Education Minister Hekia Parata is taking allegations of fraud linked to Te Kohanga Reo Trust seriously, Prime Minister John Key says.

Key spoke about the issue today from Beijing where he is meeting Chinese leaders.

Earlier Parata said the allegations around spending by the trust's wholly owned subsidiary, Te Pataka Ohanga (TPO), had been referred to the Serious Fraud Office (SFO).

"This is the spending of taxpayers money and the integrity of that is important to every New Zealander," Key said.

"So if there is a case to be answered here the Serious Fraud Office is the right place to look at it."

It "sounds logical" that the government should have visibility on how a subsidiary of state-funded organisations spent its money, he said.

"There was an inquiry for very good reason and my understanding is the inquiry for the most part cleared the organisation of that.

"If you're saying there is money that's filtered down through to another organisation which seems to be what they're saying, that wasn't part of the overall investigation and if there are concerns about that then that needs to be investigated.

"There could be a number of ways of doing that and it sounds like the most logical way of doing that is to refer it to the SFO," Key said

The prime minister dismissed suggestions that the Government had referred the matter to the SFO because it did not want to be seen to be pointing the finger at a Maori organisation.

"I don't care what ethnicity people are. If they take taxpayers' money and they spend that money they've got to be held to account, that that money is spent as it was prescribed it would be, and to the standards that we demand.

"It doesn't really bother me what ethnicity they are. They'll be held to account if they don't do that."

Parata last night released an independent audit that she said showed there was no misspending of public money by the trust. She then admitted the allegations which sparked the inquiry had not been addressed.

Parata said last night she had no authority over TPO, whose officials are accused of the misspending, and no authority to investigate it.

However, she today revealed that fresh allegations had led to the registered charity being referred to the SFO.

"The problem with this arrangement is that a wholly owned subsidiary of the trust has had persistent allegations made about it," Parata said.

"Those allegations, I think, have the potential to undermine the very good work the kohanga reo are doing and because we don't have the legal powers to investigate that we are passing it on to those who do."

The allegations had come in the last 12 hours and related to further alleged misspending by TPO though Parata refused to elaborate.

She could not say who the allegations referred to or how many people were involved but they related to the same period of time as the original allegations, she said.

While she had no legal authority over TPO, she said concern had been sufficient to refer the matter to the SFO.

"Our point is there are allegations that haven't yet been answered by the trust, they need to be so that public confidence can be restored, we're taking this step to achieve that."

In a short statement Te Kohanga Reo National Trust Board said it was happy with the report clearing it of misuse of public funds. It acknowledged that Ernst & Young did not inquire into its subsidiary, TPO.

Parata said TPO had committed to fronting up to answer questions today but failed to do so.