Financial auditors have said a council did not properly scrutinise a £10.25m stadium redevelopment loan given to Northampton Town Football Club.
An audit report by accountancy firm KPMG identified the council's loan system as "a risk area".
Council leader Mary Markham said she welcomed KPMG's feedback, which related specifically to the football club loan.
Northamptonshire Police is investigating "alleged financial irregularities" surrounding the loan.
The report said auditors were "unable to state that Northampton Borough Council had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people".
As such, KPMG said the loan did not represent value for money.
Ms Markham said the authority had already put "a number of improvements in place to tackle the issues raised in this report" and was intending to make further changes.
"I acknowledge this is a very serious issue, but it is the exception," she added.
"We are using all the means we can to try to recover the £10.25m owed to the council, but this must be balanced against the £450 million of transactions that the borough council handles efficiently every year. We also manage assets worth £725m."
In July, the council announced it was earmarking a further £500,000 in its bid to recover the loan.
Sixfields' East Stand partly reopened for the first time in two years in April, about five months after new chairman Kelvin Thomas completed his takeover of the club.
Following the takeover, a memorandum of understanding allowed for the club's debt to be wiped out in return for the council acquiring land around Sixfields for development.