The report also reveals how employees in the offices were secretly providing licences to foreign nationals over a three year period.
One cashier fraudulently processed five licences despite none of the applicants having passed a driving test. The same employee provided a further six licences on the basis that the applicants had exchanged their foreign licence but the audit found this not to be case.
All 11 individuals involved were Albanian -- sparking fears that the employee was part of an international scam.
The employee involved, referred to as Cashier B, "informed Internal Audit that none of the applicants had visited (the) MTO in person, and she stated that she subsequently destroyed the relevant paperwork".
Meanwhile the investigation found that a supervisor in a second office was "instrumental" in fraudulently providing licences to 17 individuals from Albania, Romania, Greece and Italy.
The report states that "Supervisor S" admitted to "requesting a number of cashiers to process transactions on her behalf".
Both staff members admitted to the offences and have since been sacked by the city council.
Gardai confirmed today that they are continuing to probe the findings of the report.
An investigation by the council and senior MTO staff found that the electronic system currently in place allowed the employees to "bypass the relevant quality control checks".
A Council spokesperson told the Herald this morning: "Controls were subsequently significantly tightened, to ensure that the integrity and security in the licensing process is paramount."
The spokesperson refused to address a number of questions lodged by the Herald in relation to the manner in which the employees' behaviour was allowed to go unnoticed.
City councillors today expressed fears that the operations may have been controlled by crime figures operating both in and outside of Ireland.
The Herald understands that thousands of euro may have been exchanged for licences.
Independent Councillor Mannix Flynn said: "What we're dealing with here is an international scandal. These employees were able to carry out illegal and dangerous acts. We need to know the whereabouts and status of the individuals who now illegitimately own Irish driving licences."