AUDITORS have told Alresford Town Council to tighten its procedures after a review revealed serious problems and the possibility of fraud.
BDO has highlighted a lack of control over aspects of civic operations, including the running of the Alresford Recreation Centre and its bar.
It expressed concern about the Imprest account, which had £417,000 over which the clerk, Stevie Kavanagh had sole control.
BDO in a six-page report said there was a lack of any control on wages, salary and employment contracts.
"There are few controls over the purchases, bookings or staff costs related to the ARC. When payments are made to authorise the invoices received for the ARC there is no evidence on the invoice of it being checked to stock received, nor is it initialled by those authorising the payments.
"There are few controls over the clerk's imprest account which is used to fund purchases and salaries related to the ARC. There is no business plan or budget for the ARC.
"Fraud and error could go undetected if controls are not adequate.
"The lack of control over the running of the ARC has led to a profit margin of approximately 13 per cent, whereas similar operation run by other councils are achieving a profit margin of 50 per cent."
BDO called for the Imprest account to be closed.
Robin Atkins, a former chairman of the town council and a qualified accountant, said yesterday: "The monies involved and the lack of controls cover in total over £500,000. There must as I said before be a full investigation followed by an appointment of a Responsible Finance Officer.The clerk who has been ill from July 2016 has resigned so the town council has a chance to sort out its financial controls and management
Lisa Griffiths, chairman of the council and now also a city councillor, was unavailable for comment.