Napoli had finger in many pies: IBAC

The man accused of siphoning millions of dollars from Victorian schools also decided which ones should be part of an internal audit within the education department.

Now-sacked department finance boss Nino Napoli was solely responsible for signing off, holding and allocating department funding to "banker schools", which he and others are accused of using as their personal slush funds.

Former audit division general manager James Kelly said despite feeling uncomfortable about the former bigwig's responsibilities, his team worked closely with Mr Napoli during an audit of banker schools in 2010.

In emails shown during Independent Broad-based Anti-corruption Commission hearings on Thursday, Mr Napoli requested that he and principals be warned about coming audits - as per protocol.

He also provided the names of schools he believed should be audited.

This wasn't the first time the department got involved in internal audits, Mr Kelly said.

He recalled a "particularly unpleasant conversation" where he was told to back off by department staff.

There was a culture of secrecy and red tape at the education department, he said.

Mr Kelly said he first became aware of banker school issues in mid-2008 when he was approached by the new Barwon South West regional director, who held concerns about how money was being spent.

"He said he didn't understand the finances in the region, or exactly where the money is," he said, without naming the director.

An audit of the region was ordered, and found all the money was going through one school - Matthew Flinders Girls.

Mr Kelly said he made it clear in his report that this was not the way to run transactions.

He still works for the department, but is on six-months leave.