The controversial event had attracted massive media coverage and further soured relations between Mr Magill and those accused of wilful misconduct in the 'homes for votes' affair.
Lord Justice Rose, presiding, said a simple press statement would have been sufficient to convey Mr Magill's findings.
'Instead, a televised announcement was arranged at which the auditor himself appeared and, although he said his views were provisional, he expressed them in florid language and supported them by reference to the thoroughness of the investigation . . .
The judges expressed the hope that 'in any future statutory investigation ... no auditor will stage any similar event, which may undermine the perception ... of the auditor's open-mindedness'.
The judges also criticised the length and expense of Mr Magill's investigation, which took seven years and cost£3 million: 'Whether Parliament contemplated so gigantic an investigation by an auditor into an objection to local authority accounts we very much doubt. In our judgment in any future investigation of this kind it will be essential for the auditor to exercise a sense of proportion.'
A spokesman for Mr Magill said the auditor had no comment.