The Tertiary Education Commission will audit 13 industry training organisations after initial reviews found problems with trainee enrolments.
The commission says it could ask some of the organisations to repay funding to the Government as a result.
The 13 industry training organisations were reviewed earlier this year after accusations that some are claiming money for trainees they don't have.
TEC chief executive Roy Sharp says more investigation is needed. The commission will now consider a larger sample of trainees at each of the ITOs.
Eventually, all 39 industry training organisations will be audited.
Radio New Zealand's education correspondent says the commission has not yet asked any of the organisations to repay Government funding.
Govt tightens rules for industry training
Most industry training organisations are falling short of new Government benchmarks and will lose millions of dollars unless they improve.
The Government is tightening its funding rules after finding no evidence that more than a third of the trainees it subsidises complete any qualification credits at all.
It also found organisations claiming subsidies for two trainees who were dead and for one who enrolled in seven years' worth of full-time training in two years.
From next year, industry training organisations must prove at least 80% of their trainees have completed some of their training within two years.
They also cannot enrol trainees in more than 70 credits a year.
The Industry Training Federation disagrees with the limit of 70 credits, but supports the intent of the changes.
But it is warning that industry training organisations will enrol fewer trainees and there could be skill shortages as industries adjust to the new rules.
The Tertiary Education Commission expects industry training funding could drop $20 million next year through a combination of lower numbers of trainees due to the recession and the impact of the new rules.