Former Sport Australia boss Kate Palmer has told a Senate inquiry she was surprised to see the colour-coded spreadsheet of approved sports grants produced by former minister Bridget McKenzie’s office.

Ms Palmer said the first time she saw the spreadsheet was when it was handed to her as she walked into a parliamentary grilling in 2019 – prompting a late-night phone hook-up between public servants.

Senator McKenzie's office was criticised in an audit of the $100 million grants program overseen by Sport Australia for running a parallel assessment process biased towards Coalition-held and target seats in the lead-up to the 2019 federal election.

The auditor-general revealed the then-sports minister's office created dozens of versions of a spreadsheet between October 2018 and April 2019 that colour-coded grant applications according to which political party held their electorate.

Ms Palmer, who was chief executive of Sport Australia until late January, told senators on Friday that she was aware Senator McKenzie's office had its own assessment process, but she first saw the colour-coded document in April 2019. She could not recall the exact date.

Minister's spreadsheet a 'surprise' to Sport Australia boss_1
There were 136 emails between Bridget McKenzie's office and Scott Morrison's about the program.

She was so surprised by the colour coding that she sought a meeting with the secretary of the health department, which oversees Sport Australia, and her organisation's board chair that night.

Health department officials later said that was likely to have been April 5, 2019.

But the health department boss, Glenys Beauchamp, has destroyed all her records of that meeting because Friday is her last day as a public servant.

"I saw a coloured spreadsheet put under my face just as I was entering Senate estimates – that's the only spreadsheet I saw," Ms Palmer told the inquiry into the affair.

"I did not read the spreadsheet, I just … glanced at it and then stood up and walked into Senate estimates."

Ms Palmer later discussed the spreadsheet with Ms Beauchamp and Sport Australia chair John Wylie – and asked what do do about it.

Sport Australia then provided that spreadsheet to the auditors, who had already begun examining the program.

Ms Beauchamp described the phone hook-up with Ms Palmer and Mr Wylie as an "ad hoc meeting".

She agreed she would have taken notes. Asked where they were, she said: "It's interesting you should say that because it's my last day in the public service and I have destroyed all of my notebooks and notes."

Senators were incredulous at the news.

Ms Beauchamp said it was her practice to make "scratchings … of things that I might have to follow up on" and translate anything that needed to be put on the official record into email or discussions with colleagues.

"I should not have notebooks and things as a private citizen after midnight tonight," she said.

Ultimately, 73 per cent of the projects given money were not among those recommended by Sport Australia.

Ms Palmer said the program's design meant she knew the minister would ultimately decide which sporting clubs got money.

The minister "had a much broader understanding of the program or what she's trying to achieve", she said.

"We fulfilled our responsibility very professionally and it was fair and sound, and – I think – undertaken in good faith and our people did a terrific job of that," she said.

The committee heard on Thursday that Sport Australia had twice warned Senator McKenzie's office of the risks of its separate assessment of grants.

It also emerged on Thursday that Senator McKenzie’s office emailed through a final round of approved grants after the May 2019 federal election was called, and after the Morrison government had entered the caretaker period.

The Senate inquiry has also been told there were 136 emails about the controversial grants program between the Prime Minister’s office and Senator McKenzie's.

Prime Minister Scott Morrison has continued to deny any wrongdoing in allocating the grants. On Friday, he denied any breach of caretaker conventions.

“That’s not true … that’s not actually true," he told the ABC.

“[The committee] heard it was authorised on the 4th of April 2019. That’s what the testimony from Sports Australia was. It was signed on the 4th of April 2019 – that was the authorisation of the brief that went on that matter. So the suggestion it was signed at some time later, there is no basis for that.”

Senator McKenzie was forced to quit after a review by the PM's chief of staff, Phil Gaetjens, found she had broken ministerial rules by not declaring potential conflicts of interest relating to gun club memberships.

However, Mr Gaetjens found no evidence of pork-barrelling in seats targeted by the Coalition in the May 2019 election. Mr Morrison has repeatedly refused to release that report.

-with AAP