A children's charity is being investigated over its use of £1m of grant funding.
An audit flags up concerns into the management and finances of Sure Start Hyndburn Children’s Centre - including a £216,000 black hole.
Sure Start Hyndburn (SSH) was established as a limited company in January 2002 and has a board of nine trustees.
The draft review was ordered by Lancashire County Council (LCC) after alarms were raised by Hyndburn county councillor Miles Parkinson, who resigned from the board two months ago. It found 17 ‘risk’ areas, including six deemed to need urgent action to avoid ‘loss, fraud, impropriety, poor value for money, or failure to achieve the organisational objectives’.
Hyndburn Sure Start offers services to families with pre-school age children across five children’s centres in Accrington.
The borough’s other Sure Start children’s centres are not covered by the report as they are LCC-run.
Funding for areas such as service provision and staffing is ring-fenced and provided by the Government via the county council, totalling £1.07m a year.
But the audit found that controls on the use of grant funding were ‘inadequate and ineffective’ and items were bought which appeared ‘to be excessive in value’.
Accounting records were criticised as ‘not transparent’ and lacking detail – with over £216,000 allocated to ‘other’ expenditure. The report found: "From the records we have seen we can only offer limited assurance that the children’s centre grant funding has been used appropriately."
Management board meeting minutes were also criticised as inadequate and question marks were raised over whether certain commercial facilities should be free.
Mr Parkinson said: "I resigned as I felt in an uncomfortable position because I had brought it to the attention of LCC and instructed officers to initiate an audit.
"Those concerns were not raised at a board meeting. Those concerns came to me at other meetings where certain members of the trust spoke."
Elizabeth Dean, chair of the trustees, said that she could not comment on the internal audit until a final report was received.
But she added: "For nine years Sure Start Hyndburn has delivered services to children and families in Hyndburn within budget and all financial requirements including external audit and delivery of services from five child and family centres have been done successfully. The trustees employ around 50 skilled and experienced staff, who are all highly committed to children and families and the services they deliver.
"A number of our services and activities are evaluated externally. A major external evaluation of Sure Start Hyndburn and our services was carried out in 2008 which had very positive outcomes."
Bob Stott, director of universal and prevention services, at Lancashire County Council said: "We are currently investigating some potential issues relating to Sure Start Hyndburn’s use of children’s centre revenue grant funding. As part of that investigation, we are also talking to the Department for Children, Schools and Families to clarify the conditions of the grant."