Accountants at KPMG have discovered that the funding gap in the London Development Agency’s 2012 Olympics budget could be as high as £159 million.
The shortfall is understood to relate to money committed for compulsory purchase orders for land needed for the Olympic Park.
KPMG, commissioned by the LDA board to look into the additional spending commitments, filed its report this week.
The LDA has drawn up proposals to accommodate the commitments into its budgets this year through savings already made through the review process and by re-forecasting its budgets.
A statement said: “We have been and are cutting out areas of work which were not returning good value for money.
“The LDA had historically funded a proliferation of small, low-value projects with little demonstrable return on investment.
“Our new investment strategy proposes to focus on six core themes to create value for London, where future LDA investments are on larger, more strategic projects that will achieve greater impact and value for money.”
KPMG found that, while there was no evidence of fraud, there were historic failures in the Olympic Legacy Directorate, including the non-escalation of known budget overruns, poor documentation, poor performance control and monitoring, poor financial controls and the lack of long-term budgetary control.
The reports will be considered by the LDA board on Wednesday 16 September.