The Federal Government’s controversial $444 million grant to an obscure Great Barrier Reef charity failed to comply with transparency rules, the auditor-general has found.

The Turnbull government issued the grant to the Great Barrier Reef Foundation (GBRF) in April last year, entrusting significant environmental stewardship funds to a group with just six full-time staff, no real track record compared to others in the field, and links to companies whose activities have been blamed for damage to the Reef.

The Coalition said it had done due diligence before awarding the grant, and the Australian National Audit Office (ANAO) has now weighed in.

The ANAO’s investigation into the grant-making process found relevant ministerial decisions were informed by departmental advice that was sufficiently detailed and complied with commonwealth rules.

But the Department of Environment and Energy failed to properly follow government rules around making grants, which require grants to come with clear and specific objectives for the funding.

“For non-competitive grants, assessment criteria provide a transparent means of assessing whether the particular proposal under consideration is of a satisfactory standard that approving a grant would represent value for money,” auditor-general Grant Hehir wrote in his report.

The AG found the objectives of the Great Barrier Reef Foundation's grant were too broad and general in nature.

The vague ambitions included “improved management of the Great Barrier Reef” and “management of key threats to the Great Barrier Reef” with little more detail.

Other reef-related grants used for comparison were found to have more precise targets associated with them, like measures to reduce water pollution by a specific amount.

The Department of Environment and Energy has issued a statement saying it believes the targets were detailed enough.

“Setting of quantitative targets in the guidelines would have given an unrealistic impression of the precision with which outcomes can be predicted in the very early stages of this intervention in a highly dynamic and complex biophysical and socio-economic system,” it wrote.

The auditor-general also questioned the grant’s value for money, saying the department did not adequately scrutinise the charity's actual fundraising performance.

The department said the findings were, “incorrect or based on an incomplete assessment of the evidence”.

“The department's conclusion that the proposal represented value for money for public resources was reasonable and based on a clear understanding of the objectives and desired outcomes the Government was seeking from the grant,” it said.

“Keeping in mind the outcomes that we all want to achieve for Australia, this grant is well targeted to improve the health of the Great Barrier Reef and to leverage additional funding to further boost outcomes.

“Already, the foundation has successfully delivered early milestones and established an ambitious fundraising target of $300-400 million.

“Further, the partnership serves as an innovative model that could be adopted to address other policy priorities for Australia.”

Great Barrier Reef Foundation managing director Anna Marsden says the charity is spending the grant effectively.

“The GBRF is focused on fulfilling the obligations of the partnership because we are committed to protecting the reef and serving as a good guardian of taxpayer funds,” she said.

The AG’s report made six recommendations to the Environment Department to improve the transparency and performance of the grant.

The Environment Department “agreed” to three and “noted” the rest of the recommendations.