to You, O Allah ! Please bless it with your acceptance. Acknowledgement Firstly, we thank Allah (swt). All praise is for Him, the All-Kind and Merciful. Then we acknowledge our deep gratitude for all the Accuser’s and the Accused, for all the pains they took in going through our interrogations and giving us their unopposed co-operation, which we needed to carry out our task. We owe our gratitude to Brother Abdul Rashid Laher, our Caretaker Chairman, for his impartiality in our investigations and who also was a great help in compiling the complaints received from the Accuser’s. We deeply thank The Caretaker Treasurer, Mohammed Rafik Saab who was a constant source of help in our review of the Accounting records. In grateful appreciation we thank the whole of the Caretaker Management Committee and every single member of the Kingston Muslim Association for their patience, trust and respect accorded to us. We again thank Allah (swt), the All Knowledgeable and Wise. Authority We, the Kingston Muslim Association Audit Committee (KMAAC), an independent internal enquiry team, were elected by the etin A n Masjid on 2 G 8 e th n   e N r o al v   e B m o b d e y r ,     2 at 0  t 0 h 4 e .  Kingston Muslim Association (KMA) Annual General Meg (GM), held at the Kingsto The KMAAC The Audit Committee consists of 4 members: Bashir Sacranie, Anjum Ahmad, Afzaal Khan and Naveed Shah. The Task The remit of our Audit Committee was to investigate: allegations of theft, fraud, financial irregularities, mis-management and the allegation of a dictatorial style of management made against the past and present KMA Elected Management Committee(s), (KMAMC), their office bearers (the Executive) and the remaining Committee Members (the non-Executive). The proposal passed and adopted at the AGM stated that an independent internal inquiry team should review, investigate and make appropriate recommendation(s) regarding the KMA management, administrative and accounting processes followed in the last six years. Research and Methodology We began our investigation in Jan 2005. We carried out to the best of our knowledge and ability a rigorous examination of the financial and accounting records, minutes and correspondence of the past Committee(s), in detail where necessary and possible. We entered into communication and correspondence, where necessary and possible, with the Accountants, Bankers, Lawyers, Local Council Offices and Inland Revenue Offices. We certify that to the best of our knowledge and ability all allegations were fully investigated at appointed hearings with all the Accusers and the Accused, through recorded interviews conducted under oath. The Audit Committee collectively spent some 100 +/- hours and a further 200 +/- individual hours in carrying out its investigation, deliberations and reporting. Key Findings and Audit Opinion It is our unanimous opinion that in the absence of sufficient evidence and witness, as prescribed under the laws of Shariah, we did not find any one person(s) guilty of theft or fraud. We are also of the opinion that the key financial allegation(s) were without strong evidence(s). However, we are of unanimous opinion that whilst the Community as a whole is indebted to the past Executive and Non- Executive Committee Members for their tireless and dedicated role in the establishment of our Masjid, their identified failings ultimately paralysed the ability of the then Management Committee(s) to work for the betterment of our Masjid and Members. Therefore, the past elected Executive, including most but not all the Non-Executive Committee Members, were individually and collectively, guilty of gross mis-management. Both the style of management and the discharge of their entrusted responsibilities were unconstitutional, non-consultative, undemocratic and lacked accountability thus leading to disunity, suspicion and mistrust within the realms of our Masjid. 3

RECOMMENDATIONS

Truth and Reconciliation We, unanimously, very strongly and without any reservation recommend to the KMA that Insha-Allah the spirit of Truth and Reconciliation embodied in this Report should be allowed to prevail.

New Team The former Management Committee Members should now make way for a new team which will Insha-Allah, bring the compelling, necessary and essential Management and Administrative skills which are a prerequisite to a united, efficient and effective Management Committee.

New Constitution Insha-Allah, the KMA should adopt a NEW CONSTITUTION, paying extra-ordinary attention to: (i)   the MEMBERS of our Masjid, their eligibility and acceptance. (ii)   the BOARD OF TRUSTEES of our Masjid, their eligibility, appointment and/or election. (iii)   the ELECTIONS of the Management Committee Members, their eligibility and election. (iv)   the ROLE of the Office Bearers (the Executive), Committee Members (Non-Executive) and Sub-Committees. The limitations of their powers, their responsibilities and their accountability. (v) the ROLE of SUB-COMMITTEES. The Future Insha-Allah, these recommendations will bring a newly elected Committee, with clear direction and standards for the future, under the strict guidelines of a newly adopted Constitution. This must take effect immediately in order to rectify the neglected affairs of our Masjid, “then strive together (as in a race) towards all that is good’’ (Qur’an , 2:148).

