Concerns over the financial management of the America's Cup are so serious that the Government has been threatening to withhold the next tranche of taxpayer funding, according to a confidential letter.

Auckland Council and the Ministry of Business, Innovation and Employment say a financial dashboard that was presented in May - showing public spend - is "materially different" from that presented earlier in the year.

"In particular, the total actual event investment spend for previous months is materially different from what has been reported by ACE (America's Cup Events Ltd) as at 31 January 2020 and as at 29 February 2020 and all other event investment dashboards," says the letter from the CEOs of Auckland Council and MBIE to Team NZ and ACE.

The council and the Government have poured $250m into hosting the 36th America's Cup - and the council is planning to spend a further $20m to support the regatta and other events next year.

The council's share of the $250m is $113m.

The Government is spending $136.5m, including a host fee of $40m.

On top of this, the council has been spending about $100m to spruce up the waterfront in time for the Cup and other events in 2021.

The council and MBIE delivered an escalation notice - the confidential letter - on June 22, saying their concerns over health and safety of the on-water plan, reporting of the public funding spend, a breach of warranty and a breach of commitment were "individually and cumulatively material adverse events" in relation to the management of the America's Cup challenger and final series, to be held in Auckland next year.

The council and MBIE were also concerned there has been no event cancellation insurance taken out. "As such... MBIE is not obliged to pay the next payment instalment."

In addition, documentation in relation to a funding milestone for June 30 was "not satisfactory".

The parties met on Monday this week, but the outcome of that meeting has not been revealed.

Team NZ boss Grant Dalton said today no public money had been misused.

Dalton told Newstalk ZB's Mike Hosking that he had seen the MBIE-council letter - the allegations were treated seriously, and he looked "forward to knocking them off one by one... a lot of them have already [been] knocked off".

More comment is being sought from all parties.