Former Sport Australia head Kate Palmer was "surprised" when she was shown the controversial colour-coded grants spreadsheet used by former Sports Minister Bridget McKenzie last year.
The spreadsheet was a list of the applicants for sports grants, colour-coded by which party held the seat.
Ms Palmer told a Senate inquiry into the sports grants on Friday that she had been shown the spreadsheet by a staff member as she was walking into a Senates estimates hearing in early April last year. Hearings were held on April 5 and 10 just before the government went into caretaker mode on April 11.
"I was just surprised when I saw it," she said.
Labor's Don Farrell asked: "What surprised you about it?"
Ms Palmer replied: "The colours."
As a result, a high-level meeting was called that evening with board chairman John Wylie and health department secretary Glenys Beauchamp to "uncover and explore what has actually happened".
"We determined that the minister's office had replaced our spreadsheet, which was not colour-coded with this spreadsheet that was colour-coded," Ms Palmer said.
Ms Palmer said Sport Australia was concerned to ensure it had outlined the risks to the minister and was giving her proper advice.
It was clear under the program guidelines that the minister was the approver of grants. But it would have been "a much more professional process" for Sport Australia to have given its recommendations to the minister from the beginning, instead of drawing up recommendations based on the projects the minister wanted funding, she said.
Ms Beauchamp, who gave evidence after Ms Palmer on Friday, couldn't throw any more light on the hastily called April meeting. She said recalled a meeting with Ms Palmer and Mr John Wylie "on a number of issues", but did not recall details and had not been able to find any records of the meeting, with her notebooks destroyed.
The final round of grants funding was decided at the same time as the meeting, with Sport Australia sending Senator McKenzie its list of recommended projects on April 3, and Senator McKenzie sending back the list she had approved, which was mostly different, on April 11, 15 minutes after the caretaker period began. By that time the Audit Office was already investigating.
Ms Palmer said Sport Australia raised concerns with Senator McKenzie in December 2018 and March 2019.
"There were concerns raised about the process, yes, I can confirm that absolutely," she said.
Ms Palmer rejected suggestions by Liberal Senator Matt Canavan that Tennis Australia had been given special treatment by virtue of being given the guidelines earlier than other sports.
She also rejected attempts by Senator Eric Abetz to cast doubt on Sport Australia's assessment process, with Senator Abetz pointing out that assessors had scored the same projects very differently, sometimes different by as much as 30 points.
But Ms Palmer said the assessment team had been very experienced and Sport Australia had used a panel to examine cases where scores had differed.
While the Audit Office has reported that 43 per cent of projects were ineligible by the time they were funded, Ms Palmer also said that Sport Australia believed all projects were eligible.