The Australian Federal Police's refusal to examine whether Bronwyn Bishop broke any laws by chartering a taxpayer-funded helicopter to a Liberal Party fundraiser is under investigation.
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A loophole that allows federal politicians to secretly repay wrongly claimed entitlements without the public knowing will also be scrutinised by the Commonwealth Ombudsman.
Labor and members of the public asked the AFP to investigate Mrs Bishop's helicopter ride in July at the height of the furore over the former speaker's lavish spending habits. Mrs Bishop eventually resigned.
But the AFP refused to investigate - citing the so-called 'Minchin Protocol' - and referred the complaints to the Department of Finance.
The protocol was introduced by former Liberal senator Nick Minchin in 1998. It lets bureaucrats decide whether allegations of wrongdoing are credible and MPs are usually allowed to quietly repay funds they were not entitled to access.
A letter from the Ombudsman's office to a member of the public unhappy with the AFP's actions shows there are grounds for an investigation into the AFP's general use of the Minchin Protocol, as well as its explanation for refusing to investigate Mrs Bishop's spending.
The Ombudsman's operations director, Anne-Maree Harrison, has been assigned the investigation.
The Ombudsman has powers to investigate government departments but does not have the power to overturn a decision or compel an agency to take any action. However its findings have the potential to further embarrass the Abbott government, which has been reeling from damaging stories about the spending habits of a number of high-profile MPs.
Mrs Bishop's critics have questioned whether she committed a criminal offence by signing a form stating the $5000 chopper ride from Melbourne to a Liberal Party fundraiser in Geelong was for official purposes.
The original complaint to the Ombudsman was made by Tony Yegles, the co-publisher of the No Fibs citizen journalism website.
"The protocol is not a legal process," Mr Yegles wrote. "It is an administrative process. It has no standing in law. The AFP is not bound by that protocol nor do they fall under any legal obligations to refer to it."
An AFP spokesperson said the AFP have been notified of the Ombudsman's interest in the matter and "will cooperate with their investigation".
"While this process occurs the AFP has no further comment," the spokesperson said.
