The Auditor-General has announced the terms of reference of its inquiry into the Kaipara District Council's rating process for Mangawhai's new sewerage system.
Property-owners in the Northland coastal community have challenged the council over the way it levied rates for the scheme and kept borrowing to meet cost blow-outs.
The district council has asked the Auditor-General to carry out an investigation into how it handled the scheme.
The Auditor-General says the inquiry will consider how the scheme was funded and the use and setting of rates.
It will include a review of the council's planning, contracting arrangements, and financial management and reporting.
An earlier independent investigation found the council illegally levied millions of dollars in sewerage rates on the Mangawhai community.