An investment by Waikato District Health Board into a virtual health platform will be investigated by the Auditor-General's office.
The deputy auditor-general, Greg Schollum confirmed on Wednesday that terms of reference for the inquiry had been set up.
It comes in the wake of allegations of wrongful spending of public money by former DHB chief executive Nigel Murray.
Earlier this month, State Services Commissioner Peter Hughes said he formally requested the Auditor-General to conduct an inquiry into the DHB's $15 million purchase of the SmartHealth product and the procurement process from HealthTap.
In 2015, the DHB entered a contract with California-based HealthTap to provide IT services and "virtual health care" to patients from clinicians through the internet or mobile phones.
The contract was driven by Dr Murray and former board chairman Bob Simcock, who both resigned following an investigation into Dr Murray's expenses, which totalled more than $200,000.
Mr Schollum said the inquiry will examine how the contract was awarded and managed.
In a statement, DHB interim chief executive Derek Wright welcomed the Auditor-General's inquiry.
"It's important we learn lessons from how we did things in the past," he said.