The Australian National Audit Office (ANAO) has blasted the administration of a $200m program rolled out by the Coalition after the 2016 election to boost regional jobs and growth, with a new assessment uncovering substantial administrative shortcomings.

The audit office ran the ruler over the government’s Regional Jobs and Investment Packages after complaints from Labor that grants were being heavily weighted to electorates held by the Coalition, creating the possibility that the program was inconsistent with the commonwealth grant guidelines.

The audit, tabled on Tuesday afternoon as Australians watched the Melbourne Cup, found that funding decisions were made by a panel of government ministers, and the decisions did not always line up with advice provided by bureaucrats.

Ministers declined to fund 28% of grant applications recommended to them by officials, and approved 17% of applications that had not been recommended to them.

Officials recommended that funding be approved for 232 applications, and there were 132 applications where the panel’s ultimate funding decision differed from the departmental recommendation. The ministerial panel binned 64 of the 232 applications, which translated to $75.9m in declined funding, and approved 68 not on the departmental list involving $77.4m in requested grant funding.

Departmental staff were not in attendance at any of the meetings of the ministerial panel and the meetings were not minuted. The ANAO also points out that the proportion of decisions overturned by the ministerial panel increased over time, increasing from 17% in 2017 to 35% by April 2018.

The program assessed by the ANAO originated from a 2016 election commitment by the then Turnbull government to establish a $200m program to deliver regional jobs and growth, with the expectation of leveraging a further $200m or more in matched funding.

The objective of the initiative was to create jobs in regions in five states – the Bowen Basin, tropical north Queensland, and Wide Bay Burnett in Queensland; the north and south coast of New South Wales; the upper Spencer Gulf in South Australia; Geelong, the Goulburn Valley, and the Latrobe Valley in Victoria, and regional Tasmania.

The ministerial panel overseeing grants for the first three regions was comprised of Nationals Darren Chester and Michael McCormack and Liberals Michaelia Cash and James McGrath. For the remaining regions, the panel consisted of the LNP’s John McVeigh and National Bridget McKenzie – who replaced Cash.

Concluding that eligibility and merit assessment processes were not applied to an appropriate standard, the ANAO notes that the ministerial panel most often cited incorrect scoring by assessors as the reason for not agreeing with departmental funding recommendations, but then the ministers failed to re-score the applications.

The audit notes this failure to join the dots meant “there was not a clear line of sight between the departmental assessment results, the subsequent adjustments by the ministerial panel and the funding decisions”.

The ANAO found that applications were not soundly assessed in accordance with the program guidelines, and the eligibility requirements were not applied in full.

“Requests for co-funding exemptions were not appropriately considered and conflict of interest management was not to a consistently appropriate standard,” the audit says.

“It is not clear that the documented assessment procedures were sufficiently well developed, and there is insufficient evidence that each of the more than 60 individuals that undertook the assessments received adequate training”.

It says while ineligible applications were identified during assessments, not all of those applications were removed from further consideration. It says one ineligible application was approved for funding.

There were also late applications that were approved to continue on to assessment on the basis there were technical issues with the department system. Ten of 19 late applications were permitted to go on for assessment, and there was no record made of why the other nine were binned. Five of these applications were funded to the tune of $3.6m.

It noted while the program guidelines said applicants under the program would be required to declare any perceived or existing conflicts of interest, or declare that they had no conflicts – “no action was taken to give effect to this element of the program guidelines”.

But addressing Labor’s primary complaint, the ANAO says there was “no bias clearly evident” in the assessment and decision-making processes.

“Decisions to not approve recommended applications occurred in two Queensland regions at a rate more than three times the average across the other eight regions; these decisions affected five electorates each of which was held by the Coalition,” it says.

“With the caveat that, for some electorates, the number of grants involved was quite small, it was not evident from this analysis that the panel was preferencing some electorates in the region over others.”