Richard Lewis took over as Sport England chairman in April

An inquiry into unaudited payments of £19.6m from Sport England into grass-roots sports has found major flaws in its system - but no evidence of fraud.

Led by Timothy Dutton QC, the inquiry found unsuitable funding for several sports not "fit for purpose".

Squash, hockey, karate and boxing took payments made through a Sport England bank account called the World Class Payments Bureau between 1999 to 2007.

But there was no proof of fraud as all payments were made to intended parties.

"The report is detailed and in-depth," said Sport England chairman Richard Lewis, who ordered the investigation after he was told of the existence of the account.

The report said the system was "fundamentally flawed", because many of the governing bodies were deemed not organised to an appropriate level to receive direct Sport England funding but still qualified to receive assistance through the Payments Bureau, wasting millions of pounds of public money.

"I asked for this inquiry to be established because I was concerned that between September 1999 and March 2007, a bank account had operated outside the usual financial controls of Sport England, falling far short of the procedures and safeguards now in place in this organisation," Lewis said in a statement.

The Dutton report recommended no legal action should be taken by Sport England against anyone were involved with the Payments Bureau or those who failed to report on its functions, adding that the organisation had made significant improvements in its financial control since April 2007.

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