Maghull Town Council's leader said the new Labour administration was in the process of ensuring procedures were in place to ensure that the council was not susceptible to corruption after uncovering a "veil of secrecy" around the town hall roof rebuild project.
Cllr Caroline Esterson said procedures needed to be tightened after an independent Sefton Council auditor's report slammed the previous Lib Dem administration for its handling of the expensive roof project.
The report was handed to Merseyside Police who decided to look into it further.
An earlier investigation by the Labour Councillors found that the Lib Dems had signed off on the work just hours before losing control of the council last year.
At the time they signed off on the project, the work was expected to land the town council with a significant debt, raising debt levels to circa £650,000.
Cllr Esterson said: "With such a large amount of the Maghull public's money at stake, my Labour colleagues and I were not willing to take anything for granted.
"We had tried time and again to get the answers to questions relating to the project, but time and again we were hitting a brick wall.
"The damning findings of the independent Sefton Council audit report into the project shocked us all with its findings and ultimate criticism of the Liberal Democrats and their disregard for proper procedures. There are usual procedures in place for councils to follow when spending large amounts of money to safeguard against corruption.
"Many of these procedures were simply not followed by the Liberal Democrats.
"This raised alarm bells to us and the police decided to look into it."
Cllr Esterson said she was pleased the police had decided to study the damning audit report and the findings of the councillors' own investigation.
Cllr Esterson said: "We were shocked by the veil of secrecy surrounding the whole roof project.
"On the occasions when we questioned the Lib Dem Councillors about this we were met by a wall of silence. On one occasion we were told by one of the Lib Dem Councillors that if we continued to persist in questioning them about why they decided to spend what they were told would amount to £489,500 he would 'see us in court'.
"This was neither helpful, constructive or in the interests of the people of Maghull who wanted to know the truth as to why so much of their money was being tied to a vanity project when the money could be better spent elsewhere.
"The auditors found no evidence that showed the roof rebuild was needed at all, or that simple repairs would have sufficed.
"The report found substantial and systematic failures in procurement practice and lack of transparency in the process. In addition to significant failures in the process, that should have been overseen by the Lib Dem councillors on the council, there were also fundamental breaches of financial regulations and standing orders by the town council itself throughout the period before Labour took control.
"It is right and proper that the police look into it. That's what the people of Maghull would demand."
Cllr Esterson said the Labour Councillors were already in the process of ensuring that nothing like the town hall roof debacle could happen again.
Cllr Esterson added: "We have fully revised the standing orders of the council and we have taken steps to ensure that people can raise any concerns at any time through the creation of a whistleblowers' charter.
"Everything we are doing on the council is about getting the best value for the people of Maghull and ensuring that the decision-making process is fully transparent so we can see that no individual is benefiting financially on the back of the tax payer.
"Cllrs Tony Robertson and Andrew Blackburn may not be happy that we are taking these steps, but we have an obligation to the people of Maghull and we are determined to make sure that nothing like this whole sorry town hall roof saga happens again."