The report - compiled by the Housing Development Agency's (HDA) internal auditors - reveals that procurement procedures were "circumvented" when the contract of a human resources consultant, Sally Blaine, was extended.
The responsibilities of the agency include identifying, acquiring and developing state-owned land on behalf of the Department of Human Settlements to build houses.
The report blamed these findings on a lack of implementation of accounting practices, no oversight responsibilities and scant attention to supply chain rules.
Sowetan has previously reported that Blaine's company - Blazing Solutions CC - had been roped in to do HR work despite the HDA having a fully fledged department to carry out this duty.
Staff at the agency were reportedly unhappy over Blaine's appointment as well as having to take orders from her.
While it was not known then who had appointed Blaine, allegations were that agency CEO Taffy Adler may have had a hand in Blaine's arrival at the agency. Adler had previously been reported to have also appointed his sister-in-law as well as a close friend but this did not appear in the report's findings.
According to the report - which Sowetan understands is still to be made available to the agency's audit committee - findings are that "the procurement process was circumvented by the extension of the contract of the strategic and human resource support services, Blazing Solutions CC".
The report said Blaine's company's contract was extended without the knowledge of the supply chain management officer, listed as Jabulile Mndebele. Furthermore, Blaine's company earned R423,510 between April 2010 and March last year, despite the company not having a valid tax clearance certificate. Indications are that the company may have earned more than double that as the report considered payments only until the end of the last financial year.
The auditors slammed it as "fruitless and wasteful expenditure".
Responding to questions arising from the report, agency spokeswoman Kate Shand said: ''A final report dealing with these issues will be submitted to the HDA's audit cimmittee. The audit committee and board will take the necessary action after considering the report.''