It is another bump in the road for the project, which is seeing the transformation of The Rex building on Vincent Street into a hub to include council offices, a library, auditorium and cinema and community spaces such as a social enterprise cafe.

The council ceased works at the site and launched a review into the project in June 2018, after former chief executive officer Aaron van Egmond resigned from his position.

Mr van Egmond is now CEO at Melbourne's Hobsons Bay City Council.

It was confirmed at that time that a planning permit had not been applied for but was required due to additional expenditure pushing the project above the $1 million threshold for a planning permit exemption.

There was also a requirement to lodge a change of use planning application for the facility due to the inclusion of the library, which also had not been applied for.

At its July 2018 council meeting, the council elected to conduct an independent audit - conducted by Crowe Horwath - into the project to review the processes and outcomes associated with it.

The Victorian Local Government Inspectorate, which monitors governance in Victorian councils, was notified of the review by the council at the time.

Its investigation will cover the period from when the council purchased The Rex building for $6.3 million in 2016 until works were suspended in June 2018.

In October 2018 it was revealed Mr van Egmond commissioned artist David Bromley to paint two murals at The Rex at a cost of $30,000 without consulting the council or the public art panel.

At the time, Mr van Egmond told the paper that he had acted with delegated authority and employing Bromley had resulted in considerable cost savings for the project.

A planning permit was issued for the project in December 2018, when it came to light the entire cost of the project had ballooned to cost in excess of $9.6 million.

The sum was an additional $1.631 million more than initially forecast due to the construction cost creeping up to $2.6 million.

Hepburn Shire Council chief executive officer Evan King said the council had tried to be as transparent as possible throughout the process, that it understood the need for an investigation and would work closely with the inspectorate to ensure a thorough investigation was conducted.

"The project has had challenges and we don't step away from that at all. There will be learnings out of this project for the council but the vision of what it will deliver will be fantastic," he said.

"It will be a modern municipal office to house council staff, it will have a new library and an auditorium - it will be a great community asset. It has been delayed and will cost extra but the outcome will be fantastic. I don't want people to lose sight of that."

The council has now received the revised draft plans from the architect and it is hoped contractors can be re-engaged next month.

The investigation should not push out the project's completion date, which is now expected to be early 2020.