And in a headache for Opposition Leader Matthew Guy, parliament's auditors could not conclude if there was enough information to support Wodonga based Liberal MP Bill Tilley's residence claims.

The auditors' report said Mr Tilley refused to provide the "relevant documentation" to the auditors who were examining all state MPs that claim the controversial second residence allowance.

The audit, by accounting firm PricewaterhouseCoopers, has called for tough new laws giving the lower house speaker and upper house president powers to "enforce" the rules and "compel" members to refund overpayments.

It follows explosive revelations from Fairfax Media that former speaker Telmo Languiller and deputy speaker Don Nardella moved their principal place of residence to the Bellarine Peninsula - away from their western suburbs electorates - and claimed tens of thousands of dollars in entitlements designed for country MPs.

The scandal has dogged Premier Daniel Andrews for months, with pressure on him to force Mr Nardella to repay the nearly $175,000 he had claimed or kick him out of the Parliament. The Melton MP has already been booted from the ALP.

Mr Languiller quickly agreed to repay the nearly $40,000 he claimed for living in Queenscliff.

The report for Parliament's audit committee examined the 32 other MPs that claimed the allowance and found 31 had provided sufficient information to support their "home base" as their principal place of residence.

But Mr Tilley's failure to hand over relevant documentation, due to privacy concerns, left auditors "unable to conclude on whether the information exists to support the Member's Home Base nomination as Principal Place of Residence".

Extra efforts were made, including through the Liberal leadership, to convince Mr Tilley to hand over documents.

A defiant Mr Tilley told Fairfax that he had co-operated fully with the audit but wanted to protect his family's privacy, so some documents, including bank statements and energy bills, were redacted.

"I have absolutely nothing to hide," Mr Tilley said. "I will defend my family's right to privacy."

Mr Tilley lists a principal residence in Wodonga on the MPs' register of interests and told Fairfax he also rents a property on Spring St.

A former policeman, Mr Tilley, said he also provided the committee with a record of the commercial flights he regularly takes between Wodonga and Melbourne.

In an article published last month in his local paper, The Border Mail, Mr Tilley outlined a three-point plan to stamp out rorting.

Mr Guy has previously insisted he "double-checked and triple-checked" that none of his MPs had any issues with entitlement claims.

The findings of the audit and recommendations to improve the system were sent to political leaders on Wednesday afternoon. The audit committee, which includes the Labor Speaker, Colin Brooks, and the Liberal President, Bruce Atkinson, endorsed the 12 recommendations to clean up the system.

The report stopped short of recommending a definitive change to the second residence allowance, instead offering four options, including the leaving the system in place which would risk Parliament's reputation by not taking any action to address weaknesses.

Other options include requiring MPs to live in their electorates in order to claim the entitlement. Another is scrapping the entitlement altogether and replacing it with a system of reimbursements or introduce a "per diem" for overnight accommodation in Melbourne when on parliamentary business.

The committee did endorse 12 recommendations ,including:

• A new independent tribunal to determine MP's pay and allowances.
• Forcing MPs to "certify" that the information they provide is accurate.
• An annual audit by an independent team of all allowance payments.
• Give the Speaker and upper house president powers to enforce the rules and force MPs to refund any overpayments.
• Tie allowances to electorates rather than principal place of residence.
• Introduce "capped" budgets for each allowances.

Some actions can be made by Mr Brooks and Mr Atkinson, but others will require legislative change.

Special Minister of State Gavin Jennings said Labor would closely consider the recommendations as it worked to reform the entitlement system and announcements would be made soon.

Mr Guy said the report confirmed that Mr Andrews "can and should" get the $174,000 of rorted taxpayers' money back from Don Nardella.

The auditors have previously found that MR Nardella was living in a caravan in Ocean Grove owned by a family member to whom he paid just $200 a fortnight.

Despite owning property in St Kilda, Mr Nardella said the apartment there was "not spacious enough".

PwC said a normal person could easily conclude that Mr Nardella was living there just so he could keep claiming the allowance.

Forty MPs have claimed the allowance in this term of Parliament but not all were examined, with four of them having resigned since the election, including former Premier Denis Napthine.