Impact of not introducing recommendations made in this Report If this recommendation is not heeded than the atmosphere of mistrust, confusion and paralysis discovered in our investigation and identified in this Report will result, may Allah (swt) forbid, in the absolute decay of our Masjid, “ they shall reap the fruit of what they did and you what you do’’ (Qur’an, 2:134). Additionally, financial management will lack accountability and will lead to the assets and internal controls of our Masjid being exposed to potential abuse. An efficient management committee will provide the support, which the Treasurer requires to perform his role, “Woe to those that deal in fraud”(Qur’an, 83:1).

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SECTION ONE: RESEARCH AND METHODOLOGY:

Primary Research

·  We reviewed the financial statements of the Masjid for the period 1992 to 2004.

·  We conducted analytical review and trend analysis.

·  We reviewed the main financial record (cashbook).

·  We reviewed source documents (e.g. bank statements, invoices and correspondence).

·  We reviewed documents relating to income derived from Gift Aid claims with the Inland Revenue.         

Additional data was collected through:

·  Correspondence with the Inland Revenue regarding Gift Aid claims.

·  Correspondence with the Bank.

·  Interviews with nine members of the public making allegations.

·  Interviews with the members of the Executive against whom allegations were made:

·  Accused one (summoned 3 times) ·   Accused two (summoned 2 times) ·   Accused three ·   Accused four

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SECTION TWO: SPECIFIC ALLEGATIONS, EVIDENCE, FINDINGS AND RECOMMENDATIONS:

Accuser 1 Date of Interview: 12th March 05. 1. Allegation:   The Chairman misappropriated £80k loan from a prominent donor.  Evidence provided by Accuser: None.  Evidence established by KMAAC: Analysis and analytical review of Financial Statements over a 10-year period  confirmed that the loan was recorded in the records and used for the purpose intended.  Finding: There was no misappropriation. The entire loan was used for the purpose intended i.e. to pay off the  Masjid mortgage with the bank and the donor was gradually paid off by the Masjid. The allegation was based on  rumour and hearsay. Interviews with the Accusers supported this observation.  Audit opinion and recommendation(s): The loan was not channelled through proper Committee Meetings with the  apparent knowledge of all members thus lack of transparency led to escalation of rumour and hearsay. The intentions  however were honourable. 2. Allegation: The Committee Chairman and Secretary conducted a non-transparent style of management and  this is reflected in various financial decision and record making processes.  Evidence provided by Accuser: Several letters provided to which a reply from the Masjid Committee was not  received. Financial spends incurred without adequate communication to the Community (e.g. spend on clock tower).  Many Committee Minutes were not detailed enough.  Evidence established by KMAAC: When interviewed, the Accused accepted the management style was  occasionally not consultative or transparent. This was true, for example in the clock tower building process.      Finding: The evidence provided strongly supported this allegation.  Audit opinion and recommendation(s): Totally unconstitutional and against the very basic principles of running  any public office. Any future repetition of such proven conduct should never be tolerated and should tantamount to  immediate dismissal of the guilty person(s). 3. Allegation: Inadequate authorisation of key projects (e.g. demolition of washing area, building of the tower  and paying committee member’s families for Masjid work).  Evidence provided by Accuser: Verbal and/or written statement.  Evidence established by KMAAC: Some decisions were not properly minuted and appropriate authorisation  procedures were not in place.  Finding: Authorisation was sought through the Committee. However, many Committee Members did not turn up  to take part in discussions and Minutes were not properly kept and other Committee Members did not provide  sufficient challenge.  Audit opinion and recommendation(s): A Building Sub-Committee should authorise all work and seek a  minimum number of quotes (subject to a materiality level). 4. Allegation: Poor cash accounting e.g. fitrana was not passed through the Accounts.  Evidence provided by Accuser: The Accuser referred to the low level of donations in the Accounts.  Evidence established by KMAAC: Examination of the financial statements confirmed the accusation. However,  the late Imam kept separate records. The Treasurer advised that this practice has now ceased and fitrana is passed  through the Accounts. He further explained that it had been assumed that keeping fitrana donations outside the main  accounts was appropriate because this money was perceived as non-Masjid money.  Finding: The allegation was correct. However, the money was separately accounted for and appropriately distributed.

