Western Australia’s corruption watchdog has warned that 34 of the state’s local councils are at high or medium risk of corruption as it released a damning report into the Shire of Exmouth in the state’s northwest.

The Corruption and Crime Commission has recommended charges be laid against former Exmouth chief executive Bill Price and employee Andrew Forte.

Mr Price was dismissed over alleged misconduct including not putting out for tender a contract for work at the $32 million taxpayer-funded Ningaloo science and research hub, housing fraud, abusing leave and benefits and misuse of credit cards.

CCC head and former Supreme Court judge John McKechnie said he was worried Exmouth represented a microcosm of greater problems all over the sector, including cultures of entitlement.

WA’s local government department had identified 16 councils as high risk, all of which were regional councils, while 16 of 18 medium risk were in the country.

In smaller towns, people were more likely to know each other and be friends and that created risks.

“The issue is in procurement, lax governments and often people who are friends and, quite bluntly, incompetence – people who have not got the skills to manage budgets of many millions of dollars or oversight a CEO who may arrogantly assert power,” Mr McKechnie told ABC radio.

“If I give you tickets to shows, pay for holidays or renovations at your house at cut prices, who’s to know?

“You have to recognise that friendship is one thing but when you are elected to a position, ignorance is no longer an excuse.

“You are responsible for governance of that local authority and cannot let friendship or ignorance get in the way of good governance.”

The CCC report released on Wednesday describes Mr Price “as a law unto himself”.

Ian Fletcher, who took over administration when the entire council was suspended this year, imposed an alcohol ban saying he had discovered more than $30,000 of ratepayers money was spent on booze in two years.

WA Auditor-General Colin Murphy will be given powers to audit local councils following the Exmouth scandal, Premier Mark McGowan said on Tuesday.

“That will mean a layer of accountability that doesn’t currently exist will be introduced so the auditor-general can have the oversight capacity as he does over government over the entirety of local government in Western Australia,” he said.

WA Local Government Association president Lynne Craigie admitted mandatory training did not exist for councillors, after Mr McKechnie said a councillor at the troubled Dowerin shire did not even know the Local Government Act existed, but she denied the sector was rife with corruption.

“For the CCC Commissioner to claim that councils have very little idea of their responsibilities or don’t have the required skills is an unfair generalisation and an insult to most who work hard for their communities,” she said.