Auditors have warned town and community council in Wales have inadequate and ineffective internal audit arrangements.
A review by the Auditor General for Wales found one in five internal auditors were not sufficiently independent, while one in three had made inaccurate internal audit conclusions.
One in ten local councils were unable to satisfy Wales Audit Office staff that they had internal audit arrangements in place.
Auditor general, Adrian Crompton said: ‘Internal audit provides a vital function within organisations – to ensure that checks and balances are in place to safeguard finances and services.
‘The fact we have uncovered serious weaknesses at town and community councils is both unacceptable and worrying – and it needs to be urgently addressed.’
The review said that some instances of fraud and theft could have been avoided over the past ten years if there were effective internal audit arrangements in place.