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     Audit opinion and recommendation(s): All cash is passed through the accounts irrespective of its source or type  of donation. However, this practice has already started. 5. Allegation: The use of a Masjid builder at the home of various Committee Members in order to derive  personal benefit.  Evidence provided by Accuser: Verbal and/or written statement.  Evidence established by KMAAC: Interviews with the Accused confirmed that builders did work at the homes of  the Committee Members. However, we were unable to confirm if personal benefit was derived.  Finding: Masjid related builders did work at the homes of various Committee Members but no apparent financial  misappropriation, kickbacks or personal benefit was evident.  Audit opinion and recommendation(s): Although no financial impropriety was discovered the lack of  transparency created an atmosphere of mistrust. Masjid Committee Members should not only act honourably but also  be seen to act honourably. They should not engage in activities which will result in a conflict of interest. This means  that Masjid builders must not work at the homes of Committee Members. This will avoid rumour and speculation. 6. Allegation: Payments to Committee Members families, at higher than normal market rates for various  second hand items (e.g. windows) installed at the Masjid and for other work done at the Masjid.  Evidence provided by Accuser: Verbal and/or written statement.  Evidence established by KMAAC: Interviews with the Accused substantiated the above finding.  Finding: Payments to Committee Member’s families were made (e.g. work on the central heating). The process  was non-transparent and other opportunities for tender were not sufficiently explored. A Committee Member was  unaware of this agreement and was excluded from the decision making process. Therefore he was unable to offer  his services for free.  Audit opinion and recommendation(s): Payment to relatives of the Masjid for work done is not unreasonable  given they are offering their skills. However, in the interests of propriety it is recommended that future work is  authorised by the building Sub-Committee and tradesmen related to the Committee must disclose their relationship  and take part in a tender. 7. Allegation: Non-timely issue of receipts to donors.  Evidence provided by Accuser: Verbal statement from donor.  Evidence established by KMAAC : The Accused were unable to explain the delay in issuing receipts.  Finding: Proven.  Audit opinion and recommendation(s): Receipts must be issued within a specified time and if not supplied, the donor  follows a grievance procedure and is guaranteed a response within a specified time. 8. Allegation: Non-transparent disclosure of records when asked (e.g. membership records).  Evidence provided by Accuser: Verbal and/or written statements provided by various Accusers.  Evidence established by KMAAC: On interview the Accused were unable to provide a satisfactory explanation.  Finding: Proven.  Audit opinion and recommendation(s): Poor record keeping contributed to this problem. It is recommended that  a clear and proper Register be kept. It is further recommended that roles and duties within the Committee be  clearly defined, allocated and written down. 9. Allegation: Concern over management of building projects e.g. inadequate fire exits (suggesting poor  planning, authorisation and building), the demolition of a washroom for unknown reasons and building  work identified as ‘personal family projects’ for the Accused.  Evidence provided by Accuser: Reference was made to a previous visit by council officials/buildings inspectors.

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 Evidence established by KMAAC: None.  Finding: The number of fire exits was appropriate at a particular point in time. However, the volume of worshipers  substantially increased over time. The washroom was demolished in order to carry out a restructure of the Masjid which  would cater for a greater volume of worshippers to attend. Projects were conducted in an authoritarian  manner and sufficient disclosure was not made at Committee level.  Audit opinion and recommendation(s): A lack of consultation and non-transparent management style  contributed to this problem as well as a non-existent grievance procedure, which allowed rumour to escalate. On  interview the Accused advised that at a particular point in time the number of exits was appropriate. We did not  consider this unreasonable. The recommended Building Sub-Committee with appropriate controls should rectify  future problems. It is essential that a review of the building by a safety engineer be conducted to confirm that all  structures and fire exits are appropriate. The Management Committee should publish a review. All building  work should be authorised by the Committee and progress discussed. 10. Allegation: Insufficient Gift Aid claimed from the Inland Revenue.  Evidence provided by Accuser: Verbal and or written statement and reference to analytical review of the  financials.  Evidence established by KMAAC : Gift Aid forms were examined and payments from Inland Revenue verified.  Finding: Gift Aid was claimed however claims were not maximised.  Audit opinion and recommendation(s): Gift Aid was claimed however, it was not maximised due to the lack of  expertise, time and prioritisation. It is recommended that expert financial advice from an Auditor is sought and a  procedure documented for claiming this benefit.

Accuser 2 Date of Interview: 10th March 05. 1. Allegation(s) by this Accuser have been dealt with allegation(s) under Accuser 1.

Accuser 3 Date of Interview: 12th March 05. 1. Allegation: Material differences in messages to various audiences (e.g. some people told the clock tower  would be funded by the Council, others told it would be funded by donations).  Evidence provided by Accuser: Verbal statement.  Evidence established by KMAAC: Interviews with Accused provided comfort that the escalation of the project  was due to unforeseen problems, which arose as the project proceeded (e.g. unsuitable foundations). However, the  escalation of costs was not appropriately communicated to the Community nor to the Committee.  Finding: The conflicting messages led to confusion and created an atmosphere of mistrust but there was no  apparent misappropriation of funds. However, the project was totally mis-managed because it was not channelled  properly through the Community and Committee.  Audit opinion and recommendation(s): All discussions by the Committee must be minuted and the Minutes  displayed on the Notice Board in the Masjid. A Buildings Sub-Committee should manage such projects. The  escalation of costs on this project (due to unsuitable foundations) was not properly communicated.

