The NSW Auditor General recently undertook an audit of credit card management within local government.

Dubbo was one of six councils chosen to represent a cross-section of the sector.

The audit looked at a three year sample of credit card transactions from 2016 to 2019, during which council had 77 credit cards.

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"The audit found zero instances of fraud or misuse by this council," Mr Frost said in a statement.

"That's not to say the audit didn't identify opportunities to improve our procedures, documentation and record keeping. The audit also highlighted issues with the data migration in 2019 from an old system as we moved to our current system - making the retrieval of some receipts needed for the audit difficult."

The audit says council initially could not produce the requested records for 27 of the 82 transactions selected for review which totalled more than $15,600.

It says council stated "records of 20 of these transactions ($15,688.95 in total) were lost during the transition from one online purchase card reconciliation system to another, but the council had since obtained access to the previous system to extract 14 of the missing records".

Issues were also raised around card use for meals and entertainment, which under council's policy were only permitted under some exemptions.

"Twenty food, coffee and entertainment-related transactions ($13,067.55) reviewed in the audit included no evidence of a business-related purpose or approved exemptions," the audit states.

One of the recommendations was for Dubbo Regional Council to amend its credit card policy to prevent cardholders from sharing credit card details with other staff members.

The audit said council's current credit card policy allowed cardholders to share their credit card with other staff members "which complicated credit card management, increased the risk of misuse and fraud, and breached its agreement with the credit card user".

Recommendations have also been made around the need for clarity in the credit card policy, the need for purchases to be better scrutinised and more compliance checks.

"Council unreservedly accepts the recommendations, some of which have already been addressed or implemented as part of our evolving business improvements prior to the audit," Mr Frost said.

"This includes the purchase of the Civica purchase card management system to add rigour to our approval, reconciliation and reporting processes. This has been operating effectively since July 2019, which is unfortunately outside the period covered by the audit."

Council says it understands without the context or evidence to support some of the 8300 credit card transactions people could question some of the findings.

"Council has written to the Auditor General to highlight our concern over tabled figures and statements made by the auditors not being reasonably explained, or supporting evidence included to avoid any misinterpretation," the director organisational performance said.

"We also expressed disappointment that our change in purchase card management system in 2019 was not mentioned in the report."

The audit also looked at Junee Shire, Lane Cove, Nambucca Valley, Penrith City and Shellharbour City councils.

It found all six councils had "important gaps in their credit card policies and procedures".

"Their policies and procedures covered the essential aspects of credit card use and management, but a lack of coverage or clarity in some areas could lead to inconsistent and inappropriate use of credit cards," the audit said.

"These areas included: eligibility to hold a credit card, aligning credit card limits with financial delegations, and the reconciliation procedures."

Read the full report below: