Queensland's councils have been told to act swiftly on a report showing they have routinely failed to stop fraud and corruption.
A report by state Auditor-General Andrew Greaves shows 66 of the state's 77 councils reported cases of alleged or actual fraud involving $8.6 million between July 2009 and November 2013.
Most cases involved the misappropriation of council assets, including theft and corrupt employees using their positions or access to information for personal benefit.
More than 90 per cent of cases were uncovered by tip-offs and public interest disclosures rather than internal council audits.
The report says most councils failed to recover fraud losses and 43 councils still do not have an anti-fraud plan.
"Their responses to known and potential fraud risks are, by and large, inadequate and demonstrate a lack of leadership and a failure in governance," Mr Greaves wrote in the report, tabled in the parliament on Tuesday.
The auditor-general recommended councils report all fraud losses to the local government minister and his office and keep detailed records of losses.
Councils have also been advised to assess themselves against the report's findings to improve their internal procedures.
Local Government Minister Jackie Trad said the report was stark and called for councils to take immediate action.
"Swift action to address the lack of central monitoring of fraud losses and to strengthen internal fraud management systems in local government is required," Ms Trad told AAP.
The minister said her department will request progress reports from councils on implementing the auditor-general's recommendations within one year.
But Local Government Association of Queensland chief executive officer Greg Hallam was ready to co-operate but denied there were systemic issues.
"There will always be individuals who attempt to take advantage of the system," he said.
Mr Hallam also downplayed the amount of money defrauded.
He said $8.6 million was a tiny amount compared with the $36 billion in total local government expenditure over the given period.
"It should also be noted that more than 90 per cent of these cases involved sums of $10,000 or less," Mr Hallam said.
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