The Auditor-General is critical of the Ministry of Health for its oversight of care standards in rest homes.
An Audit Office report says the auditing of rest homes has been inconsistent and sometimes of poor quality.
Auditor-General Lyn Provost says she believes the arrangements used to certify and audit rest homes have been inadequate since their introduction in 2002.
The report found that private audit agencies rely on rest homes to report their own progress and fail to keep the ministry updated.
The report also revealed that 14 of the 21 district health boards carry out their own auditing.
However, the head of one of the country's largest rest home companies says audits do not improve the quality of services.
Bupa Care Services chief executive Dr Dwayne Crombie says good progress has been made by the Ministry of Health in the last two years on maintaining standards in rest homes.