Police have been called on to investigate allegations of forgery in the Victorian Nationals' branch in Morwell, the marginal seat where Russell Northe sits as an independent after quitting the party late last year.
Mr Northe has hundreds of thousands of dollars of debts, including $30,000 that Nationals leader Peter Walsh said was owed to him.
The party announced an audit of the Nationals' Morwell branch had "indicated [the] possibility of unauthorised transactions and of an alleged forgery relating to the withdrawal of $8000 in May 2017".
"The sum was later deposited back into the account," it said in a statement.
Mr Walsh would not say whether that allegation related to Mr Northe, but said MPs were not signatories to party bank accounts.
"The auditor directed the Nationals to consider making a report to authorities, and this morning the Nationals' Victorian state director is contacting Victoria Police,'' said a statement from party president Neil Pankhurst, read by Mr Walsh.
In a strong statement released through Mr Northe on Monday afternoon, the MP's wife, Jenny, said their family had been "dragged through the mud for political gain" by the party.
"I'm disgusted at the gutter politics and hypocrisy of the Nationals and the emotional hurt inflicted on me, my children and my family," she said.
"Apparently, it's not OK to question Barnaby [Joyce]'s private life in the media but it's OK to question ours.
"It shouldn't be forgotten that Russell worked extremely hard for the party for more than 10 years and is desperately trying to make amends for his mistakes."
On Monday afternoon, police confirmed they had been notified of a possible theft from a political organisation and would speak to party officials to determine the circumstances of the complaint.
Mr Northe said he was seeking legal counsel over media reporting of the matter, saying "claims of missing money" were "simply not correct".
Ricky Muir to run for Morwell
The allegations came as the Shooters, Fishers and Farmers Party formally announced that former Victorian senator Ricky Muir would be its candidate for Morwell at the November 24 state election.
As reported by the ABC, Mr Muir will campaign to protect the timber industry and against the creation of a new national park.
"Having Ricky stand for the Shooters, Fishers and Farmers Party makes perfect sense," said the chairman of the Victorian party, Jeff Bourman.
"We have similar values and outlook and I believe he will make an exceptional local member if elected."
Last year the ABC revealed Mr Northe had racked up large debts and was suffering mental health issues which saw him quit the Nationals to sit as an independent in State Parliament.
"I don't believe Russell should run at the election, I think he has significant personal and family issues that he needs to concentrate on, he needs to make sure he gets professional help," Mr Walsh said.
The margin in Morwell is just 1.8 per cent and will be one of the most critical in November's election, with all sides conceding the major party hold on the seat could be broken.
With the real possibility of a hung parliament, the winner could hold a powerful position.
In an earlier statement issued in relation to the fact that he owed money to Mr Walsh, Mr Northe said he continued to receive professional assistance for depression "which has helped me enormously".
"Whilst these matters remain private I am making every endeavour to resolve these challenges in my life, and I am making progress,'' he said.
The Nationals are currently choosing who should replace Mr Northe as their candidate.
