The charity regulator ruled that the way Keep Scotland Beautiful gave the £45,000 post to CEO Derek Robertson's spouse was not "seen to be fair" and was marked by failure.
SNP MSP John Wilson said he welcomed the findings.
The anti-litter charity has grown to become one of the country's most prominent environmental organisations.
It caused controversy last year after Robertson's wife, Catherine Gee, secured a temporary contract at the body.
Gee was then appointed as head of corporate services at the charity. She was the only applicant for a post that was advertised internally.
The appointment sparked nepotism allegations and prompted a complaint to the Office of the Scottish Charity Regulator (OSCR).
After an investigation, OSCR aimed critical comments at the charity for the way Gee was hired.
On opting for an internal advertising process, OSCR stated: "[We]consider that restricting the recruitment process to internal candidates only could be considered to be a failure in that process, given the personal relationship which exists between the CEO and the sole applicant for the post."
The watchdog added: "It is clear that, with the benefit of hindsight, the charity could have conducted a more open and transparent exercise regarding the recruitment of both senior management posts."
On the perception of hiring the chief executive's wife, OSCR concluded: "From an external point of view the process was not seen to be fair and 'above board' as the press attention to the issue made abundantly clear with accusations of 'cronyism' and 'nepotism'."
OSCR said it had sought assurances from the charity that lessons had been learned. A review of its recruitment process was also recommended, while the watchdog also backed the development of a staff handbook. However, OSCR found no misconduct.
Wilson said: "I welcome the report from OSCR into the investigation arising from the internal appointment and decision-making structures of Keep Scotland Beautiful. The recommendations contained in the report must be implemented without delay."
John Frater, the charity's company secretary, said: "OSCR has informed Keep Scotland Beautiful that they found no evidence of the charity trustees acting outwith the legislation. OSCR also made some recommendations for the future, which KSB has welcomed and is actioning."