How to check whether grants given by government are being utilised for the project?

I am auditor of a state government owned company. The state government gives huge funds for multiple projects to the company almost every year. What would be the points to check (in deep) to determine whether funds are being used appropriately, timely and not misutilized? Whether long term funds are being used for short term purposes? The company was in heavy loss in FY 2017-18. But there is no as such comparability between each FY. It is fluctuating.