During his former role as chief executive of the South Somerset District Council in England, Waitaki District Council chief executive Alex Parmley authorised a "substantial" settlement payment to a senior council staff member in the 2020-21 financial year.
In an audit report released in August, auditor Grant Thornton found proper processes were not followed - the council leader and other elected members were not consulted.
It also found financial regulations and standing orders were not followed, and there was no evidence value for money was considered.
The payment represented a serious failing in governance arrangements, the auditors said.
"There was no scrutiny of the decision by statutory officers or members. There is no evidence to support the decision made, and no legal advice sought over the lawfulness of the agreement."
The payment resulted in a statutory recommendation being made.
Auditors said that action was "almost as high as auditors can go".
English media reported the payment was £109,000 ($NZ209,506).
Mr Parmley, who began his role at the Waitaki council in July last year, said he did not recognise that amount and did not believe it was accurate.
He acknowledged the auditor’s findings, but said he believed proper processes were followed at the time.
"The issues raised in the report result from full documentation of those processes not being completed, which I also acknowledge."
The audit report did not take into account the affects of Covid-19, he said.
"The council, like many, was under severe pressure, including a third of staff being deployed to the vaccination programme and many other staff being redeployed to support grants to businesses, hardship payments and other new services."
Waitaki councillors had seen the report before he was aware of it.
"I have discussed the matter with elected members, who are satisfied that due process was followed, albeit not fully documented.
"I have a track record of hard work, innovation and delivering high standards for the communities I have worked for.
"I intend to do the same for Waitaki."
The statutory requirement meant the council had to discuss and respond publicly to the audit report.
South Somerset District Council chief executive Jane Portman said in a statement the matter had been taken extremely seriously and had been investigated to the fullest possible extent to ensure such an incident could not occur again.
During a special audit committee meeting on September 2, she said the payment was made when "the chief executive at the time asked payroll to pay the amount".
She became aware of the payment shortly after starting her role in August last year, as it was an overspend on the chief executive’s budget.
The payment was not wrongful, rather it was a failure of process, she said.
Waitaki Mayor Gary Kircher said the council had full confidence in Mr Parmley.
The council had looked into the issue and remained "fully confident that our appointment of Mr Parmley is a very good decision and that he will continue to serve us and Waitaki very well".
