Kaipara District Council chief executive Steve Ruru says it is surprising Audit New Zealand failed to spot serious errors in the council's rating process over several years.
The council has uncovered another $7 million of wastewater rates that are legally invalid because they were not included in the council's funding-impact statements. It brings the total of invalid rates to $16 million.
Mr Ruru, who started with the council last December, says some of the new-found errors go back to 2006.
He says while the council should have checked its rating process, he would have hoped Audit New Zealand might have noticed the mistake at some point in the last six years.
Audit New Zealand, a business unit serving the Auditor-General, carries out audits of public entities, including councils.
Mr Ruru says the Auditor-General, who is investigating the council's borrowing, will take independent advice on the auditing aspect of its problems to avoid a conflict of interest.
Ministerial review team meets council
A ministerial review team is charged with looking into Kaipara District Council's governance and management holds its first meeting with the council on Friday.
The council's debt of more than $80 million makes it, per capita, the most highly-indebted territorial authority in the country.
More than $50 million of the debt has arisen from costs that spiralled out of control for a sewerage scheme for one small community, Mangawhai, where angry residents are refusing to pay rate increases of 100% and more.
Local Government Minister David Carter wants the review team to report on the challenges facing the Kaipara council and its capability to address them.
Mr Carter is also asking the review team to report on the council's relationship with ratepayers, the risks of its current financial position and its use and management of debt.
The review team, headed by former Fonterra director and Northland farmer Greg Gent, will report its progress by mid-August and submit a final report to Mr Carter by the end of October.
