Rheon Tomos found that the DSO had lost more than£1m in its first year, when its own projections had suggested it would make a surplus of£162,582. He identified losses not accurately reported, normal accounting practices not followed and poor record-keeping.
'Lack of proactive management action may have placed the DSO's future at risk,' he said. 'Our audit has been frustrated, the complete absence of even the most basic of reconciliations in some areas raising serious doubts over the competence of those administering the process. The submission of significantly amended accounts will almost certainly raise concerns in the Welsh Office.'
The investigation centred on the financial affairs of the organisation for the year starting in April 1996. The accounts were about six months late when they were finally given to the auditor in March this year. They had not been signed by the director of finance.
Losses for 1996-97 are now calculated to be£1.14m. The accounts for 1997-98 show a deficit of£473,000.
Rhondda Cynon Taff's director of finance, Steve Perry, who is being called in to take control of the trading accounts and has issued his own report on the findings, said: 'Observations included a lack of co-operation [between council officials] and delays in responding to correspondence on behlaf of both parties.'
He said that key issues had now been resolved and it was important that everyone in the local authority faced up to their responsibilities.