The report revealed the home was understaffed and ill-equipped and medication errors were frequent.
The board's chief medical officer Nigel Millar said staff interviewed residents and their families after receiving 11 complaints.
Health Ministry chief medical officer Don Mackie said an independent manager would remain at the home until the health board was satisfied the issues had been resolved and the quality of care improved.
Dr Mackie said the licence for the home was stay in place but it would be subject to close monitoring and further spot audits.
"Operational certification is contingent on receiving an audit report which takes into account factors such as substantiated complaints.
"New Zealand has more than 670 rest homes nationwide which provide care for people with a wide range of complex health needs.
"We do expect issues to arise and the integrated audit process is in place to identify these and take appropriate action to ensure the best care for residents."
The Health and Disability Commission has received six complaints about he home.
Deputy Commissioner Theo Baker said three were current but would not comment on their nature.
She said the commission had received 23 complaints about rest homes since July.
In the past financial year the Health and Disability Commissioner received 1564 complaints, 106 involved rest homes.
"The ones that cause us the most concern are complaints where there has been poor management of pressure wounds, nutrition, hydration - often those things are linked.
"I would be reluctant to call that neglect - sometimes it's a lack of expertise, or failure to comply with the required standard of care. For example they might be treating a pressure wound but they actually aren't using the right dressings and they probably need to get better expertise in.
"Neglect conjures up people sitting around in rest homes with no one trying to look after them - what we encounter is people trying to provide good care but sometimes not meeting the appropriate standard," she said.
Associate Health Minister Jo Goodhew said the Government had already tightened up the way rest homes and aged care facilities were certified and monitored.
"The auditing process is now integrated with district health boards, audits are more frequent when risks are identified and we've introduced spot, unannounced audits."
"I am heartened by the latest report from the Office of the Auditor General which says the consistency and quality of rest home audits has improved.
"Work is underway to further strengthen the quality of care, including comprehensive clinical assessments for each resident," said Mrs Goodhew.
