Police acknowledge they did not handle to the required standard the case of a woman wrongly arrested over the arson of a Tokoroa pre-school.
Mii Teokotai JP was charged with conspiracy to commit arson at the pre-school in 2005, but the charges were later dismissed because of a lack of evidence.
Another woman was jailed for the incident.
The Independent Police Conduct Authority was critical of the police handling of the case, saying Mrs Teokotai's arrest was unreasonable and unjustified.
The report, which was never publicly issued, also found senior officers acted unlawfully in not notifying the IPCA about a complaint laid by Mrs Teokotai's son-in-law, David White.
Police say they accept the report's findings and have been working in good faith with Mr White, a former police officer, over the issues raised.