The Northern Territory Government handed out billions of dollars in grants without proper record-keeping processes and without a government-wide oversight procedure in place, an auditor-general's report has found.

Key points: NT Government knew grant oversight system was flawed as far back as 2014, Auditor General's report finds

NT Government knew grant oversight system was flawed as far back as 2014, Auditor General's report finds Grant applications not thoroughly scrutinised and those awarded were inconsistently reported

Grant applications not thoroughly scrutinised and those awarded were inconsistently reported However, creation of Grants NT system "well managed", on time and within budget

The audit shows the Government knew their grant oversight systems were flawed as far back as 2014, when it began developing a new system called "Grants NT".

But four years later, the system has not been implemented, and the current approach of awarding grants to businesses and community groups is still a mash-up of manual paper reporting and other inefficient practices that provide little transparency.

Auditor-general Julie Crisp also found that grants awarded were inconsistently reported and, in some cases, grant applicants were not scrutinised thoroughly before being awarded taxpayer money.

Ms Crisp says she was unable to determine a total amount of money paid out since 2014 because of the improper record keeping — but that it was expected to be in the billions.

Other instances saw applicants approved for funding after previously being rejected, with no reason offered by department officials for the reversal.

The audit was conducted around the time of the last Territory budget, which saw the NT Government's debt levels reach record heights and increased calls on the Commonwealth for more GST revenue.

Ms Crisp found communication was severely lacking between departments.

"There is no established means for communication within agencies or between agencies in relation to applicants that have breached grant conditions," Ms Crisp wrote in the report.

"It was noted that appropriate documentation was not maintained to evidence approval for all grant applications and the nature and type of documentation maintained was inconsistent."

Ms Crisp called on the Government to reconsider grant programs that do not meet departmental objectives and to conduct regular reviews to "promote consistency".

Report 'poses questions' about transparency

The audit showed that the Department of Corporate and Information Services commissioned a review of grant reporting systems in 2014, which found departments could not provide documentation for all grants because "the way the grants are managed is inefficient and ineffective".

"Existing processes are prone to human error due to a lack of programmed [information technology] checks and oversight," Ms Crisp wrote.

"Agencies experience difficulty reconciling grant activity with expenditure and there is an inability to generate meaningful reports on grants issued across the NT Government."

Ms Crisp found the Department of Chief Minister — which administers a large portion of grant funding annually — did not have modern systems in place to monitor the grants.

"In some instances, agencies are dependent upon corporate knowledge maintained by individual employees in relation to management of grants rather than documented policies, processes and procedures," Ms Crisp wrote.

Ms Crisp pointed to an estimate provided by the NT Government that suggested $966 million in grant funding was paid out in the 2014-15 financial year alone, but that figure may be inaccurate and totals paid out for each year since are difficult to determine because of the improper record-keeping.

Deputy leader of the Opposition Lia Finocchiaro called the audit "deeply concerning".

"Particularly given the perilous state of the Territory's budget and burgeoning debt levels," she said.

"Territorians would expect that awarded public monies would be appropriately acquitted, and that grants and subsequent spending is monitored and reviewed.

"This report poses a series of further questions in relation to the Gunner Labor Government's so-called open and transparent rhetoric, particularly in relation to spending by the Department of Chief Minister."

No deadline for new grants system

Ms Crisp found the creation of the Grants NT system was "well managed", provided proper reporting to those involved and was on time and within budget at $3.4 million, after accounting for previous changes.

However, she suggested implementing the system be problematic, and recommended the Government address concerns such as the increased workload when the new scheme comes in, how best to meet reporting obligations, and the development of a manual for public servants on how to use the system.

"At the time of the audit there was no timeframe for when each agency will be transferred to the new system," Ms Crisp wrote.

Lauren Moss's office did not answer questions about the grants system. ( ABC: James Dunlevie )

A spokeswoman for Corporate Information Services Minister Lauren Moss did not answer questions, but said in a statement that the new Grants NT system was completed last month — only one month late.

She did not provide a deadline for when all departments would be using the system.

"Grants NT is being implemented through a staged approach aligning roll-out with the timing of individual NTG agency grant programs," the statement said.

"A change management strategy has been established and agency-specific implementation plans are under development in partnership with individual agencies.

"Agencies maintain records and reporting of their grants programs, including funding and acquittals."

Treasurer Nicole Manison's office declined to comment on what savings could have been found from better oversight of grant funding over the last two years.

The NT Labor Government's debt is expected to reach $7.5 billion in three years, and forecasts show the Government is expected to borrow more money than it brings in a year by 2021.