Investigation: Auditors found financial management at LLS in disarray

Missing documentation was an obstacle to an audit of the not-for-profit London Leadership Strategy

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A team of accountants drafted in by the London Leadership Strategy to examine the state of its finances blamed a lack of paperwork for not being able to make judgements on important aspects of the organisation’s financial management.

The audit, by accountancy firm Landau Baker, was commissioned by LLS last March to look into allegations of financial irregularities. Their report highlighted a number of concerns of the way in which money was being spent by the organisation.

Jacqueline Valin, LLS director, had “conceded” that the organisation’s financial systems “needed improving,” according to the report.

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It said that Ms Kerwin-Nye had given a “large pay rise” to one member of staff in 2016, amounting to £18,000 a year – a 60 per cent increase. While she had justified the decision due to it being the “market rate” for a project manager, the report stated: “There was no evidence available that this pay rise was ratified at board level.”

It also detailed how LLS had been charged more than £1,500 towards the cost of a book written by Ms Kerwin-Nye on behalf of her own company, NotDeadFish, and an organisation called A New Direction.

The report said: “AKN states that this potential conflict of interest has been declared to the directors of LLS.” It added the Ms Kerwin-Nye described the £1,604 she recharged LLS as a “fair contribution.” However, it added: “There is no evidence, however, that this payment was authorised by the board, which is expressly required as per the financial procedures, as it is payment to a related party.”

The report, seen by Tes, noted that improvements were needed to the “effective implementation of the company’s financial procedures and policies.” It said there was “no indication” of any “misappropriation of funds” and added: “concerning the specific allegations made, whilst these have highlighted in part certain weaknesses in the systems which had been identified elsewhere, no evidence has been found of any financial impropriety”.

However, auditors blamed a lack of paperwork for not being able to amount “an effective review” of LLS’ finances and reach any conclusions as to whether “board or staff members were authorising payments to themselves, partners or relatives.”

Their report also stated that there was “no evidence” attached to purchase invoices linked to bank payments to show they had “been approved for payment by the appropriate hierarchy as detailed in the financial systems.”

It said: “Whilst the organisation is below the statutory audit threshold, the company may wish to engage statutory auditors on an annual basis to ensure that their accounts and financial systems receive an appropriate level of scrutiny.”

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