The Liberal Senator and his insistent offsider Matt Canavan have the job of trying to discredit the scathing audit report into the government's handling of $100 million of sports grants at a Senate inquiry.

The inquiry, which is expected to hear from the head of the Prime Minister's department, Phil Gaetjens, and likely a host of unhappy salt-of-the-earth sports clubs, heard from auditor Grant Hehir and his team on Thursday.

"You did find that no ineligible project or application was funded?" Senator Abetz asked Brian Boyd, an executive director in the Audit Office, his voice triumphant.

"No, senator that's not what we found," came the answer. The shock was palpable; Abetz's mouth fell open.

This has been the crux of the government's defence - that all of the projects were eligible, unlike when Labor's Ros Kelly handed out sports grants with seemingly no discernible criteria at all.

In fact, Boyd told the Senate, about 43 per cent were ineligible by the time they were funded, mainly because they had started or finished before the funding agreement was signed.

It was always a thin defence, just as the ostensible reason for Bridget McKenzie resigning - that she hadn't declared her membership of one of the sports clubs funded - was beside the point. Saying a project is eligible does nothing to address the key problem - that Sport Australia developed scored and ranked the projects according to the published criteria, and Senator McKenzie then essentially ignored the scores and instead handed out money according to an internal process based on which states the Coalition wanted to win in the election.

But thin as it was, Prime Minister Scott Morrison and every government members buttonholed on the issue since the audit was handed down in January, has stuck by the mantra.

Here's Morrison on January 29: "The auditor-general did not find there were any ineligible projects that were funded under this scheme, and nor did he say that rules had been broken."

Well, that would be incorrect. But since the government has hung its hat on the claim, it dare not drop it now. And even on Friday, after Mr Boyd's explosive evidence, embattled Nationals Leader Michael McCormack, stayed on tune.

"The program was properly dealt with. The projects were properly funded. They were all eligible," he said, standing, shamelessly, at the Sunshine Beach Surf Life Saving Clubhouse in Noosa which received $2.5 million under a different grants program just before last year's election.

He was standing, humiliatingly, alongside Llew O'Brien, who resigned from the Nationals party room last week, essentially in protest against McCormack's leadership after supporting challenger Barnaby Joyce, and then piled an added humiliation on McCormack by accepting Labor's backing to become deputy Speaker against the Nationals' official candidate. Oh the ignominy.

It has become, though, a feature of this government - and of modern politics - that saying something is enough to make it so and ignoring something is enough to make it not there. O'Brien's treachery of the week, anybody? Anybody? The auditor just said 43 per cent of the sports projects were ineligible; no matter, McCormack and Morrison will just keep saying the opposite.

The auditor also said he could find nothing that have the minister the legal authority to actually make the decisions. But again, this is being ignored by the government.

"There was a ministerial authority to make decisions in this matter," says Morrison.

"Bridget McKenzie had the legal authority, as a minister, to use discretion," parroted McCormack the day after Grant Hehir had explained to the Senate why she didn't appear to. Sport Australia didn't think McKenzie had the legal authority to make decisions and raised its concerns at the time, he said. The Department of Health said they should seek legal advice. But no one actually did.

For Abetz and Canavan, the lack of legal advice was a chance to score a point for the Hansard at Thursday's hearing. They wanted yes-no answers.

"There was no legal advice before you to indicate that the minister lacked legal authority to make the decisions?" Canavan demanded.

No, Hehir answered, at which Canavan sat back, enormously satisfied at having verballed the auditor, and entirely unconcerned that the auditor had just explained that the lack of legal advice was precisely the problem.

Abetz's face might have worn the starkest shock at Thursday's hearing, but you also got the sense from the audit team that the process for deciding which sports projects would get funded at the last election - disorganised, unjustified, legally questionable, undocumented - was among the more unedifying mires they have had to wade into.

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