A multiple sclerosis charity has been forced to close because its trading subsidiary received money that should have gone to the parent body, a Charity Commission report found last week.
The Northern Friends of Arms charity lost significant amounts of money because of the error, which contributed towards losses and meant it had to fold.
The inquiry into the charity, the second in four years, also found that it submitted inaccurate information about its fundraising lotteries to the Gaming Board.
David Rich head of investigations at the Charity Commission said: "Trustees need to remember that a charity's trading company, even a wholly-owned one, is not legally a part of the charity and it should not be treated as if it were.
"Unfortunately, this was a classic example of what can happen when the charity's financial affairs become too mixed up with those on the non-charitable trading company."