A Harrow body for racial equality is set to be taken over after a row over its finances.

The Harrow Association of Voluntary Service (HAVS) will run the Harrow Council of Racial Equality (HCRE) following an investigation into the organisation released today.

HAVS will oversee a transition board of councillors, HCRE trustees and others, who may create a new organisation looking after race, sex and disability interests in the borough.

The decision follows a report into the HCRE by Dr Khurshid Ahmed CBE, a former commissioner for the Commission for Racial Equality, which opened in June 2008 after Harrow Council suspended an annual grant of £57,585 to the body.

The director of the HCRE Prem Pawar was suspended in August 2007 on full pay after allegations of financial misconduct and later left the group on August 16 2008.

The report found the council was justified to suspend the grant and also revealed the HCRE breached management and performance agreements in return for local authority funding.

Asoke Dutta, current chair of the HCRE trustees, said: "The report highlights issues with management which, while largely historic, it was obviously important to deal with.

"We are now obviously looking forward to working on the future shape of an organisation which will take on the very good work the HCRE has done. Harrow is a borough proud of its diversity and we will make sure we work together to create a worthy successor."

Councillor Chris Mote, portfolio holder for community and cultural services, said: "We're looking forward to working with stakeholders to create a truly modern body that will take forward the legacy of the much outstanding work the previous organisation did."