The Public Interests Report called into question the legitimacy of the loan which was intended to support the rebuilding of a stadium stand and the development of surrounding land, but instead simply disappeared.
KPMG said that it has unearthed “serious failings” in the local council’s arrangements with the club for the loan.
According to the report, the council should have foreseen the risk of it “being exposed to financial loss or liability”, and its failure to do so has rendered its decisions “unlawful”.
Work on the football league club’s East Stand began in 2014, but was put on hold after contractors walked from the project claiming they had not been paid.
The authors at KPMG were also made aware that David Mackintosh, then Conservative leader of the council, had asserted pressure for the deal to be completed.
They found that while there were numerous talks between the council and Northampton Town FC, “many of these discussions were not minuted or attended by any other council representative”.
The council has since acknowledged the report, claiming that it is “carefully considering” what KPMG has put forward.
However, it also ensured that many of KPMG’s recommendations for moving forward have “already been addressed” through work that was conducted with PwC in 2016.
The response said: “The report contains a series of recommendations for where KPMG feels the council’s processes at that time should have been more prudent and how they might be improved.
“Many of these recommendations have already been addressed as a result of work we undertook following a similar report published by our then internal auditor, PwC, in late 2016. Our current internal auditor, BDO, has since built on that work to ensure our policies and processes are as robust as possible.”