Auckland Council has stepped in after an ongoing stoush at the Avondale Business Association.
Following an 18-month dispute with the association and its members, the council has frozen its funding, saying it failed to provide a proper balance sheet.
The council said the association, which last year received $130,000 to help local small businesses, had discrepancies in its balance sheet for the most recent financial year.
Auckland Council's external partnerships manager, Alastair Cameron, said the council had since ordered a full audit on the association.
"Auckland Council can confirm that it is currently investigating several issues relating to the governance and financial procedures of the Avondale Business Association," Cameron said in a statement.
"This is both a response to and the result of concerns brought to the council's attention with regard to the previous financial year, and as a result of the council's own quality assurance processes."
Victor Martec has since been elected interim chairman of the association, taking over from local businessman and former NZ Army Afghanistan serviceman Marcus Amosa, who was elected then removed under disputed circumstances.
The association denies any wrongdoing, and Martec said discrepancies in the balance sheet were the result of incorrect dates being recorded.
A statement on the Avondale Business Association website reads: "The ABA has produced the same closing and opening balances error since 2008 and only now this error is discovered. The 2018 financial statements questioned were sent to a reputable accounting firm ... are due to be anytime now. There is no question of any financial improprieties just simply an accounting error."
Amosa, who co-owns tattoo shop Cain Tattoo Studio with his brother Chris, was elected as chairman of the association in October.
Shortly afterwards, former long-standing chairman and local appliance store owner Duncan McDonald sent a letter issuing Amosa with a trespass order.
"We regret to inform the ABA that we are not willing to have Marcus Amosa on our premises," the letter read.
The association leased office space from Avondale Appliances, McDonald's business.
Amosa lost his position in January after the Business Association committee revoked his membership, because he did not meet the minimum member contribution to the Business District (BID) Programme.
But the council has since said "setting a minimum financial contribution for membership of Business Associations is against the BID policy."
The council still recognises Amosa as chairman of the association.
In a Facebook post, Amosa wrote that McDonald had sent images from Amosa's Instagram account to members of the council, insinuating that he was "some sort of cat thief", among other things, in an attempt to oust him from the position.
McDonald has also been accused of implementing policies, such as the minimum member contribution, which he knew Amosa could not meet.
McDonald denied these claims. He said the executive committee was afraid of Amosa which is why he was no longer welcome at the association.
"That's an easy stereotypical thing to say about someone who looks like me," Amosa said.
McDonald said Amosa was not eligible to stand for election as chairman.
"We believe the council's attitude on this is completely wrong and goes against the memorandum of understanding that we have."
Concerns about the way Amosa has been treated and the way in which the association runs have been expressed by members and Avondale locals on social media.
In letters from the association, Amosa was told the executive committee had unanimously voted to decline his membership application as he did "not qualify to be a full member under the ABA Membership Standards policy and constitution".
"As such you are no longer recognised as the Chairman and you are to immediately cease and desist from claiming you hold the position of Chairman of as a member of the ABA," the letter read.
Another letter reiterated the same message, but added the organisation would seek to obtain an injunction if he did not cease to be chairman.
Amosa said he was not able to do his job when he was chairman, as McDonald refused to hand over access to the association's membership and financial records.
"He denied me access to the office and then said I couldn't have access to anything I was requesting," he said, adding he was denied the chance to bring about change for the local business community.
"I've definitely been stonewalled."
The Council said the association needed sort out its governance and financial "issues".
"The council has now advised the ABA that as a number of issues raised by the council have not been dealt with in a satisfactory manner, it will be withholding funding until a number of conditions have been met."