The North Rail Yards site in Townsville city is dilapidated. (ABC News: Baz Ruddick)
The Queensland Audit Office has found weaknesses in governance, oversight and financial reporting processes in a company owned by the Townsville council.
The now-dissolved Northern Rail Yard Development Pty Ltd was created by the council, without approval from the Queensland treasurer, to oversee the redevelopment of a derelict former Queensland Rail site.
Townsville Mayor Nick Dametto says the council will outline how much funding was provided to the company in its financial statements.
The Queensland Audit Office (QAO) has criticised the Townsville City Council (TCC) for its handling of a multi-million-dollar development in the city.
In a letter sent to Townsville Mayor Nick Dametto in July, the QAO said council had an obligation to report to its ratepayers on the financial operations of the council-owned company Northern Rail Yard Development Pty Ltd.
The company was created by the council in the 2023-24 financial year, which the QAO found was done without necessary approval from the Queensland treasurer.
The council said it was set up to oversee the redevelopment of a former Queensland Rail depot in the Townsville CBD.
The Queensland government has allocated $35 million to transform the North Rail Yards into a housing and commercial hub. (ABC News: Baz Ruddick)
TCC provided Northern Rail Yard Development Pty Ltd with a total of $624,000 in operational funding over the 2023-24 and 2024-25 financial years.
The Queensland government has allocated $35 million towards the project, which will see the railyards developed into a housing and commercial hub.
The QAO said its first audit of the council-owned company, which was dissolved in May 2026, found governance, oversight and financial reporting weaknesses.
"Resolution of these issues was not undertaken in a timely manner, resulting in significant delay of the completion of the audit," the QAO said.
"By the time these issues were resolved and the audit for the 2023-24 year was completed, council decided to wind up the operations of the entity, and it was deregistered.
"This meant we were unable to issue an audit opinion on the financial statements of the entity for that financial year."