An internal HSE audit into the Hepatitis C support group Positive Action has identified serious breaches of corporate governance and inappropriate spending on items.
The spending included overseas conferences, relaxation weekends, angel card readings and dog kennel costs.
According to the executive summary of the internal audit report, the organisation had non-existent controls over the expenditure of public funds, there was significant extravagance, irregularities and resistance by directors to being accountable.
The HSE said the audit findings were being considered by its senior management.
Positive Action was established in 1994 to support women infected by contaminated blood products after they gave birth. The directors were unpaid volunteers.
The HSE allocated €2.3m of taxpayers' money between 2009 and 2013.
However, the internal audit of that period outlines a catalogue of what it calls inappropriate expenditure and inadequate corporate governance controls.
Travel to conferences cost almost €104,000 over four years. The internal audit found most of these were targeted at highly specialised clinicians. Some spouses accompanied directors, and sometimes extended their stay afterwards.
The internal audit could not find evidence that all spouses reimbursed their costs.
Expenses including travel came to more than €250,000. Among the items were €19,540 on supermarket bills, gifts worth €2,223, a courier to transport dry cleaning cost €202 and dog kennels cost €185.
Spending on conferences quoted in the report included $66 for filet mignon, $234 for four lobster meals, $463 on alcohol, $1,700 on tips, $135 on excess luggage, $235 on laptop cases, and $300 on taxis.
Separately, the HSE auditors noted that $795 was spent on alcohol - at a conference about liver disease.
A total of €86,781 was spent on dining and purchases of groceries.
Positive Action also funded various relaxation weekends for members.
More than €100,000 was spent on complementary therapies, including angel healing, angel card readings, reflexology, crystal healing, ear candling, pilates, emotional freedom techniques, thought field therapy, spiritual healing and aromatherapy.
Positive Action spent €550 to allow a member to attend a course called "Dancing the Spiral".
They also funded a wide range of massage and beauty therapies, including facials, manicures and pedicures.
The internal audit found this was not an appropriate use of scarce public funds.
On corporate governance, the internal audit found that proper accounts had not been maintained, and that expenses claims were not properly vouched.
Expensive equipment, including a high volume mail machine and a projector, were purchased and never used.
It also found that the external auditor of Positive Action had prepared the accounts without visiting the organisation's offices or seeing supporting documentation. The auditors told the HSE that they stood over their accounts.
The HSE said it was their duty to ensure proper corporate governance.
RTÉ News left messages for five directors, but none responded.
However, the HSE Internal Audit report contains the responses of directors to the draft report which had been circulated to them.
Director C and four other committee members said they were disappointed at the tone of the Internal Audit, describing it as "overly extended", and focusing on the most "insignificant of items" and the most "immaterial of expenditure".
They said it traded fact for opinion, and was not accurate, impartial or dispassionate.
They said as the office has now closed due to the liquidation of the organisation, they do not have the resources to respond forensically to the Internal Audit findings.
However, they did not challenge any specific finding in relation to any individual transaction.
Director A said she felt she was being scapegoated.
She said each committee member had access to all files.
She noted that the board was voluntary, and were reimbursed for out of pocket expenses.
Director G said she had raised concerns about the way things were done, but that her concerns were not taken on board.
Director H agreed with her, saying there was not much in the HSE internal report that she could dispute. She said she was angered at the way funds were used.
The HSE said the report is now being considered by its senior management.
It said it has a duty to ensure funding provided to organisations is spent for the purposes intended, and that there was appropriate governance probity and transparency.
It said it ceased funding to Positive Action in March 2014 after identifying serious concerns in its governance.
