Walsall Council has been heavily criticised for a "range of failings" that led to a £650,000 payout to a former employee.
Peter Francis was awarded the cash after taking the council to an employment tribunal claiming constructive dismissal and disability discrimination.
He said he had suffered as a result of blowing the whistle about misuse of council funding.
He reached an out-of-court settlement with the council in December 2006.
A report by district auditor John Gregory, published last week, concluded that Walsall Council failed to consider whether or not the Disability Discrimination Act applied to Francis, and did not consider making 'reasonable adjustments'.