An audit of Gainsborough Town Council said problems prior to 2012 resulted in “poor financial processes across all areas” of the council.
The report said the town had run up a £100,000 deficit at the time of the audit.
The audit, carried out by an organisation called Audit Lincolnshire, also revealed the town’s reserves had shrunk from £72,000 in 2008 to £9,000 by 2012.
Gainsborough, which has a population of 18,000, had an annual budget of £535,000 but a deficit of more than £100,000.
The audit also said financial reports were “misleading” and the council had poor computer security and inadequate payroll and training systems.
The council also failed to use proper purchase orders and filing systems and had failed to file its accounts on time.
Clerk to the town council. Matthew Gleadell, said: “In response to that report there were fundamental changes to the way in which the Council operated such that the deficit did not reach anywhere near the £100,000 forecast by the Auditors.”
“The end of year accounts for 2012/2013 actually showed a financial deficit of in the region of £30,000.00 although the Council recognises that although not as bad as reported was still entirely unacceptable.”
“As it stands now the Council has made huge strides towards recovering its financial position and as at the end of 13/14 financial year looks set to be holding reserves of approximately £60,000.00 which is exactly the figure recommended by Auditors as being appropriate for a Council of its size.”
“The 2012 Internal Audit report highlights operational failings across all aspects of the Council and made 72 recommendations to be implemented in reversing the Council’s difficult situation.”
“A change of personnel both in terms of Councillors and Officers has resulted in much work being done to address the problems and more recent Internal Audit Reports demonstrate the huge improvements made.”
“The Council is now embracing its much stronger position across all aspects of its operations and is quickly working towards putting the legacy of its previous administration firmly behind it.”
“The Council now welcomes being able to work in an appropriate way both for and on behalf of the community it serves.”