Its report released Thursday also cites a lack of federal oversight for towing vessels that could put crew and the environment at risk in the future.
"There's no regulation, really (or) ... some kind of government body to inspect those vessels before they leave," said Pierre Murray, the board's manager for regional operations in Atlantic Canada.
"This is one thing that we're keeping an eye on for sure."
The loss of the derelict, rat-infested Lyubov Orlova, a once popular Arctic cruise ship named for a revered Russian actress, made international headlines as it drifted toward Ireland.
It is presumed sunk, says the report.
The debacle raised many questions as marine observers wondered why anyone would attempt such a trip in mid-winter on the North Atlantic.
The board found that the captain of the tug Charlene Hunt did not sufficiently prepare before towing the 100-metre long vessel out of St. John's harbour on Jan. 23, 2013.
The tow line snapped the next day off Cape Race south of St. John's in winds of about 75 kilometres per hour and six-metre waves. Mechanical issues on the Charlene Hunt soon forced it back to St. John's.
"The arrangement was not adequate as we saw by the result of it," Murray said. "There was a lack of voyage planning and the vessel's seaworthiness wasn't there.
"There was a lack of following the guidelines for a towing operation."
Reza Shoeybi, co-owner of the wayward ship, said at the time that the plan had been to tug the Lyubov Orlova to a scrap yard in the Dominican Republic. The vessel had sat neglected and listing in St. John's harbour for two years after Canadian authorities seized it in September 2010 as part of a lawsuit by Cruise North Expeditions against its Russian owners.
Shoeybi, who could not be reached Thursday, said he and his uncle took over payments after a family friend bought the ship for $275,000 in a Federal Court process. He said they spent about $400,000 getting it ready to haul. They had hoped to make up to $800,000 selling it for scrap.
Shoeybi said in an interview in February 2013 that his life-savings were lost with the ship.
The board's report says Transport Canada found problems with the Charlene Hunt during an inspection in Halifax before it travelled to St. John's to attempt the tow.
Its captain was requested to inform local Transport Canada officials when he arrived in St. John's but did not.
"Following the eventual loss of the tow and the vessel's return to St. John's, a (Transport Canada) inspection again revealed several deficiencies with the tug," says the report. "The (board) investigation concluded that had an inspection been undertaken prior to departure, some of these deficiencies would have been identified."
Transport Canada did not respond to a request for comment.
In the weeks after the Lyubov Orlova's disappearance into international waters, Transport Canada maintained that the vessel's owners were responsible for its fate.
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