Powys council invested in Landsbanki
An inquiry into how £4m of public money became tied up in failed Icelandic banks has found a council became "complacent" after years of investment.
A Powys council committee identified weaknesses in the way the authority operated, and has made recommendations.
About £74m of public money from Welsh councils, police bodies and universities is tied up in investments with Icelandic banks.
Neath Port Talbot council has £20m in the banking system.
The investments made by staff working in a treasury management team were examined by Powys council's treasury management scrutiny review panel.
Its draft report has been reviewed by the corporate governance policy and scrutiny committee, which has made several recommendations about future investments.
The committee said: "Whereas the panel does not hold any individual responsible for the failure in the treasury management process, it has identified weaknesses in the council's operational system which require action by both elected members and staff.
"Little or no report of the effect and potential risks of the changing economic climate was made to the (governing) board from the summer/autumn of 2007.
"The panel believes the council had become complacent after many years of apparently risk-free investment."
The committee added the treasury management team had been given "little supervision or direction from the board or senior management".
The draft report says that by summer 2007, when the world's banking system started to show signs of collapse, Powys already had £3m invested with Landsbanki and Glitnir banks.
But on 5 September 2008, about a month before the Icelandic banks went into receivership, the council invested a further £1m in Landsbanki.
It is feared the council has suffered "potential losses of £4m", and interest on that money worth £200,000.
Conservative prospective parliamentary candidate in Montgomeryshire, Glyn Davies, said lessons would have been learned.