In a 20-page submission to the Administration of Sport Grants inquiry, the Wodonga-based senator denied she favoured marginal electorates when choosing which clubs would receive funding.

She did admit that spreadsheets that listed the grant applicants "were colour-coded, using a colour related to the party that held the electorate in which the project was located".

"My ministerial office requested Sport Australia incorporate federal electorates in a spreadsheet as a proxy for the measurement of geographic spread," Senator McKenzie said.

"Primarily, I wanted the spread of grants to be geographically broad across the country. Additionally, I aimed to support a diverse range of sports so a wide cross-section of the community would benefit."

North Wangaratta Football Netball Club was one of four clubs to have grants altered at the last-minute before being approved, but Senator McKenzie only said this was due to "emerging issues" such as state grants.

"In response to the ANAO report, some commentators have claimed that I did not exercise my ministerial authority in an appropriate manner, that the process was negatively politicised. I reject this interpretation and the facts refute it," she said.

The senator claimed the terms "marginal" and "targeted" electorates were used on a memo written by a former ministerial adviser, but she never saw the memo herself.

"The ANAO argues that this former adviser's memo underpinned the methodology of my office. I unequivocally reject this premise and the facts themselves contradict it," she said.

Senator McKenzie said it was true that her ministerial discretion led to 27 per cent more grants in marginal seats than recommended by Sport Australia, but there was also a 39 per cent increase in other electorates.

She said some documents not part of the official record were "disposed of" when she were no longer sports minister.

"Regrettably, this has limited my capacity to fully respond to some of the issues raised through this inquiry," she said.

The statement claimed that the decisions ensured "greater fairness", but conceded "worthy applicants would benefit from greater transparency for decisions taken".

"I remain confused by the competing conjectures raised in the ANAO Report, which simultaneously argues for unbiased administrative processes, whilst exposing Sport Australia's flawed and biased administrative processes," Senator McKenzie said.

"I make no apology for exercising ministerial discretion. To do so was my prerogative, but more importantly, it was my responsibility."