One fund under scrutiny involves the Kids' Plates Program - which raises money for child safety programs through the sale of specialized license plates.
The report found that the Department of Public Health and its predecessor agency spent more than 2 million dollars on a contractor to manage the program.
The auditor said it was illegal to contract out work that could have been done by the state agency.
The report also says the Public Health department also did not follow its own grant making rules and money intended for programs was used on administration.
The Department of Social Services was also criticized for improper monitoring of other child abuse prevention money.
The Department of Public Health says it is incorporating the state auditor's recommendations and is now lawfully administering the children's funds.