The beleaguered council was reported for an extreme risk finding for the quality of its financial report, and a high risk over its use of restricted funds.

The council was also criticised for using developer contributions to pay for administration costs, submitting incomplete financial statements which were late, and which contained errors and disclosure deficiencies.

The council is already facing intense scrutiny following Local Government Minister Shelley Hancock's decision to suspend the council in October last year.

The trigger for the suspension was the council's "lack of oversight and control" over its budget and expenditure, as well as a loss of community trust in the council's effective functioning.

Interim administrator Dick Persson was appointed and has since been replaced by former local government general manager Rik Hart. The State Government announced a public inquiry into the Council to investigate its financial management and its ability to serve the local community on April 26.

That decision also means that the Central Coast Council's elections, scheduled for September, will be postponed until late 2022.

"My decision to order a public inquiry aims to give the community the best possible chance to restore confidence in its Council," Mrs Hancock said. "As such, I have formed the view that it is in the public interest for all Central Coast councillors to remain suspended during the public inquiry process."

Issues identified by the Auditor General included gaps in monthly account reconciliations, including missing supporting documents and some items simply not explained, and failure to maintain a log of current values of roads, bridges and footpath assets, with no valuation since 2015.