An audit prompted by the mayor’s financing plan for the now-defunct West Side stadium proposal concluded that the Bloomberg administration inappropriately diverted more than $20 million it collected from property owners to projects of its choosing without going through the normal budget process.

The audit, conducted by the city comptroller, William Thompson Jr., and released yesterday, found that between fiscal years 2002 and 2004 the city disbursed $7 million to Cancer Research, $8.4 million to the New York Stock Exchange, $700,000 to the Police Museum, and approximately $673,000 from the money it collected from payments in lieu of taxes that should have gone into the city treasury.

The audit, which also named a number of other projects that got money from the city’s Economic Development Corporation, also found that the Bloomberg administration failed to renew the PILOT agreements it had with 37 property owners citywide and as a result did not collect about $2.1 million it was owed.

A spokesman for the mayor, Edward Skyler, said the audit found that almost all transactions were properly accounted for. In an e-mail message, he said last night that the administration disagreed with Mr. Thompson’s contention that the disbursements violated the law.

The city’s once-obscure PILOT collections were thrust into the spotlight this year when Mr. Bloomberg said he was planning to use money from that stream to pay for the city’s $300 million share of the New York Sports and Convention Center he wanted built. That facility was to serve as the home of the New York Jets football team and the primary venue for the 2012 Olympics, if the city had been chosen host for the Games.

The mayor’s plan was opposed by the speaker of the City Council, Gifford Miller, who said the mayor was using the PILOT program as a “slush fund.” The plan also provided political fodder to the three other Democrats running for mayor. The administration argued that the mayor has the right to use PILOT money to spur economic development as he sees fit. Mr. Bloomberg is not the only mayor to use PILOT money in this fashion.

In June, three weeks after a state board killed the stadium proposal, Mr. Bloomberg agreed, however, to sign a bill that requires council approval for a mayor to use PILOT funds to finance development and construction projects. At the time, political analysts said the about-face was a shrewd political move that averted a court battle in the months leading up to November’s mayoral election and robbed the Democrats of a juicy issue to bring to voters.

Deputy Comptroller Greg Brooks said yesterday: “The audit found that agencies involved were not complying with state law, which requires them to go to the taxing jurisdiction within 30 days, and that they were transferring funds to both the general fund and to projects they believed were important.”