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Accuser 4 Date of Interview: 13th March 2005. 1. Allegation: The use of expensive funeral agents instead of cheaper alternatives and non-delivery of funds to  the deceased.  Evidence provided by Accuser: Verbal statement  Evidence established by KMAAC: The choice of funeral directors was a personal decision taken by one of the  families concerned. Non-delivery of funds depended on the deceased having not completed the appropriate forms.  Finding: Not proven.  Audit opinion and recommendation(s): The Management of this fund is non-transparent. A Funeral Sub-  Committee should be set up. 2. Allegation: The Secretary brought alcohol back from a trip to Paris over ten years ago.  Evidence provided by Accuser: A written statement.  Evidence established by KMAAC : The KMAAC was unable to confirm the allegation and witnesses declined to  come forward.  Finding: Although the Secretary agreed that alcohol might have been brought back he explained that it was  nothing to do with him nor was the trip anything to do with the Masjid.  Audit opinion and recommendation(s) : In order to prevent allegations having to wait 10 years before being  aired, a recommended grievance procedure, through a Sub-Committee, should enable future allegations to be dealt with  swiftly.

Accuser 5 Date of Interview : February/March 2005. 1. Allegation: The potential for large loss of money on key projects e.g. investment in a cemetery.  Evidence provided by Accuser: Verbal statement  Evidence established by KMAAC : Interviews with the Accused confirmed that no investment was made.  Finding: Although the Accused investigated the possibility of investment in the project no activity occurred  following objections from other Committee Members.  Audit opinion and recommendation(s): All projects should go through a Buildings Sub-Committee. In this  instance we understand why the project was considered and note that it ceased once the cost and scale of the  project was considered. 2. Allegation: Donations collected for the building works not reflected in the P&L Account.  Evidence provided by Accuser: Verbal statement  Evidence established by KMAAC : Analysis of the financial statements (analytical review) demonstrated that  periods showing high levels of donation corresponded with movements (upwards) in the value of fixed assets in  the Balance Sheet.  Finding: Donations were capitalised and hence passed through the Balance Sheet.  Audit opinion and recommendation(s): Preparation of monthly Management Accounts are a must. Again, a  responsibility of a Sub-Committee. Must be tabled for discussion and verification at Management Committee  Meetings.

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Accuser 6 Date of Interview: 13th March 05. 1. Allegation: Inconsistent treatment of tenants.  Evidence provided by Accuser: Verbal statement.  Evidence established by KMAAC : Significant outstanding debtors.  Finding: Some tenants were pursed for outstanding debts due to the Masjid and others were not.  Audit opinion and recommendation(s): The Masjid has significant outstanding debtors, e.g. The IRC. We note  with considerable concern that the IRC, an independent organisation, owes the Masjid significant sums of  outstanding rental monies. This is an unacceptable situation and needs resolution forthwith. The Masjid should not  be subsidising other individuals or organisations. A special Sub-Committee should be set up to resolve this matter  within a specified timeframe. The ability of tenants to pay with proper legally binding tenancy agreements should be  in place for the protection of Masjid’s hard earned assets. Tenants should be treated fairly and equitably but not at a  loss on the part of the Masjid.

Accuser 7 Date of Interview: 23rd March 05. 1. Allegation(s) by this Accuser have been dealt with allegation(s) under Accuser 1.

Accuser 8 Date of Interview: March/April 2005. 1. Allegation: The Chairman seen to remove monies from the Friday collection.  Evidence provided by Accuser: Verbal statement.  Evidence established by KMAAC:  We found the above explanation under finding being consistent with our  review of Accounting for Cash and payment for volunteers. Our analytical review supported this conclusion.  Finding: Funds were removed from Friday collections. The explanation provided was that these were used to pay  volunteers.  Audit opinion and recommendation(s): The current practice of paying all staff through the Accounts to continue.  It is noted that as soon as the allegation was made, the Treasurer, in particular, took appropriate steps to clarify the  cash counting process and removed the Accused from the counting process. We are of the opinion that no theft  occurred in light of no evidence or witness. However, cash was removed, as acknowledged by the Accused, but to  pay volunteers. Grievances and allegations should have been dealt with promptly rather then allowed to simmer for  years. This is no longer an issue as proper procedures are now in place governing cash collections and monies are  now channelled through the Accounts.

Accuser 9 Date of Interview: March/April 2005. Allegation(s) by this Accuser have been dealt with allegation(s) under Accuser 1.

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