A plumbing industry auditor's $10 million contract with Victoria's building regulator has been terminated and the matter referred to police following audit irregularities.

Casey Inspection Services, part-owned by Peter Lamborn, was given the lucrative contract in 2012 to audit the work of licensed plumbers by Michael Kefford, the then-building industry commissioner.

Mr Kefford was a personal friend of Mr Lamborn and awarded the contract against the advice of his own expert panel.

The ensuing controversy prompted calls for an investigation by the Ombudsman and is believed to have resulted in Planning Minister Matthew Guy not renewing Mr Kefford's contract as commissioner.

The Victorian Building Authority took the unusual step this week of terminating Casey's contract after identifying 13 audits and two rectification notices completed by a Casey inspector who hadn't carried out the work.

"This incident relates to 13 audits conducted in the Geelong area, which resulted in the issuing of two rectification notices," VBA chief executive Prue Digby said.

The VBA immediately inspected the sites where the work was carried out and was satisfied there were no health and safety risks to consumers, Ms Digby said.

"We have referred the matter to Victoria Police," she said.

The VBA had increased its monitoring of Casey Inspection Services' performance until the contract terminates on November 5, she said.

Victoria's troubled building industry regulator has been plagued with controversy.

In 2012, more than a dozen senior commission figures left or were forced out amid concerns about performance, probity and use of public funds.

The Commission was replaced the following year by the Victorian Building Authority after damning findings by the Auditor-General about its lax oversight of industry standards.

Ms Digby said the irregularities in Casey's audits came to light under the VBA's 'audit the auditors' program.

"This demonstrates that the VBA's audit of the auditor process is working," she said.