EIVT

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Recipients:

 

1. Vincent Green

2. Richard Palczynski

3. Jennifer Aneto

4. Imam Goztas

5. Priti Devchand    

6. Gary Parmar

7. Carmen Wallace

8. Karen Wilkie

 

 

Dear Sir/Madam,

 

Enfield Island Village Trust Financial Statements: open letter addressed to all the Trustees of Enfield Island Village Trust (EIVT) in office on 21st December 2012 as well as Trustees in office during the year ending 31st March, 2013.  

 

This is a formal notice of serious and material irregularities in the Financial Statements of the Trust as well as material irregularities in the financial records of the Trust for the year to 31 March 2013. These records were the responsibility of the Trustees serving at the time.

 

Financial Management affairs

 

1. EIVT is a charity and is required to prepare accounts in accordance with SORP (Statement of Recommended Practice) as defined by the Charities Commission.  The accounts for the Year Ended 31 March 2012 were prepared by Roberts and Co, and signed by Trustees, Richard Palczynski and Karen Wilkie and approved by the serving Trustees. The Statements do not comply with the Charities Commission’s requirements.  While the preparation of financial statements may have been delegated to Amber Management, the Trustees have a fiduciary duty and as we all know ignorance of the law is no defence.  Indeed the Charities Commission documented its concern of the Enfield Island Village Trust’s practices of delegating it’s duties to Amber Management yet the advice was ignored and discarded.

 

2. SORP accounting requires that figures should differentiate between “Restricted” and “Unrestricted” funds.   The approved statements for the Year Ended 31 March 2012 had no such classification nor do they contain a note in the accounts to that effect.   Case in point is Big Lottery grants the Trust received. These are invariably “restricted” funding and the Grant from Big Lottery to EIVT should be shown as such in the accounts as a condition of the Grant being given to the Trust.  As this was not stated there is now contingency that the grant can be recalled for which the current Trust holds the previous Trust Members accountable.  The accounts do not show if each Grant was fully spent or whether any unspent part was partially carried forward to the next period.

 

3. On reviewing the financial statements, the notes to the accounts and the records recovered from Amber, it has come to light that there are dividends provided in the accounts to the value of £11,893 which is strictly prohibited by our governing document yet that amount has been recorded in the credit column as surplus income to be distributed to members when in fact it should have been credited to reserves.  Irrespective of the prohibition it has also come to light that not all Grants were fully spent and that would have made the provision for dividends illegal in any case.  Dividends cannot be provided or paid if there are unspent amounts on Grants and additionally the Memorandum & Articles of Association do not allow for dividends to be paid to members.  The Charities Commission’s guidelines which I, as a new member of the board, emailed to all of you in July 2013 are also specific on this point.

 

4. The accounts sent to the Members in 2012 were missing the last page containing income and expenditure.  This page shows a figure of £92,000 being transferred to reserves.  This by its very description in the accounts is neither Income nor Expenditure and therefore unaccountable.   The transparency you all claimed to represent at the time of your very spurious appointments appears to have been abandoned as a result of the omission of this very informative page.

 

5. The accounts you approved do not balance.   The March 2011 accounts have a Reserves balance C/F as at 31/03/11 of £835,649.  Accounting practice is to add the surplus in the current year to the balance of the previous year to arrive at the balance to c/f to the next year. The surplus in the accounts of 31/03/12 was £11,893 the B/F figure from 2011 was £835,649 which gives a c/f figure of £847,542; yet the c/f figure in the accounts you approved is £802,328, leaving the very significant difference of £45,214.

 

6. UKGAAP accounting as indeed international GAAP requires that all income and expenditure should be reflected in the income and expenditure account, if of revenue nature and in the balance sheet, if of capital nature.  The following list of substantial and material amounts were merely shown as a note movements to reserves and that cannot be professed as transparent in any one’s mind.  We the current board of trustees formally request and require an explanation for each item listed below from all of you jointly or severally:

 

a.       Entry not shown in Income & Expenditure account

Unexplained entry Trust’s Projects

b.       Entry not shown in Income & Expenditure account

APA Legal case

c.       Entry not shown in Income & Expenditure account

Covenants Legal Case

d.       Unexplained entry and entry not shown in Income & Expenditure account

Rent Charge & Gift Aid Legal Fees

e.       Entry not shown in Income & Expenditure account and not declared for tax purposes

Interest Received

f.       Entry not shown in balance sheet. Transfer to historic debtors B/F

g.       Unexplained entry not shown in Income & Expenditure account and incorrectly shown as a deduction to reserves

Amounts due from developer

h.       Unexplained entry, no invoices and not shown in Income & Expenditure

Account Trust Expenses

i.       Entry not shown in Income & Expenditure account and no tax paid  

Surplus on income on Investment Properties for the year

 

