The Prime Minister has asked the head of his department to investigate whether senator Bridget McKenzie's handling of a contentious sports grant program breached ministerial standards.

Key points: Bridget McKenzie faces an investigation into whether her oversight of a government sports grant scheme breached ministerial standards

Bridget McKenzie faces an investigation into whether her oversight of a government sports grant scheme breached ministerial standards PM asks the head of his department to investigate the program, as well as the senator's ties to a shooting club that received funding

PM asks the head of his department to investigate the program, as well as the senator's ties to a shooting club that received funding The vice-president of the shooting club says he will cooperate with any investigation

It follows a damning audit report which found the Minister used the $100 million program to funnel money into marginal seats, and those the Coalition was targeting, in the lead-up to last year's federal election.

A statement provided by the Prime Minister's Office said the entire report into the scheme by the auditor-general had been referred to the secretary of the Department of Prime Minister and Cabinet, Philip Gaetjens.

"Last Friday, the Prime Minister referred the matter of the auditor-general's report to the secretary of [the Department of Prime Minister and Cabinet] for advice in relation to any actions in the application of the statement of ministerial standards," it stated.

"The Prime Minister is awaiting the secretary's advice and will continue to follow due process. The matters raised in the media today have also been referred."

McKenzie defends funding for club where she is a member

Earlier on Wednesday, Senator McKenzie downplayed her membership at a shooting club that received almost $36,000 in the sports grants program she oversaw.

She issued a statement saying all funded projects were eligible and "as the founder and co-chair of Parliamentary Friends of Shooting her support for shooting sports is very public and well documented".

"The gift of membership from the Wangaratta Clay Target Club was made during a site visit on 25 January 2019. It is valued at less than $300 making a declaration to the Senate unnecessary.

"Round two funding became available in December 2018 at MYEFO and funding decisions were made from that time."

Brian Reid, vice-president of the club, told the ABC he would cooperate with any investigation, but the money had already been spent.

"If they want to have a look at the toilet block and see what's there and how it's benefited the club, anyone's welcome to do that," he said.

"If they want to have a look at the paperwork lodged with Sport Australia, that information is there as well."

Mr Reid said he had not been informed of any new investigation.

"The gun club's got nothing to hide," he said.