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Australia's auditor-general is investigating the administration of a community grants program overseen by Peter Dutton.
Auditor-general Grant Hehir on Wednesday wrote to Labor Senator Kristina Keneally to confirm the audit is taking place after she requested a review of the program, the Safer Communities Fund.
The fund came under scrutiny earlier this year after it was revealed Mr Dutton, then the home affairs minister, had rejected his department's advice when he reduced funding from some applications and diverted it to other projects, at least one of which was in his Brisbane electorate.
Mr Dutton - now the defence minister - has strongly denied any wrongdoing and defended his management of the program.