Wales Audit Office said there were “significant shortcomings” in the way £9.3 Million of taxpayers’ money was spent on plans for Circuit of Wales at Ebbw Vale.
Funding was based on a “flawed” appraisal by Welsh Government said the public finance watchdog.
Welsh Government said it was “disappointed” by the report as it considers whether to underwrite over £200 Million of investment to create the international motor sport centre as part of the total £425 Million project.
The £9.3 Million was allocated to get the project off the ground and allow initial works and land acquisition to go ahead. A further £16 Million has been agreed but not yet handed over to the promoters, Heads of the Valleys Development Company.
Promoters have said the scheme would create 6,000 jobs in related businesses and attract 750,000 visitors annually.
Welsh Government will decide next month if it will underwrite the project.