A cash-strapped council which gave an executive a £50,000 pay-off could not prove it followed rules during the appointment of a firm she owned to oversee an IT project, an auditor said.
Northamptonshire County Council made Christine Reed redundant before engaging her company.
Ms Reed said the firm was employed for "a short-term and one-off contract".
The council confirmed it was working with auditors to review the appointment.
Questions raised by auditor KPMG over the council's procurement process in relation to Mrs Reed's firm, Gradon Consulting, are recorded in the minutes of the council's Audit Committee meeting last month.
Earlier this month, a government report said the council should be scrapped.
Max Caller, who led the government investigation, said Northamptonshire should have two new unitary authorities by 2020.
Part of the wide-ranging report revealed the engagement of Ms Reed's company had been referred to the auditors by Max Caller.
Ms Reed was working for the Local Government Shared Services (LGSS), a body funded by Cambridgeshire, Northamptonshire and Milton Keynes councils.
She was made redundant in September 2016 following a restructuring of LGSS.
Her company, Gradon Consulting, was employed in the same month on a £650-a-day rate as programme manager of a large IT project called ERP Gold.
An independent report into this project, which will handle all the council's financial transactions, described aspects of its implementation as "wholly inadequate".
The system is due to go live at the beginning of April.
The audit committee minutes said documents were not provided showing any business case or value for money considerations regarding the appointment of Gradon Consulting.
A council spokesman said it had nothing further to add to a statement issued in February in which it said Ms Reed was "re-engaged" in a position "entirely different" to the role she had been made redundant from.
In a statement made at the same time, Ms Reed said her company had been employed on a one-off contract "to support the core design and build of the new business system that had become very high risk".
The BBC has approached Ms Read for further comment.