Whitehall's spending watchdog has launched an investigation into Government grants to the charity Kids Company.
The National Audit Office inquiry will focus on a £3 million taxpayer-funded grant from ministers to Kids Company earlier this year against the advice of a senior civil servant, who said it was not likely to be good value for money, as well as a further £4 million grant made shortly before the charity was shut down.
Kids Company, which closed on 5 August amid allegations of financial mismanagement, drug taking and sexual abuse, is already the subject of a statutory investigation by the Charity Commission and an inquiry by the House of Commons Public Administration and Constitutional Affairs Committee.
The Government was forced to draw up emergency plans to provide support for children following the sudden closure of the charity, which operated in London, Bristol and Liverpool and was led by its high-profile founder Camila Batmanghelidjh.
Announcing its investigation, the NAO said that Kids Company had received funding from central government for at least 10 years, including from the Department for Education and the Cabinet Office.
"In June 2015 the Cabinet Office's permanent secretary received a ministerial direction to award a grant to Kids Company of £3 million, despite his advice that the grant was not likely to be value for money," the NAO said.
"A grant of £4 million had also been made to the charity for 2015/16."
The investigation will look into the Government's grounds for funding the charity and its monitoring of grants provided. The NAO is due to report its findings during the autumn.