When Tasmanian Liberal senator Eric Abetz took over the mic at this week's Senate inquiry into allegations of sports rorts, he asked the Australian National Audit Office (ANAO) to confirm the Prime Minister's well-worn statement — that all grants receiving funding were eligible.

Scott Morrison has repeatedly asserted the rebuttal in press conferences — at the National Press Club and in Parliament.

"I seek to clarify, you did find that no ineligible project or application was funded?" was the question Senator Abetz asked audit office executive Brian Boyd.

He did not get the answer he expected.

Instead, Mr Boyd revealed that 43 per cent of the projects that received funding in the $100 million program were in fact considered "ineligible".

Were the projects technically eligible or not?

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 1 minute 39 seconds 1 m 39 s ANAO's Brian Boyd says 43 per cent of funded projects were ineligible under the guidelines

Mr Boyd acknowledged that in most cases the projects had been ticked off by Sports Australia as meeting the criteria.

But in 270 cases, the clubs that got the money started building works before the final paperwork was completed.

Bridget McKenzie lost her seat in Cabinet for failing to disclose her membership to a gun club. ( ABC News: Nick Haggarty )

That rendered the projects ineligible for the grants scheme because it was specifically for proposals where work had not begun.

"The projects had started before the funding agreement was signed," Mr Boyd explained.

A handful of other projects were ineligible, according to the audit office, because the building works were already complete, the applications were late or were amended after the assessment by Sports Australia.

The ANAO sparked the sports grants fiasco with its detailed report last month that found the community sports grants program favoured marginal government seats as well as Labor and crossbench electorates that the Coalition was targeting to win in last year's election.

Grant Hehir defended the audit he oversaw into the Government's handling of the sports grants program. ( ABC News: Ian Cutmore )

The Prime Minister is yet to face questions on these new eligibility issues. His office maintains he accurately represented the information he had been provided with.

Government Senate leader Mathias Cormann argues the important test of eligibility, that the Prime Minister has been referencing in his public comments, was the assessment by Sports Australia.

"No project which received funding under this sports grants program was assessed as ineligible at the time the decision to allocate funding was made," he said.

But Opposition Leader Anthony Albanese said the evidence to the committee illustrated mismanagement.

He continues to accuse the Government of treating "the public piggy bank like its own private pork barrel".

Secret report remains under lock and key

Katy Gallagher and her Labor colleagues quizzed auditors over the Prime Minister's involvement in a sports grants program. ( ABC News: Ian Cutmore )

The ANAO report has already pushed the Prime Minister to ask his departmental secretary Phil Gaetjens to conduct an investigation.

Mr Gaetjens's report remains secret but a briefing he provided to Mr Morrison led to the resignation of Cabinet minister Bridget McKenzie.

She stood down when Mr Morrison announced the Gaetjens Report had determined she breached ministerial standards by failing to declare she was a member of a clay shooting club that received funding.

Brian Boyd said auditors found evidence the Prime Minister and Bridget McKenzie's offices shared a colour-coded spreadsheet assessing sports grants. ( ABC News: Ian Cutmore )

At the time, the Prime Minister said the report did not identify wider maladministration of the grants program, but Labor and crossbenchers are demanding proof.

Following weeks of pressure, Mr Gaetjens published a six-page summary of his confidential report on Friday.

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His dot points include reference to "significant shortcomings" with the grants scheme, but he maintains there wasn't bias in the way the money was doled out.

That finding is directly at odds with the audit office conclusion that the Government focused on marginal Coalition seats and targeted seats it wanted to win when awarding the funding.

"The evidence I have reviewed does not support the suggestion that political considerations were the primary determining factor in the Minister's decision to approve the grants," Mr Gaetjens wrote in the summary.

On top of that, Mr Gaetjens said Bridget McKenzie assured him she never saw the infamous colour-coded spreadsheet that divided applications by electorate and political representative.

He said his assessment of the successful applications did not show the minister was "unduly influenced" by spreadsheet references to particular marginal seats.

Mr Gaetjens, who was formerly Mr Morrison's chief of staff, won't release his full analysis, and said it was a confidential document.

Senator Cormann has suggested Labor ask questions about the contents of the report by calling Mr Gaetjens to give evidence at the Senate inquiry.

So Labor has not found a smoking gun, but has secured more ammunition to keep the issue alive and in the headlines for another day.