An audit of WA Labor's 'Local Projects, Local jobs' election cash scheme has uncovered "shortcomings" in how the project's $38 million in grants have been handed out.

A report by WA Auditor General Caroline Spencer tabled in Parliament yesterday found some of the grants had been used for "a purpose that differed from the agreement".

In some cases, there was no documented approval of the change in purpose or changes had been signed off by a local MP instead of a minister.

The Auditor General has found "shorcomings" in how the state government's 'Local Projects, Local Jobs' grant scheme has been implemented. Credit:WAtoday

The Auditor General "audit tested" 40 of the program's 858 projects to determine if funds had actually been spent for the purposes of the grants.