The Icelandic banking crisis is threatening to destabilise finances at the new unitary authority for Cornwall, the Audit Commission has warned. Auditors reported losses incurred by Restormel BC, which will form part of One Cornwall in April, could impact on the first budget at the new town hall. Restormel has around £4m frozen in Icelandic accounts following the collapse of the country's banking sector last October. Auditors lambasted the borough, which covers the towns of Newquay and St Austell, for breaching investment rules on deposits. Treasury rules limit deposits to a single £2m investment, but the council made separate deposits of £1m and £3m.