The Office of the Auditor-General is looking into Whangarei District Council's handling of finances involving the city's new stadium.
It says its inquiries are preliminary, following a complaint from a member of the public, and it cannot give details.
However, Northland Regional Council, which is building the stadium, says the Office of the Auditor-General has asked both councils for correspondence with other parties involved in the project.
The regional council says it welcomes the inquiry because it has asked Whangarei District Council about its agreement with Northland Rugby over the use of the stadium and has had no reply.
The union says the council has paid it $2 million compensation for surrendering its lease on Okara Park, and its assets there, in order to make way for the new events centre.
It says it is still negotiating a rental deal with the councils for the days when it needs to use the stadium for games.