Councillors in a drought-stricken outback town say they are "absolutely shocked" after an ABC investigation revealed their boss spent more than $500,000 on a corporate credit card.

Key points: The card was in former Hay Shire Council general manager Allen Dwyer's name

The card was in former Hay Shire Council general manager Allen Dwyer's name Purchases included golf equipment, antiques, toys and groceries

Purchases included golf equipment, antiques, toys and groceries Mr Dwyer says he has repaid all personal expenses on the card

Allen Dwyer, who was the general manager at Hay Shire Council, held the card between June 2014 and June 2017.

Documents obtained under freedom of information laws show Mr Dwyer withdrew $73,600 in cash advances on the card, often in $200 amounts.

Hay Shire Council permitted Mr Dwyer to make cash withdrawals for work expenses, but the documents show cash advances were questioned as expenses mounted.

A 2016 audit found receipts were missing or "not up to date", and that $28,100 of ATM cash withdrawals were "unsubstantiated card transactions".

In response, Mr Dwyer reported to council he felt receipts were "considered unnecessary" and he had "never taken a cash advance for personal use".

Hay Shire councillor Peter Dwyer said he was "absolutely shocked" about the amount of cash withdrawals.

He said proper accounting demanded people "don't draw cash" on a council credit card and claimed councillors were not briefed about audit findings.

"We were led to believe there's a number of receipts in a box under somebody's bed," he said.

"We're yet to see that, as a member of council, I'm yet to see that."

Personal spending also on card

The records also show thousands of dollars were spent on personal goods, such as pharmaceuticals, fresh meat and groceries.

Other purchases included golf equipment, antiques and toys, while alcohol was sometimes purchased from bars and bottle shops.

Allen Dwyer told the ABC council permitted him to use the card for personal expenditure, and repay charges for things like fuel, WiFi or private travel with monthly deductions.

He said sometimes his repayments were "a bit behind" but "whenever it was brought to my notice, I always paid it in full".

He conceded there were "disparities" with a lot of book-keeping under his watch but was "scrupulous about charging back expenditure".

"My mantra has always been to get the job done," he said.

"And sometimes that probably cuts some corners."

Allen Dwyer used his card while on annual leave and auditors also questioned why almost $3,000 of "personal expenditure" was charged during a summer holiday.

As cardholder, Mr Dwyer's signature is the sole approval on many of the Visa card statements.

Hay Mayor Bill Sheaffe signed some statements, while others were unsigned.

Many were processed months late.

Hay Mayor Bill Sheaffe maintained "full faith" in Allan Dwyer's performance as general manager. ( ABC News: Verity Gorman )

The audit report criticised "material deficiencies" in the accounting records as a possible breach of the Local Government Act.

It recommended more than $20,000 of spending be repaid by Allen Dwyer, and that card approval systems be amended.

The records show $117,000 of personal spending on the card was repaid by Mr Dwyer, including some large lump sums after his resignation in June 2017.

Travel to five-star hotels

Around $380,000 in official expenditure was billed to ratepayers, including thousands of dollars spent on business trips, including stays at hotels like Sydney's Sheraton on the Park.

Allen Dwyer says these costs were unavoidable thanks to an "abnormal season" of NSW Government meetings, which he and other Council members attended.

"There are probably are cheaper motels," Mr Dwyer said.

"But there's not much cheaper within the vicinity of Parliament House."

Allen Dwyer said his card was used to pay for official travel for many of his council colleagues, including cash withdrawals for "taxi fares and meals and sustenance expenses".

Mayor Sheaffe confirmed at least four other people had used the card to organise travel and that collecting receipts "didn't always happen".

He told the ABC he maintained "full faith" in Mr Dwyer's performance "because he'd been a general manager for 40 years".

Hay Shire Council has since tightened its financial policies and appointed Amanda Spalding, a chartered accountant, as their new GM.

Peter Dwyer told the ABC he would welcome an investigation into account keeping in the Hay Shire Council, so the public could be assured all reconciliations were properly done.

"As a small community, every dollar counts," he said.

"We need to get to the bottom of this."

A letter from the NSW Office of Local Government, which monitors and investigates councils, also raised "serious concerns" Hay Shire Council officials may have received unauthorised benefits.

Allen Dwyer is now the general manager at Cootamundra-Gundagai Council.

Cootamundra-Gundagai Mayor Abb McAlister said he had spoken with Allen Dwyer and that the amount of personal expenses was concerning.

The Mayor added his council could seek legal advice.

"I have spoken to all councillors this morning and we're going to sit down and discuss it and see where we go from here," Mr McAlister said.

"I'll be seeking advice from people I can rely on, whether it's legal advice or whatever, and advice from what the councillors feel."