No examples were given in the report, other than references to previous reports which discuss examples of poor sensitive expenditure practices.
But it said: "Through our work, we continue to see examples where public organisations aren't applying sound judgment when making decisions about sensitive expenditure.
"We'll be writing to them to ask them to review their policies and procedures relating to sensitive expenditure as a result of this updated guide".
Public Services Commissioner Peter Hughes said New Zealand has a high degree of public trust and confidence in the system of Government.
But that is something that cannot be taken for granted and everyone in the public sector must work hard to maintain that level of trust.
"Many public agencies exercise special powers or influence over people's lives, and with this power comes responsibility."
The report said it is the view of the Auditor-General that this responsibility rests with those "at the top".
That is, board members, chief executives, and senior management, the report said.
"They need to set the highest standard for what is and is not acceptable sensitive expenditure.
"All leaders should actively promote ethical behaviours, through role modelling, reinforcement, and communication."
The report also acts as a guide to help public-sector organisations improve their approach to sensitive spending – any spending by an organisation that could be seen to be giving private benefit to a staff member or their family.
It contains several warnings, as well as tips on how public money should and should not be spent.
For example, the report said public organisations should not tip for services while they are travelling for work in New Zealand.
And if a public servant is in a country where tipping is the norm, it "should not in any circumstance be extravagant".
