Victoria Climbie died after horrific abuse
Naan John, who was deputy leader of Brent Council in 1999 when Victoria came into their care, said she was aware of "serious concerns" about the team's performance.
Ms John, who is now leader of the London authority, said this was triggered by tight budget, staff shortages and lack of leadership.
Victoria died in February 2000 aged eight, after suffering months of abuse by her great aunt Marie Therese Kouao, 44, and Kouao's boyfriend Carl Manning, 28, who are now serving life for her murder.
Ms John told the inquiry into Victoria's death that the professional judgment used in the case by Edward Armstrong, Brent's children's services manager, was found "wanting".
Mr Armstrong, who has been suspended, was singled out for blame by Ms John over the "mistakes" he had made.
Ms John said: "Any system you have in place is capable of being ignored by individuals within that system if they do not adhere to it.
"It is a matter of deep regret that a child died in these circumstances. I can tell you it has had a devastating effect on the authority as a whole. All of us feel it and want to learn from it.
"I do not want to leave the inquiry with the impression that we are not, as an organisation, scarred and marked by the fact that this child died when she had contact with our authority.
"The death of any child is terrible and the death of a child in these circumstances makes a difference to the way we view things."
Ms John said there had been meetings "at the highest level" within the council in the run-up to a damning May 2000 inspectorate report as "serious concerns" were raised.
Criticism included a breakdown of the referral system so that hundreds of contacts and referrals went unrecorded and were not linked to future incidents with the same cases.
The inquiry has already heard that approximately half of the government funding, about £25m, earmarked for children's services were diverted for use in other departments between 1997 and 1999.
This was prompted partly by a political decision to try to keep the council's council tax levels at or below the London average.
There was a recruitment crisis as staff suffered long term illnesses and absences, and struggled to cope with the workload.