A damning report into financial mismanagement at NHS Croydon has concluded there was a deliberate cover-up of a £28m black hole in its budget.

Senior managers were today branded incompetent and their actions judged to have "a detrimental impact on health services in Croydon" by an investigation notable also for gaping holes caused by "a wall of silence" formed by key figures.

Joint Health Overview and Scrutiny Committee (JHOSC) have urged the Secretary of State for Health to compel Caroline Taylor, former NHS Croydon chief executive, to answer crucial questions that remain unanswered.

The committee said the refusal of Ms Taylor, former finance director Stephen O’Brien and interim deputy director of finance Mark Phillips to give evidence meant it did not know the full extent of financial mismanagement at Croydon Primary Care Trust (PCT), despite a seven-month investigation.

The committee, formed by six south-west London councils to probe why the PCT reported a £5.54m surplus in its 2010/11 budget when it was actually £22.4m in debt, said there was "significant motivation for senior officers to disguise the extent of the financial incompetence at NHS Croydon to safeguard their own positions".

The report, published today, also criticised the NHS for failing to hold individuals to account for the overspend and flatly contradicted the findings of a 2012 NHS-commissioned Ernst & Young report which lay the blame on a systems failure rather than staff.

Heathfield councillor Jason Cummings, JHOSC chair, said: "What has become clear from the committee’s review is that the accounting errors were deliberately hidden. This was not the result of any system failure but a consequence of the action of individuals, who have still to explain their actions.

"We have been faced by a wall of silence from key witnesses in the NHS and subsequently there are still some questions that remain unanswered.

"In particular, we still don’t know why the accounts were altered and whether patients had been directly affected.

"This cannot be right, and we now call on the Department of Health to carry out rigorous investigation and ensure the relevant officers can be publicly held to account."

The findings of JHOSC also include:

• poor accounting practices at NHS Croydon masked and prevented the deficit from being identified sooner

• insufficient senior supervision of the finance team

• Mark Phillips, deputy director of finance, did not meet the mandatory professional requirements and was not suited to lead the team in the absence of finance director Stephen O’Brien

• financial management was so poor it was not possible to track where money had been spent

• a culture of complacency and the need to achieve a balanced budget at NHS Croydon prevented internal challenge

• a large number of interim appointments had contributed to a culture in which accountability was low and long-term issues not considered.

• external and internal audit reports are unreliable indicators of good governance even when conducted properly, although in this case they fell short of expected standards

• the audit committee and the NHS Croydon board had been too passive and prevented the overspend and lack of budget management from being identified and addressed sooner – they placed too much reliance on audit reports

JHOSC, which launched its investigation because member councils believed the £1m Ernst & Young review did not provide proper public accountability, also made a series of recommendations.

It said Clinical Commissioning Groups in south-west London should review the qualifications of staff that have responsibilities for budgets and make all budget-holders personally responsible for their budgets.

NHS bodies should also make a commitment to help foster a culture of openness, honesty and challenge, the report advised.

Coun Cummings said: "We are satisfied that efforts have been made to address the concerns raised by Ernst & Young but we are also recommending a number of extra measures to make sure this never happens again.

"The public needs to have confidence in the NHS and be sure that their money is in safe hands."