The Federal Government's overhaul of billions of dollars in spending on Indigenous disadvantage is still only in the "early stages" of evaluation, five years after a funding shake-up that was found to be rushed and flawed.

Key points: The Indigenous Advancement Strategy overhauled government spending on tackling disadvantage in 2014

The Indigenous Advancement Strategy overhauled government spending on tackling disadvantage in 2014 An audit says the department is still in the "early stages" of evaluations, five years after the controversial upheaval

An audit says the department is still in the "early stages" of evaluations, five years after the controversial upheaval Labor, the Greens and Aboriginal organisations say the management of the multi-billion dollar fund is not good enough

An audit has found the guidelines belatedly developed to evaluate the $5.1 billion dollar Indigenous Advancement Strategy (IAS) have "potential" to help determine whether the programs it funds are working.

But critics said the situation is not good enough and have called for more control to be transferred to Aboriginal community-run organisations.

The Australian National Audit Office looked at the evaluation framework for the strategy that it previously found was bungled by the Abbott government when it was introduced in 2014.

"Five years after the introduction of the IAS, the department is in the early stages of implementing an evaluation framework," the audit found.

"(The framework) has the potential to establish a sound foundation for ensuring that evaluation is high quality, ethical, inclusive and focused on improving the outcomes for Aboriginal and Torres Strait Islander peoples."

But the audit office found that the Department of Prime Minister and Cabinet has no reliable method for measuring long-term evaluation outcomes, and implementation has only been "partially effective".

"That is not good enough for the department in charge of the Australian public service," said Pat Turner, chief executive of the National Aboriginal Community Controlled Health Organisation.

The audit found the evaluation guidelines did not measure the government's funding decisions against its Closing the Gap policy commitments.

"You can't function like that," Shadow Indigenous Affairs Minister Linda Burney said.

"We're talking about the most marginalised people within society and yet the main funding body for those people is mired in mystery and has no proper evaluation or methodology."

In a statement Indigenous Affairs Minister Ken Wyatt said the inclusion of "transparency" as a principle in the new framework "is a significant step in providing the public insight into the activities we fund".

Mr Wyatt said the Federal Government was committed to ensuring IAS funding delivers outcomes for Indigenous Australians "and is always looking to improve the outcomes this funding achieves".

Deadlines missed

The audit said there were "several" missed deadlines after the government's promise to establish an evaluation framework in 2014, with most elements not in place until half-way through last year.

It also describes battles fought by the department to secure enough funding to do the evaluation work, with internal documents describing an "impossible" one-off allocation in 2016 that was half the amount requested by the department, which it had already considered "a fraction" of what was required.

Proper funding was only allocated by then Indigenous Affairs Minister Nigel Scullion after the blistering audit report into the establishment of the IAS, released in 2017.

And the audit reveals that Mr Scullion told the department to seek his approval for the membership of what was envisioned as an independent Indigenous Evaluation Committee.

Former minister for Indigenous affairs Nigel Scullion. ( AAP: Mick Tsikas )

Greens Indigenous Affairs spokeswoman Rachel Siewert said the lack of proper evaluation in the space meant that time and money had been wasted.

"There's no basis on which to make future funding decisions because we just don't know how effective all that money being spent under the IAS is," she said.

Pat Turner said she hoped the creation of a separate Indigenous Australians Agency inside the department would herald some change.

She said Indigenous organisations should be supported to both deliver services and do the evaluation work the department was failing to do.

"There are some signs this is understood by the Coalition government, which committed in its election promises to increasing the Aboriginal service sector," she said.

"(We) will take responsibility for outcomes in a way the public service do not."