The Auditor-General is investigating how the Queenstown Lakes District Council has dealt with a conflict of interest involving its chief executive, Adam Feeley.
Land belonging to Mr Feeley is being considered by the council for a special housing area.
Last year, the council and the Housing Minister agreed on a housing accord aimed at increasing housing supply and affordability in Queenstown.
One way was by streamlining Resource Management Act processes to enable special housing areas to be established.
Mr Feeley has expressed interest in land he owns near Arrowtown becoming such an area.
The Auditor-General, Lyn Provost, said she reviewed the council's management of Mr Feeley's interest and was comfortable with it.
However, for completeness, she is now reviewing any involvement he may have had in developing the council's policy before declaring an interest.
The Auditor-General has received several requests from Queenstown people to look into the matter.
Queenstown Lakes mayor Vanessa van Uden said the council was comfortable with the inquiry.
She said she saw it as an opportunity to reassure people the matter had been dealt with appropriately.