A county council "misappropriated" £8m of funds ring-fenced for public health projects, auditors have revealed.
Northamptonshire County Council is facing a budget shortfall of £70m and this week was ordered to restrict spending to statutory services.
A report by auditors KPMG says the council used Public Health England grants to support other council services between 2015 and 2018.
Council leader Matt Golby said the accountancy was "not good enough".
He said most of the staff involved in monitoring the funding of the projects were no longer working for the council.
KPMG says having found the public health funds "misappropriated", it was now looking to see if other restricted grants had been used incorrectly.
"We have extended our testing over other ring-fenced grants and have requested evidence from the authority that all terms and conditions for such streams of funding have been adhered to," the report says.
It adds that the audit had been delayed by "key working papers" not being ready and "significant delays in responses to audit queries" with "poor responsiveness from individuals and teams".
'Set everything right'
Looking at Section 106 funds, provided by developers for project over strict timescales, the report says the county council acknowledged it "deliberately looked for monies with long repayment periods", which pushed back the risk of a challenge from developers and the potential to borrow to top the balance back up.
Conservative councillor Mr Golby said he had "massive concerns over the whole finance function of the council".
"We have got to set everything right. We have got to get some simple basic principles in place," he said.
The county council was issued a second 114 notice on Tuesday. The previous one had been issued in February.
Two government-appointed commissioners are overseeing the authority, with one calling its finances "truly perilous".