The charity closed last month after the withdrawal of public funding amid concerns about financial management and leadership at the charity.
However, this followed a series of grants that had been made, including a grant of £4m for 2015/16 and a £3m award in June.
The NAO confirmed today the £3m grant had been made despite advice from Cabinet Office’s permanent secretary Richard Heaton that it was unlikely to be value for money. This led to a ministerial direction to award the funds.
The investigation will set out the funding that Kids Company received from government, the grounds for this support and how government monitored these grants.
