Financial management at some town and community councils is dysfunctional, with members signing blank cheques and accounts five years overdue, auditors warned.

The Senedd’s local government committee launched an inquiry on the governance and accountability of town and community councils in Wales on 14 November.

Adrian Crompton, the auditor general, said a hardcore of 20 to 25 councils regularly fail to submit accounts to Audit Wales, with some outstanding since 2019.

Questioned by Labour’s Lee Waters, he told the committee: “There is a small element of the sector where there is a real issue simply in producing accounts.”

Deryck Evans, audit manager at Audit Wales, identified issues around procurement leading to losses at town and community councils, warning internal controls are often very poor.

He said: “Members are signing blank cheques.

“We find that members are not approving payments … activities are initiated by small groups of members without necessarily the knowledge of the council as a whole.

“What this leads to, in … a very small number of cases, is significant losses.”

He told the committee that auditors are still waiting for 94 councils to submit 2023/24 accounts, warning: “It’s very difficult to get information out of some of those councils.”