The OECD is run on an antiquated basis, with outdated accounting systems, low-grade management, has fostered a culture of complacency among staff - and even the inventory for its wine cellar fails to provide for obsolescence or depreciation.

Most of its $200 million a year budget is used to pay its 1,850 staff, according to international financial consultants Arthur Andersen, who were called in by the organisation's secretary general, Mr Donald Johnston, who himself arrived in the OECD in 1996.

However, the consultants found no evidence of malpractice within the organisation and Mr Johnston had told the Financial Times that he is "optimistic we have put these issues behind us".

Examples of what was not best practice abound in the report, which formed the basis for reform of the internal administration and which ambassadors from the 29 member countries will review later this year.

Arthur Andersen found the antiquated system of reporting made the organisation's finances hard to penetrate. "No standards are available nor is there a consistent policy. Therefore the financial information as currently presented cannot be interpreted without extensive narrative support. Presently, the financial information does not provide all relevant information about the organisation's assets, liabilities and net assets and about their relationship with each other at a moment in time in accordance with internationally accepted accounting principles."

For example, the OECD did not file its VAT returns on time; there were 1,800 separate components in the budget; there was no proper segregation of duties between managers and auditors; one person had unsupervised control of loans to the administration and staff; and manages were appointed on the basis of technical competence rather than administrative skill.

The result, according to the secretary general, was "a level of management skills within the organisation which is probably too low".

Mr Johnston did take issue with the report's criticism of its wine accountancy. "I would have thought a wine reserve would increase in value rather than decrease in value," he said.