Auditor-General Lyn Provost is to review the Crown's Retail Deposit Guarantee Scheme which ended earlier this week having paid out $1.85 billion or $422 from every New Zealander to investors in failed finance companies.

The move is confirmation of Provost's recently signalled intention to carry out a "performance audit" of the scheme which was set up to maintain confidence in New Zealand's financial institutions during the depths of the global financial crisis two years ago.

Finance Minister Bill English said the audit would include an assessment of how effectively and efficiently Treasury had identified and monitored the risks to the Crown posed by financial institutions covered by the scheme, including South Canterbury Finance.

South Canterbury's failure last month triggered a $1.6 billion call on the scheme and therefore an independent audit was "timely and appropriate", English said.

"This is certainly preferable to some kind of ill-defined and politically-motivated inquiry, which opposition parties called for in the days following South Canterbury Finance's collapse."

The audit will investigate how well the scheme had met its objectives, would explain its purpose and functions to the public and Parliament and would identify improvements that could be made to future similar schemes.

The scheme ended yesterday and was superseded by a new one which covers fewer institutions and has tougher qualifying criteria.

Provost is expected to present her report to Parliament by the end of June next year.