Audits have caught more than 100 schools breaking the law by misusing taxpayer money - including lending money to staff and other parties.

The auditor-general has found 103 primary and secondary schools broke rules with their financial practices in 2010.

Those included buying buildings and property without telling the Education Ministry, not keeping accounting records, and one school which held an overseas trip without raising enough money to cover the cost, the Dominion Post reports.

The auditor-general's report says the principal and receptionist at a kura kaupapa signed off on each other's expenses, despite being in a relationship.

"This is a conflict of interest because the situation could create an incentive for the principal and the office administrator to act in ways that might not be in the best interests of the kura," the report says.

Another kura kaupapa paid for its principal and their daughter to fly to the World Waka Ama champs in New Caledonia.

The audit also found the number of schools in "serious financial difficulties" jumped to 32 in 2010, from 17 in 2008 and 19 in 2009, while 29 per cent of kura kaupapa faced significant deficits.

The auditor-general attributes the jump to more accurate reporting, and has launched an investigation into the financial position of schools, which is due to report back next month.

Education Minister Hekia Parata says her ministry will monitor kura kaupapa.

Schools Trustees Association president Lorraine Kerr says the legal breaches are concerning - especially schools lending money to staff - but believes schools are struggling with budgeting due to a lack of funding.