The Australian Agency for International Development or AusAID is reported to be investigating 134 cases of possible corruption in 16 countries, with millions of dollars allegedly being used fraudulently by officials.
The Herald Sun newspaper reports that AusAID's investigated 68 cases of alleged, suspected or detected fraud in the past year, most of them in Indonesia and Papua New Guinea.
The two countries jointly receive 652 million US dollars' worth of Australian assistance a year.
PNG's 141 million dollar law and justice sector programme is being scrutinised, following the misuse of at least 88,000 dollars worth of aid money intended for a prison project.
The agency wouldn't comment on particular fraud cases but told the newspaper many of the recipient countries didn't have sufficient resources to deal with aid corruption.