The Auditor-General's Office won't be acting on complaints alleging a lack of consultation and conflicts of interest relating to the proposed Ruataniwha water storage scheme in Hawke's Bay.
The Ruataniwha dam could irrigate up to 25,000 hectares and 200 to 300 farms if it gets the green light.
The Auditor-General's Office says it won't be be looking any deeper into complaints made by a group of Hawke's Bay residents.
Transparency Hawke's Bay claimed there was a lack of consultation by the Hawke's Bay Regional Council regarding the proposed dam, which would receive considerable funding from ratepayers.
But the Auditor-General found that because the large project is in such an early stages, full information is not available, and said the council has indicated in its Long Term Plan it will conduct consultation prior to making any final decision on investment.
Transparency Hawke's Bay also raised concerns about potential conflicts of interest - pointing out many of the same people in the council are involved in the council's investment company.
The Office of the Auditor-General acknowledged the large overlap of people on both organisations but said that is common in local government.
It said the council had recognised that by making the current board of the investment company a transitional one to be replaced in January 2014.
Transparency Hawke's Bay says the response hasn't lessened concern about the financial viability of the proposed dam and that the community will demand robust consultation once the resource management process is complete.
The regional council says the report reinforces that consultation is still to come and reassured the community it will have a chance to ask questions and explore the issues.
