Trustees must carefully monitor the actions of their senior staff to avoid fraud, the Charity Commission has warned.
The Charity Commission has concluded an inquiry into the Devon-based Residential Care Homes Trust. The inquiry was launched in January this year after the charity failed to submit its accounts for 2000.
The charity ran into trouble after an office manager stole £40,000 by forging documents. Before the police completed its investigation, the manager absconded abroad.
However, the charity's bank paid compensation because the cheques did not adhere to the account mandate.
The Commissioners said: "It is essential that there are adequate internal financial and administrative controls over charities' assets and their use. Trustees must be able to devote sufficient time to their duties to effectively monitor the actions of their employees.