Several Town of Cottesloe projects have been postponed after a $1.67 million federal grant was incorrectly recorded as revenue, making the council's financial position appear stronger than it was.

The money should have been recorded as a liability because it was already committed to the beachfront path, but was instead entered as capital revenue. After discovering the error, the council postponed a number of projects, including a drinking fountain at the skate park, design work for a beach access path, and $300,000 each for new South Cottesloe toilets and the Civic Centre playground. A $50,000 project to repaint a wall at the Civic Centre was also deferred.

The council subsequently drew $270,000 from its surplus to reduce the $1.67 million shortfall, leaving a surplus of $714,152.

Three planning projects costing another $380,118 were also unable to proceed following the State Government's takeover of Cottesloe's planning schemes, in addition to more than $500,000 associated with the government's action.

Council administration accepted responsibility for the accounting error, attributing it to absences in key positions, leadership transitions and a major IT system changeover.

The $1.67 million forms part of a $4.1 million federal grant for design and safety improvements to the beachfront path along Marine Parade. The proposed South Cottesloe toilet block, previously estimated to cost between $300,000 and $750,000, has now been removed from the council's agenda along with the other postponed projects.