More than 900 carcases of BSE-positive animals are being held in cold storage and the Department of Agriculture has been unable to dispose of them, according to the report.
The report says the Department of Agriculture has been storing the carcases at a facility in Co Tipperary for the last four years since on-farm burials were outlawed.
"The Department purchased the facility in 2000 at a cost of approximately €1.2 million," the report states.
"The running cost of the store amounts to approximately €90,000 per annum.
"There are over 900 carcases in store at present. The Department estimates that with declining BSE numbers, the store has capacity to the end of 2005. Efforts to dispose of the carcases have been unsuccessful to date."
The comptroller also expresses concern at the Department's decision to pay by escrow the contracts for the disposal of about 170,000 tonnes of meat and bone meal generated by rendering plants. The report says the escrow arrangement contravenes the principle of matching expenditure to the accounting period in which the service provided was paid for.