7. Since taking over the duties of trustee I become aware that Amber Management has not been keeping general ledgers.  This is a very serious breach of their contract as this resulted in them being unable to provide the Trust with meaningful financial reports to complete statutory accounts.  The largest element of the contract you awarded to Amber Management was of a financial nature. However, it is clear that they did not have the expertise to fulfil the obligations of the contract and yet you awarded them a lucrative and perpetual contract in spite of this. Your lack of oversight, monitoring and control of their financial management and performance raises grave concerns. Indeed the Charities Commission also raised these same concerns. Your failure to act in accordance with the advice and the diligence expected from Trustees leads us to believe that you acted negligently.   Not being able to provide a trial balance and an audit trail for the income and expenditure of the Trust is a serious breach of your fiduciary duties.  To make matters worse, up until October 2013 which is the time that I took over the duties to bring accounts of the Trust up to date, certain Trustees continued to behave in a way that was obstructive and irresponsible and again raising concerns regarding the motive.  In particular I make reference to past, current and continuing vigorous practices to obstruct investigations into the affairs of the Trust indicating very questionable motives, even possible complicity to what might turn out to be deception. If this transpires to be the case, directors’ indemnity cover, which under normal circumstances might be relied on to indemnify one from personal liability, might be denied by the insurance company.  Because of these serious concerns, the current Board is moving forward with the decision to employ the services of forensic accountants to investigate all the transactions of all income and expenditure of the Trust.

 

8. I have also been made aware by past trustees that many of you have been instrumental in obstructing each and every trustee, who was an accountant by profession, and who brought into question some of the obvious irregularities in the Trust’s affairs.  Indeed just weeks after I joined the Board, four of you in collaboration with Amber, tried to frustrate my own investigations by attempting to remove me from the Board through malicious defamatory statements. When you did not succeed in your crusade, on three occasions, some of the former trustees engaged in a concerted and determined effort to call an EGM to remove the current trustees and reappoint themselves as trustees.  This is in spite of the fact that the current Board achieved savings of over £200,000 (approximately 50% of expenditure) for the Trust and were making a marked improvement to the appearance and running of the Village. This type of behaviour only deepens the Boards suspicions regarding motives.

 

9. It appears that the 2011/12 accounts were prepared by Roberts & Co.  Indeed the same firm of accountants were performing the role of independent examiner.  My question to all of you is how do you propose the examination was independent if it was carried out by the same person who prepared the accounts?  In other words how can you have instructed the person who prepared the accounts to examine them and report on their validity?

 

Community Centre affairs

 

10.     With regards to the community centre I became aware that Martine Eni was receiving a salary of £22,000 p.a. In addition she drew an additional self employed income of £8,000 p.a. making her total income £30,000 p.a.  She furthermore informed me that her weekly hours of work for this income were 24 hours per week and that she did not work on Fridays.   This equates to £24 per hour pro rata for a community worker in a permanent position. However, we established that her contract of employment in fact states her salary to be £18,000 and her hours of work 9:00am to 5:00pm, 5 days per week.  There is no mention in her contract of employment of the additional income of £8,000 as self employed.  In fact HMRC regulations do not permit the same person to receive part of the salary as self employed and part on PAYE.  As I have seen no evidence of a variation to her contract of employment I am formally requesting that you explain the vast variation and disclose the identity of the person who authorised such variations. I will also need to see the minutes authorising the variation, if one was made.  In addition I will need to examine all the relevant correspondences evidencing this variation. I understand that Vincent Green and Karen Wilkie were the two trustees responsible for the charitable activities at the Community Centre at the time.

 

11. I have requested Martine to deliver to us the Grants file with all the funding applications made with supporting cash flow projections as submitted to the funders and the monitoring reports that followed. This has not been done and after repeated requests for same Martine has not returned to work due to work stress related illness which made it impossible for me to obtain the information required. The said information is necessary to enable us to complete the preparation of the accounts.   In addition Amber informed us that they were not instructed by you to keep books of accounts for the community centre.  Can you please let me know whose responsibility it was to keep the accounts and records?   In addition can you please let us have all the information as stated in this paragraph?

 

The matters outlined in this letter, to which you have been asked to reply to, are delaying the accounts from being finalised. I want to make it absolutely clear that the responsibility for the preparation and submission of the accounts for the year to 31 March 2013 lies collectively on all trustees in office at the time and not the current board of trustees, as is so often stated in leaflets left in resident letter boxes. I further point out that the Board considers the statements in the leaflet related to the late submission of the accounts to be misleading, deceptive and defamatory and will hold you personally liable for misleading residents and for attempting to cast doubt over our ability, integrity and professionalism.

 

The Trust’s Independent Examiner requires a written reply to the above within the next 14 days. The reply is to be sent to Enfield Island Village Trust, 39 Island Centre Way, Enfield EN3 6GS.  Failure to provide satisfactory responses will prompt the matter to be reported for investigation. We will also seek to recover any losses incurred by EIVT from the Trustees who approved the accounts.

 

Please note as these irregularities are material and in the spirit of transparency this correspondence will be made available to all members within the next 14 days unless you can offer us written representations giving good reason why this should not be done.

 

 

Signed

 

 

 

 

 

 

 

Vladimir Ioannou

For and on behalf of Enfield Island Village Trust

Irregularities - Enquiries made to previous Trustees

24 March 2014

 

£6,672

 

£74,748

 

£21,758

 

£2,820

 

(£4,442)

£307

 

£20,795

 

£5,681

 

(£2,462)

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