Guernsey's Chief Minister Laurie Morgan and the entire States Policy Council are to resign.
The WAO said Chief Minister Laurie Morgan was a poor leader
The announcement was made by Treasury Minister Lyndon Trott, who has already handed in his letter of resignation.
It follows a highly critical report into why the lowest tender to build a new clinical block at the Princess Elizabeth Hospital was withdrawn.
Commerce and Employment Minister Stuart Falla and Health Minister Peter Roffey resigned on Tuesday.
Mr Trott told a press conference the letters of resignation from all 11 members of the island's top political body would be officially handed in over the next few days.
Seventeen deputies had signed a letter calling for all members of Policy Council to resign.
Deputy Barry Brehaut's letter called for the council to step down and seek a fresh mandate, saying it was better than forcing a vote of no confidence.
The Wales Audit Office (WAO) was asked to carry out an investigation following concerns the Policy Council had used its influence to encourage RG Falla to withdraw.
The bid was £2.4m lower than the one accepted, and was the preferred tender.
The WAO's findings said the States' reputation had been damaged, citing procedures for managing capital projects as inadequate, incomplete and unclear.
The report also said Mr Morgan was a poor leader and Treasury Minister Lyndon Trott had made inaccurate and inconsistent statements.