A small King Country training centre double-claimed government funding for hundreds of students even after it had been told not to.
A Tertiary Education Commission report said the Maniapoto Training Agency received $2.122 million more than it should have, and finished repaying the debt last month.
The commission said it first spotted the problem in 2014 when an audit found the agency had claimed funding for students who failed the course and again for the same students successfully completing the course.
It said students should have been given an extension or allowed to re-sit if they needed minimal additional learning to complete the course and the agency should claim funding that reflected the amount of work the students had completed.
The training agency said it would stop the practice but another investigation in mid-2018 triggered by low pass rates found it had continued.
The commission's report, published in February, said the second investigation concluded the organisation had double-claimed for 498 students from 2013-2017.
Most of the students had failed part of their course and were re-enrolled for the full course again even if they only needed a little more time to complete the parts they had failed or had not completed.
"It appears that, despite confirmation that MTA had addressed the issue with the dual enrolments, the situation was still occurring with: No extension of the course date to allow for a re-sit or re-examination to take place; or no adjustment made to the EFTS value for a second enrolment," the report said.
The report said the commission permitted re-enrolling students who were not successful "but we do not accept the volume and the blanket way in which it was reported" in the organisation's funding claim.
It said the effect was to enrol and fund each student twice.
"While we also acknowledge that MTA frequently deals with high needs students and that many students may in fact fail courses, there is no accounting for the minimal requirements of extra learning when almost all of the students have been re-enrolled in each course."
The report said the training agency claimed funding for 18 students it said successfully completed their course twice at the same time, one student who was recorded twice as as failing the course during the same time period, and six 15-year-olds who had not legally left school and were therefore not eligible for tertiary subsidies.
It said the training agency had to repay $2.122 million, which it had done by February 2023.
The report said the agency was the education arm of the Ngāti Maniapoto Marae Pact Trust (NMMPT) and claimed funding for more than 100 students a year.
It was focused on education and training for people who had not been successful at school.
"The TEC acknowledges that MTA's focus has always been on supporting its rangatahi, and that it accepted the TEC's investigation findings and worked hard with us to resolve the issues identified so that it can continue to deliver for its community," the report said.
The commission told RNZ it did not publish its report earlier because it did not formally close its investigation until the funds had been repaid.
"Once the initial part of the investigation was completed our focus was on ensuring repayment through an acceptable repayment plan (managed through a deed of acknowledgement of debt and repayment). We didn't formally close the investigation until after the plan was fulfilled and the terms of the deed of debt were satisfied," it said.
The agency achieved the highest possible rating of "highly confident" in its most recent Qualfications Authority audit.