Betsi Cadwaladr health board rapped over Lap of Wales funding
Auditors have questioned the way a health board handled funding awarded to a celebrity-led charity event.
Betsi Cadwaladr University Health Board (BCUHB) gave £20,000 towards the Lap of Wales Challenge.
But the Wales Audit Office found the board breached its own rules and regulations in handling the funding.
Board officials said they would learn from the experience after auditors highlighted a lack of transparency and poorly-managed conflicts of interest.
Auditors also found the health board failed to follow procurement rules when appointing suppliers for the event.
The Lap of Wales Challenge was organised by Cerddwn Ymlaen under the leadership of its national organiser Eryl Vaughan and was fronted by the Welsh opera singer Rhys Meirion.
The event cost more than £150,000 to arrange and the surplus was £1,368.
The challenge saw a number of Welsh celebrities undertaking a week-long journey through Wales in July 2015 to raise awareness of the Welsh Government's changes to the organ donation law.
It was arranged in aid of Cronfa Elen. The fund was set up by Mr Meirion in memory of his sister who died in 2012, and was incorporated within BCUHB's own official charity, Awyr Las/Blue Sky in 2014.
The health board awarded £20,000 towards the event, with another £20,000 coming from Cardiff and Vale Health Board and £45,000 from the Welsh Government.
The report found £10,000 of BCUHB's contribution was awarded as a loan, but the paperwork was not processed by the health board's financial team.
Despite that, the funds were transferred.
Cerddwn Ymlaen said it was not aware it received a loan rather than a grant and would not have agreed to it, had it known.
To ensure the Lap of Wales project was not in deficit, Cerddwn Ymlaen undertook additional fundraising to meet the £154,054 cost of completing the challenge.
Concerns were also raised about a breach of the health board's financial regulations in relation to the challenge.
A spokesperson for BCUHB said: "The health board was very keen to learn from this experience which is why it asked the Wales Audit Office to carry out this review, as we recognise that to achieve the objectives of the charity, it is important to work with external bodies.
"Such arrangements are underpinned by trust, common objectives and mutual cooperation but misunderstandings can occur."
Officials added a new joint-working protocol would provide a robust governance framework for future projects and require all arrangements to be formalised.