Nearly a third of industry training organisations are to face more intense funding audits, amid accusations that some are claiming money for trainees they do not have.
Any organisations found to be deliberately mis-using taxpayer funds could be referred to police.
A recent consultation paper from the Tertiary Education Commission highlights a list of concerns brought to its attention in the 12 months to February.
They include training organisations claiming for a significant number of trainees who are inactive or had their employment terminated, and inadequate monitoring.
There are 39 ITOs in New Zealand. Tertiary Education Minister Steven Joyce says 12 are to be further scrutinised and he will support referring any deliberate rorting to police.
But the Labour Party says the Tertiary Education Commission is not releasing as much information as it should regarding the concerns.
Tertiary education spokesperson Maryan Street says the reputation of all providers stands to be tarnished.
One ITO, the Aviation, Tourism and Travel industry training organisation, doubts that taxpayer funding is being deliberately rorted.
Chief executive Elizabeth Valentine says there is confusion about reporting requirements and any deliberate mis-use of funds among ITOs would be few and far between.
The audits are taking place until June.
