The Essex branch of the Police Federation welcomed the appointment but said it was concerned senior officers were getting allowances - such as a flat rate 15% of salary for being in a senior position - while rank and file officers had seen competency payments stopped.
In addition to general oversight, the board's other key responsibility is to establish salary and other compensation levels for the key officers at rates that are in some way tied to performance.
The WAO investigators concluded that the local authority did not advertise a special meeting in September 2012 to decide the salary of Mr O'Sullivan and other senior officers.
But he said the main salary costs were governed by the size of the force, adding that it was not worthwhile for some officers to become a chief constable "because you could be losing money coming from one force going to the other".