Partnership bosses told the tribunal that concerns had first been raised over Paula Walford's financial dealings in 2003 when it was agreed that MCP would take over the accounts of the Bright Lights fund, which Miss Walford had been running separately to her involvement with the Partnership.

MCP Treasurer, John Gunn had asked Miss Walford to produce audited financial records, but said over three years this had never been done. The tribunal heard that directors had, over a number of years, offered to assist Miss Walford in producing the accounts, but this had been declined.

Then in October 2006, councillor Edwin Simpson had asked to see the Bright Lights balance sheets as he was concerned over three amounts which did not appear to be on accounts he had seen.

His concerns were over money raised by charity fundraiser Tommy Joyce in a treadmill run; a donation of £1,000 from Doncaster Council; and a £500 donation from the Card Factory.

MCP director Linda Teesdale was added as a signatory to Bright Lights in November 2006. This gave her personal access to bank statements and she was asked to investigate the Bright Lights accounts.

She told judges: "A lot of information, receipts and invoices were just not there."

Addressing Councillor Simpson's concerns, Miss Teesdale found that the Card Factory cheque was later confirmed as cleared and the £1,000 cheque from Doncaster Council had been paid to Mexborough Community Partnership. From that £1,000, Bright Lights had received £400 and £600 had been paid to an electrician.

But the money from Tommy Joyce's treadmill run remained unaccounted for and other discrepancies came to light during the investigation, including missing receipts and a ledger which had been "made up" to replace one that had been lost.

Miss Teesdale said: "I was previously told a ledger had gone missing. She said there was no ledger so she had made one up. It had Tippex in it. I told her it was no use if it was all made up."

When Miss Teasdale was finally able to piece together yearly accounts, she said many receipts had simply gone missing: "I realised something was seriously amiss at this stage, but I wanted to believe her."

Miss Teesdale said she had spent "hours and hours" with Miss Walford going through the books: "I told her we were concerned about a large amount of money missing. If she had spent it she would have to have receipts. She assured me money had been paid in even when receipts were not there. I discovered there was a significant shortfall of at least £6,000."

Miss Teesdale said she had based the missing £6,000 on evidence from cheques, bank statements and printouts from a computer. The total included a shortfall she had estimated of thousands of pounds of income from a lottery, bingo sessions and bus trips which had not been paid into the Bright Lights account.

She said Miss Walford had cashed cheques from the Bright Lights account and written them to herself.

During cross examination Miss Walford - representing herself - described the estimates as "pure guesswork".

Miss Walford's line manager at MCP, Tracey Leyland, told the tribunal she had produced two false receipts to help Miss Walford balance the books.

The tribunal heard Mrs Leyland had admitted this to MCP directors and had herself as a result been given a six-month final written warning from the charity.

MCP director Jean Sutton, the co-signatory on the Bright Lights account, admitted to the tribunal that she had signed blank cheques when asked by Paula Walford. She said she accepted it was not good practice but had known the claimant for a number of years and there had never been any cause for concern.

Representing Mexborough Community Partnership, solicitor Helen Upson said that a proper disciplinary procedure had been followed leading up to Miss Walford's dismissal and a thorough investigation had been carried out. She rejected suggestions that the dismissal had been politically motivated.

Ms Upson said: "The decision to dismiss her was purely related to her misconduct. She admitted she took money she was not entitled to and that in itself constitutes gross misconduct." She added that Tracey Leyland had received a lesser punishment because she had not taken money.