Nationals leader Michael McCormack is standing by his embattled deputy Bridget McKenzie, who is under immense pressure to quit over the sports rorts scandal.

A damning auditor-general's report into a $100 million grants scheme found it favoured marginal and targeted seats before last year's federal election.

Prime Minister Scott Morrison has referred Senator McKenzie's handling of the program to his department head Philip Gaetjens to see if ministerial rules were broken.

Mr Gaetjens is also scrutinising a $36,000 grant Senator McKenzie dished out to a shooting club of which she was a member, an association she didn't declare in her register of interests.

Mr McCormack said his deputy did an outstanding job as sports minister, describing the grants scheme as a "very good program".

Asked if he would sack Senator McKenzie if the Prime Minister and Cabinet probe found she broke the rules, the Nationals leader said it was "completely hypothetical".

"I'm not going to be judge and jury. I'm going to let process take its course. That's the only right thing to do," he told reporters in Coffs Harbour on Friday.

"In any situation in Australia, people are always innocent until proven otherwise."

The deputy prime minister claimed Senator McKenzie declared all memberships she was required to.

Her office argues she didn't need to declare the shooting club link because it was a gift worth less than $300.

The auditor-general found in the third round of the program, 73 per cent of projects given funding were not recommended by Sport Australia.

Senator McKenzie's cabinet colleague Peter Dutton doesn't think it's enough for the minister to resign.

"If you strip away the emotion and look at the facts as we should do, I don't think that a case has been made for her removal," he told the Nine Network.

"We all make decisions in our portfolios. That is exactly what she has done."

Mr Dutton expects the review to be complete over the weekend or early next week.

Prime Minister Scott Morrison has vowed to take whatever action is necessary after the head of his department investigates if ministerial standards have been broken.

Senator McKenzie's spokeswoman says the minister is not resigning.

"She is actively engaging in the process and is confident there has not been a breach in ministerial standards."

Mr Morrison said the shooting club issue was "very, very different" to the broader controversy surrounding the grants scheme.

Labor's shadow special minister of state Don Farrell has written to Mr Gaetjens warning him against conducting a "sham" investigation to serve the government's political interests.