A statutory investigation by the Charities Regulator into the Peter McVerry Trust (PMVT) has found failures relating to management, oversight and administration by the board.
An investigation by the regulator began in October last year after it had communications regarding the financial status and solvency of the charity.
In the report, inspectors highlighted instances of a lack of adequate and appropriate financial controls with which the charity's board (also known as charity trustees) could exercise control over the affairs of the charity.
It showed that management accounts provided to the audit committee and the board by former CEO Pat Doyle included financial information from 2005 to 2025 - a period of 20 years - on a single page.
Inspectors found no cash flows, cash on hand, asset or liability figures were provided to the audit committee or to the board until July 2023, subsequent to former CEO Francis Doherty taking over as CEO in June 2023.
Information was also not broken down by a restricted fund, "which is not in keeping with recommended practice for the governance of an organisation of PMVT’s scale and profile," according to the Charities Regulator.
The inspectors also identified a failure to adhere to donor intention in how restricted funds were used.
Restricted funds that can only be lawfully used for a specific charitable purpose and unrestricted funds can be spent at the discretion of trustees to further any of the charitable purposes of a charity.
However, PMVT’s financial statements at the end of 2021 and 2022 indicated a transfer from restricted funds to unrestricted funds of €1.5 million and €7.3 million respectively.
No explanation was included to indicate the reason for the transfers, according to the report.
PMVT welcomes publication of report
In a statement this evening, PMVT welcomed the report's publication and acknowledged that there had been deficiencies in its financial controls.
It said: "We have undertaken extensive work in rebuilding our processes and structures over the past 12 months, including the recruitment of senior finance, corporate services and procurement team members. While this work is significantly advanced, it will take some time to complete.
"The Trust encountered financial difficulties as we grew at what was an unsustainable rate to respond to the ever-increasing needs of our participants.
"During this period of growth, the board accepts there was insufficient investment in head office resources which would have enabled us to ensure compliance with some of the deficiencies identified by the inspectors."
It added that all decisions taken by the board "continue to be in furtherance of our charitable purpose" and that while it accepted that some conflicts of interest were concealed from the board, it welcomed that "no fraud or misappropriation of funds for personal gain has been identified in the report".
Process of taking over other charities
Further findings by the Charities Regulator relate to the process by which the charity took over other charities and whether the board considered whether the charitable purpose of those being taken over aligned with the charity’s own charitable purpose.
Between 2011 and 2022, PMVT took over or commenced the process of taking over nine charities, as reviewed by the Inspectors.
The inspectors cited one case where the charitable purpose of the charity being taken over was the advancement of religion, which according to the regulator "is not one of Peter McVerry Trust’s charitable purposes".
PMVT "indicated" that there is no defined policy or formalised process in PMVT for the takeover of another charity.
PMVT confirmed that the charities were taken over by way of a change of ownership structure.
This entailed employees of PMVT becoming charity trustees of the taken over charities.
The inspectors were not provided with any evidence that PMVT considered how an employee of PMVT could act independently as a charity trustee of an entity over which PMVT exercised control.
The bank account of one charity was used to facilitate the transfer of funds to other parties on behalf of PMVT.
The report states that it "is not clear why transactions have been processed in this manner, and how this practice is in keeping with the stated charitable purpose of Charity 3 as listed on the Register of Charities, which is the advancement of religion."
Material inaccuracies
Material inaccuracies were also uncovered in the recording of the assets of the charity and inadequate management accounts which did not report the level of debtors, creditors or debt financing.
A sinking fund was to be utilised to finance capital projects which had full funding approval from the Department of Housing, rather than for its stated purpose of maintaining property assets already held by PMVT.
Board minutes for a meeting held on 30 March 2023 show that the board approved amendments to the use of the sinking fund.
The terms of the board’s approval were that the sinking fund could be used to finance capital projects which had full funding approval from the Department of Housing, up to a maximum of 75% of the value of the sinking fund, on the understanding that such expenditure would be replenished within six months.
However, the report has found that the sinking fund was ultimately used for different purposes without board oversight or approval.
PMVT confirmed to the inspectors that the charity trustees did not become aware of the depletion of the sinking fund, or that the funds may have been used for purposes other than to fund the purchase of properties, until July 2023.
"This demonstrates clear oversight and governance failures within PMVT," according to the Charities Regulator.
The report also stated that competitive tendering procedures for services and contracts to ensure value for money were not implemented or adhered to.
The inspectors’ review of the PMVT internal audit report for capital procurement, dated November 2022, identified that a number of service providers were not procured through a competitive tendering process.
The report recommended that all contracts over an agreed threshold should be subject to a competitive tendering process.
PMVT confirmed to the inspectors that this recommendation was accepted by the audit committee and this is evidenced by the audit committee minutes dated 18 November 2022.
Property transactions
There was also no evidence of "active management" of conflicts of interest.
It points out that PMVT purchased a group of nine properties in October 2018 from the 2021 auditor for a total value of €945,000, while the 2021 auditor was acting as PMVT’s external auditor.
It stated that these property transactions were confirmed in interview with the auditor and this represented a conflict of interest for the auditor.
The board indicated it only became aware during 2023 that these properties had been purchased from the 2021 auditor in 2018.
"The deed of indenture in relation to this property purchase dated 31 October 2018 is signed by the founder and the FY21 auditor," it stated.
The founder and the Chair of the Board confirmed that no assessment of a potential conflict of interest of a PMVT representative taking a position on the board of the relevant charity was undertaken by PMVT management or the Board.
Prior to and during the investigation the Charities Regulator liaised closely with the Approved Housing Bodies Regulatory Authority, which is also carrying out an investigation into the affairs of the charity related to its activities as an approved housing body.
'Importance of exercising proper control' - Charities Regulator CEO
These form part of "a range of activities and services" that the charity carries out to advance its stated charitable purposes.
Charities Regulator Chief Executive Madeleine Delaney said: "The inspectors’ report underlined the importance of a charity’s board of trustees exercising proper control over the operations of a charity.
"Charity trustees are ultimately responsible for the control and management of a charity. Where the charity has employees, as in this case, the charity trustees must set the parameters within which the employees must operate."
Ms Delaney added that charity trustees must also make sure systems and processes are in place to ensure they get the information they need to oversee all the charity’s activities.
She said: "This allows them to make fully informed decisions about the charity’s governance, finances and other significant matters.
"The report highlights the detrimental impact on a charity when this does not happen, which can have implications for public trust and confidence in the wider charity sector."
The Charities Regulator has said it will follow up with the board for assurances that the matters raised by the inspectors are properly addressed.
Ms Delaney has also encouraged all charity trustees and those involved in running charities to explore the range of guidance on regulator's website, which includes guidance on the role and responsibilities of charity trustees.
"This guidance helps charity trustees understand their obligations and the oversight mechanisms they need to put in place," she said.
