The program - released at the height of the COVID pandemic to help businesses adapt digitally, among other measures - faced criticism for its "first in, best dressed" design, resulting it appearing to become exhausted within three days.

The $550,000 Level 2 grants also encountered claims that a marketing company had quickly signed businesses up to increase its client base.

MORE ON THE INNOVATION GRANTS SCHEME:

Councillor Tim Walker asked for an update on the audit at last week's council meeting, having first called for the audit in April.

City of Launceston chief executive officer Michael Stretton said the council was waiting for the final acquittals to come back before it could proceed with the audit.

"We have to bring a terms of reference back to the council prior to initiating the audit, so that will happen in the new year, once we have received all of the acquittals," he said.

"And then obviously the council will be able to determine by way of the scope - in terms of the timing and the expectations - in respect of the delivery of the audit."

Some Launceston business owners took to social media to vent their frustration at the design of the scheme, questioning whether those who received the grants had demonstrated "genuine need" given the small turnaround in approving applications.

The audit was estimated to have a $40,000 price tag and would also look into "on-the-ground" impacts of the grants.