Officers 'lacked control' of part-time soldiers during the Troubles
Officers lacked control over part-time members of the Ulster Defence Regiment during the Troubles, an Army review said.
Some members of the regiment have been accused of passing weapons to loyalists.
A major internal stock take more than 25 years ago found weaknesses in the manning system for officers.
The 1989 report, endorsed by the Chief of the General Staff, also showed police security checking was slow and inefficient and those with no Irish connections transferring from the regular Army were not fully screened.
There was no security interview of potential applicants or security declaration required.
The military report said: "The current manning system for officers in the UDR and for part-time soldiers operating in the UDR has security weaknesses.
"Officers from the same area as their soldiers can have divided loyalties. There is a lack of control over the part-time element."
It said screening was heavily reliant upon accurate Royal Ulster Constabulary (RUC) information, an area outside the Army's control.
"The RUC manual card system can be slow and less than completely efficient.
"There is a lack of a single computerised database to speed passage of information."
The UDR was a largely homegrown regiment dedicated to supporting the Royal Ulster Constabulary in combating paramilitarism. Well-respected former members include Fermanagh and South Tyrone MP Tom Elliott.
While unionists have lauded it for holding the line against terrorism there have been claims of collusion with loyalists, including the passing on of weapons, since the 1970s.
Last year, victims' relatives took legal action, claiming a murder gang based at a farm in Glenanne, Armagh, contained members of the RUC and UDR.
Up to 120 murders in nearly 90 incidents in Mid Ulster and Irish border areas were under scrutiny.
An internal report on the UDR was released in official files published by the Public Records Office of Northern Ireland (PRONI) on Friday.
It said the UDR selection board lacked a dedicated officer so could not pay sufficient attention to detail during the recruitment process.
"Soldiers with no Irish connection transferring from the regular Army to the UDR are not fully screened," it said.
It added that there was no formal system of re-screening once individuals had joined the UDR.