An engineers group says a conflict of interest should have forced ACT Auditor-General Maxine Cooper to excuse herself from the audit of the Cotter Dam enlargement.
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Dr Cooper, whose office denied the claim, signed off on the audit released on Wednesday which blamed blowouts in cost and time on unrealistic expectations.
Dr Cooper and her office analysed reasons for a 20-month delay and a $50 million blowout in its audit of the alliance responsible the project.
She had years earlier chaired the water security taskforce reporting to the chief minister's department which in 2007 recommended the enlargement of the dam at an estimated cost of $145 million.
If this figure had been used to calculate the increased cost of the dam upgrade in this week's audit, the blowout figure would have been $250 million and not $50 million, Professionals Australia ACT director David Smith said.
"The auditor-general in a previous role was involved in recommending the Cotter Dam expansion based on the original estimates," Mr Smith said.
"She should have acted on the conflict of interest and excused herself from the audit process and any associated investigations.
"There's a bigger issue here and that is the original estimate [for the Cotter Dam enlargement] wasn't $363 million it was $145 million.
"That's more than a 150 per cent blowout."
He said the original costing influenced the final estimate before the project started.
An audit office spokesman said the report's focus was ACTEW's (now Icon Water's) establishment and management of the bulk water alliance - a term referring to the relationship between the dam operator and major contractors Lend Lease, GHD and John Holland.
"Dr Cooper had no involvement in the bulk water alliance," the spokesman said.
"Independent experts were engaged to assist in the audit and all the fieldwork was undertaken by audit office staff.
"The audit quotes these independent experts and provides reasons for all audit key findings and conclusions.
"Accordingly, all of these can be scrutinised.
"The audit was also independently quality assured."
He said the activities of the water security taskforce were outside the audit's scope.
Wednesday's audit report mentioned Dr Cooper's previous role chairing the taskforce and provided the 2007 report as background and referred to the $145 million estimate made at the time.
"We have not had any issues raised with us regarding conflicts of interest in relation to the bulk water audit," the spokesman said.
As reported this week, the blowout figure was obtained by using the final agreed estimated cost of $363 million before the project began - known as the target outturn cost - and the final upgrade bill of $410.5 million.
The audit report said in 2010 the Independent Competition and Regulatory Commission had already written the $145 million estimate was deficient for the purposes of approving the project due to its preliminary nature - it did not include contractor margins and costs to the owner which turned out to be a significant margin.
"Therefore, the audit focused on aspects of the enlarged Cotter Dam project that have not been independently reviewed,"the spokesman said.
The spokesman said the water security taskforce had noted the uncertainty of the $145 million in 2007 by referring to comments made along the same lines by the ACT Department of Treasury.
