A report, conducted by Timothy Dutton, into Sport England's World Class Payments Bureau (WCPB), has uncovered a range of shortcomings in the way the fund was distributed to national governing bodies (NGB) of sports.

The WCPB, which was used to distribute £19.6m of public money into NGB coffers between 2000 and 2006, had operated outside of Sport England's usual financial controls before being "discovered" by the current management in 2008.

In his report, Dutton criticised Sport England for allowing the WCPB to be set up without the approval of the then board of directors.

According to Dutton, it was clear that the WCPB was set up by Sport England management – rather than the board – to ensure that NGBs that were not fit for purpose to receive public funding were still able to access funding.

Although he ruled out fraudulent activities, in his conclusions, Dutton said: "It is doubtful that Sport England obtained value for the 'investments' made into some of the NGBs which were handled by the WCPB."

He singled out karate, boxing, hockey and squash as sports that should not have received any public money from the WCPB due to having poorly managed NGBs. In total the public monies given out to these sports between 2000 and 2006 totalled £16.5m, with hockey receiving £6.36m, boxing £5.26m, squash £2.63m and karate £2.22m.

"There were numerous respects in which certain governing bodies were not fit for purpose," the report says. "For example, they may not have had accounting procedures or even appropriate arrangements with their banks to receive and manage the level of funding which might be obtained from Sport England.

"Their committees or governing bodies might not be suitably constituted so as to be able to receive public funds, or they might lack adequate financial controls - as certainly was the case for boxing, hockey, karate and squash."

To prevent public money being spent on unfit NGBs in the future, Dutton recommends that a new Sports Governance Committee (SGC) be set up to advise upon and vet governance arrangements for NGBs.

The report does, however, heap praise upon the current Sport England board and the chief executive Jennie Price, saying that since the new management took over in 2007, it has addressed governance and created a "much improved control environment".

"There has been a clear improvement in financial controls since April 2007," Dutton added. "The chief executive has inculcated into staff a culture change - compliance is now high on the agenda."

Speaking to Leisure Opportunities, Jennie Price said she will act on the recommendations made in the Dutton report – to set up the SGC – as a matter of urgency.

"We will certainly sit down together with UK Sport, the DCMS and other stakeholders and explore the ways we can establish a group of individuals as Dutton has suggested," she said.