The decline in the sub-prime market in the United State of America in 2007 -2008 andthe corresponding decline in the market values of other financial investments has hada significant financial impact on many of the individuals and organisations whoparticipated in aggressively promoted investment schemes. The New South Wales(NSW) Local Government Councils was one such group of organisations impacted bythe decline in value of these types of investments. At the end of the 2006-2007financial year local councils in New South Wales had invested $590 million dollars instructured financial products such as collateralised debt obligations (CDO). By theend of January 2008, six months later, the market value of these investments dropped$200 million (34%) to $390 million. In response to the decreasing value of the localcouncil investments the NSW State Government commissioned a review of thefinancial exposures of NSW local councils in structured financial products. Thereview found that while acting within the parameters of the Local Government Act(1993), local councils had pursued high return high risk investment strategies. Thispaper reviews and evaluates financial investment exposures of the local councils inNSW and the resulting mix (unqualified/qualified) independent audit opinions issuedon their general purpose financial reports. This paper will contribute to the literatureon the wide spread impact of the 2008 global financial crisis as well as the quality ofLocal Government council financial report audits.