The authority was forced to pay former employee Ben Marriott Â£100,000 after he won an unfair dismissal case after he resigned after accusing his bosses of corruption.
Mr Marriott, 65, told his bosses in 2014 that council employees were allegedly having work done on their houses by approved council contractors at favourable rates in exchange for taxpayer funded contracts down the road.
At an employment tribunal in Hull last year three judges led by Humphrey Forrest ruled the council had failed its employee, effectively leaving him with no choice but to resign from his job at Dean Road Depot, and savaged the authority’s handling of the investigation into his complaints.
He also complained about bullying and threats made by staff following his complaints.
The Mazars independent report, which did not carry out a full investigation into Marriott's claims but only the way the council investigated the allegations, states that it found no new information that supported Mr Marriott's claims.
The 45-page report, which does not feature any names of individual officers, does highlight errors and missed opportunities with the council's own investigation into the allegations, which lead to Mr Marriott resigning from his position in the authority's Asset and Risk Management Team.
Mazars says it set the scope of its own investigation, agreed by Council leader Cllr Derek Bastiman and Labour leader Cllr Steve Siddons, and did not report to any council officers.
The report states that: "For the avoidance of doubt, we have not undertaken our own investigation of the Complainant’s Allegations. Our work is limited to the review of the SBC Investigation."
However, throughout the report, it states that no information came to light which supported allegations raised by Mr Marriott.
The investigators also found that one of the most eye-catching claims in the Employee Tribunal judgement was not as it seemed.
In the judgement, it is claimed a council van was sent to collect a rabbit hutch that an employee had bought on e-Bay.
Mazars found that the van was not sent as the hutch would have been too large to fit in.
The main criticism in the report from Mazars is into the council's investigation into the claims of council workers using council contract and how its own whistleblowers policy was not followed correctly - the latter contributing to Mr Marriott winning his claim again the authority.
Mazars found that although some council officers admitted using council contractors for private work, and that two of them did have the power to award contracts, they were not asked how much they paid for the works or the nature of the work carried out.
The officers also failed to declare the work to the council, something they were required to do under council rules.
Mazars noted that the two officers investigating the allegations said they did not believe they "[had] the appropriate authority to ask questions about work undertaken and prices paid".
Mazars said they officers should have asked the questions and it was only following Mr Marriott's win in court that two different officers conducted an investigation and asked the relevant questions needed to get a proper picture of what happened. Mazars notes that no evidence was found to back up Mr Marriott's claims.
The report also reveals that a contractor complained to the council that one of its competitors was getting a "disproportionate" amount of contracts from the authority.
This was investigated and found to be false though, as Mazar notes, the report was destroyed in line with council policy and so it could not conclude if the report would have backed up Mr Marriott's claim or not but it should have been re-examined as part of the second investigation, if only to back up the council's claims that it did not support Mr Marriott's allegations.
When looking at the contracts issue Mazars said it could not say whether the council's original investigation was correct in claiming it found no proof.
The report states: "In respect of this allegation, we are therefore unable to determine whether the work undertaken by SBC was sufficient to support the conclusions set out in the Investigation Report. However, the information provided to us did not identify any evidence to support the Complainant’s Allegations."
The report concludes by saying Scarborough Council should tighten its Whistleblowing policy and consider appointing a dedicated whistleblowing officer to handle complaints.
In a statement, Cllr Derek Bastiman, Leader of Scarborough Borough Council said: “I have instructed officers to publish a copy of the Mazars report with the unanimous support of the cross party panel of councillors to whom the report was delivered.
“Unfortunately Mazars was unwilling to grant the council permission to disclose the report publicly, however, I have taken the decision that there is a significant overriding public interest in doing so. Indeed it has always been my intention that this report would be publicly available.
“The report followed an independent and comprehensive investigation and I fully accept the outcome of this process.
“Importantly, within its report, Mazars stated that ‘…During the course of our work, we have not become aware of any additional evidence that may support the Complainant’s Allegations.’
“The council is already in the process of implementing the recommended amendments to policy and procedure and will continue to move forward in a constructive manner.”
To read the report in full visit www.scarborough.gov.uk/mazars-report