A contentious $100 million pre-election cash splash by the Federal Government was focused on marginal and target seats.

Key points: The Government spent $100 million on grants for the Community Sport Infrastructure Program in the months leading up to the election

The Government spent $100 million on grants for the Community Sport Infrastructure Program in the months leading up to the election The office of then-sports minister Bridget McKenzie identified target electorates as part of assessing grant applicants

The office of then-sports minister Bridget McKenzie identified target electorates as part of assessing grant applicants The auditor-general found a bias of funding towards marginal and target seats

The findings from the auditor-general, released on Wednesday, also raise the prospect that the entire scheme was illegal, noting there did not appear to be any legal authority for then-sports minister Bridget McKenzie to have picked recipients.

The report into the Community Sports Infrastructure Grant program discovered "evidence of distribution bias in the award of grant funding".

Labor sport spokesperson Senator Don Farrell said the report revealed "industrial-scale pork barrelling".

"I think it's very clear that the Government did not expect to win the last election," he said.

"They thought they could get away with all this pork barrelling, save a few extra seats, and it's come back to bite them in a very big way."

Hundreds of grants were recommended for funding by Sport Australia but were rejected by the minister, whose office earmarked some seats as "marginal" and "targeted", and funnelled money towards those.

Projects in these electorates applied for 36 per cent of the funding, and received 47 per cent of the amount approved in the first round.

"The award of funding reflected the approach documented by the minister's office of focusing on 'marginal' electorates held by the Coalition as well as those electorates held by other parties or independent members that were to be 'targeted' by the Coalition at the 2019 election," the report stated.

"Applications from projects located in those electorates were more successful in being awarded funding than if funding was allocated on the basis of merit assessed against the published program guidelines."

In the third round of the program, 73 per cent of projects given funding were not recommended by Sport Australia.

A spokesperson for Senator McKenzie said the program was "very popular" and all recipients were eligible.

"The ANAO [Australian National Audit Office] report is clear that no rules were broken."

Sport Minister Richard Colbeck echoed his colleague, noting "as the ANAO report found, no applications assessed as ineligible were awarded grant funding."

Decisions inconsistent with guidelines

The report notes testimony from the minister's office included the argument that the guidelines included a reference to "other factors" being taken into consideration.

The minister's former chief of staff, quoted in the report, also argued "the success of the program relied on the support across Parliament so needed to make sure the spread of projects reflected the statistics and could be seen as fair".

Former Liberal candidate for Mayo Georgina Downer — not the local sitting independent member — handed over a cheque as part of the scheme. ( Facebook: Georgina Downer — Liberal for Mayo )

However the report declared advice about assessing the applications was inconsistent with the guidelines.

"The minister's office drew upon considerations other than those identified in the program guidelines, such as the location of projects, and also applied considerations that were inconsistent with the published guidelines," it stated.

"It was this assessment process that predominantly informed the minister's funding decisions, rather than Sport Australia's process."

The report also suggests the entire scheme may have been illegal, with no apparent legal authority for the minister to make these decisions.

"It is not evident to the ANAO what the legal authority was," it said.

Former government lawyer Ian Cunliffe believes the scheme is open to legal challenge by unsuccessful applicants.

"If it was [an application worth] half a million dollars and I was on the board of one of the sports bodies involved I would be pushing very strongly that it be done," Mr Cunliffe said last year.

Emma Miles wants better change rooms for her soccer club in Coledale, New South Wales, but it missed out on a grant from the program. ( ABC News: Sarah Moss )

Deserving projects missed out

The report highlighted decisions where positively assessed applications missed out on funding.

In the then Labor-held Tasmanian electorate of Braddon — identified as a 'targeted' electorate by the minister — the fourth and fifth-ranked applications were approved in round one, but the highest-ranked application (with a score of 93) was not approved for funding in any round.

The auditor-general found reasons for funding decisions were not clearly documented.

The approach caused problems for Sport Australia, which was unable to provide feedback to unsuccessful applicants.

"Sport Australia was unable to communicate the full and actual reasons for the rejection of their application, or otherwise provide those applicants with advice on the reasons for their application being unsuccessful," the report stated.

Sport Australia chief executive Kate Palmer (centre) during her period in charge of Netball Australia. ( AAP: Paul Miller )

The auditor-general also recommended Sport Australia address problems of conflict of interest, noting an "undeclared and unmanaged conflict of interest involving a senior Sport Australia employee" with responsibility for the program.

"There is a risk that the sport linked to this organisation was provided with a competitive advantage compared to other sports and potential applicants by that Sport Australia employee," the report said.

"Sport Australia advised the ANAO that it took action in relation to this issue."

Sport Australia chief executive Kate Palmer is stepping down this month.

Ms Palmer is not the senior Sport Australia employee referenced in the report in relation to the conflict of interest.

Did you submit a grant application for your community but were overlooked? The ABC wants to hear from you. Email jack.snape@abc.net.au.