The Department of Internal Affairs is defending the Hepatitis Foundation and says publicly shaming it does nothing to help the charity sector.
It's also defended its decision not to publish a highly critical report, which was completed more than a year ago.
A two-year investigation uncovered the Foundation had spent more than $128,000 on travel over two years for its board chairperson, and paid for lavish dinners at top restaurants.
It also had credit card expenses that were unaccounted for and the report identified extravagant spending and gross mismanagement.
But Internal Affairs deputy chief executive Maria Robertson said the foundation did the right thing in response to an investigation.
After more than a week of refusing to front for an interview, Ms Robertson sat down with RNZ yesterday.
She said beating up on charities that made mistakes did not achieve anything and on balance the Foundation had done a huge amount of good.
"What do we achieve as a society if when people or organisations make mistakes we beat them up?
"This is an organisation that on balance has done a huge amount of good for the sufferers of hepatitis B and C and their whānau - that's fact. There's no debate about that.
"Now, it made some mistakes around the margins, and that's really disappointing, there's no doubt about that, it's really disappointing.
"But it's also done the right thing in terms of responding to a thorough investigation, it's worked with us around that, it's responded to that in the best way possible by making improvements so it can actually carry on and do the good work that's it's doing.
"Now isn't that really what we should want to happen?"
Ms Robertson said clearly the charity had "areas for improvement" but it had also made the changes asked of it.
"Every organisation is entitled to actually form its own view but I'm absolutely certain that through the course of the investigation and as a result of it the Hepatitis Foundation has actually improved and responded accordingly.
"Now I think one of the things that has been interesting in this particular situation with them is they too have been surprised by the recent media about this investigation, which you know was started a couple of years ago.
Foundation undertakes own audit
Ms Robertson said the Foundation was entitled to do its own audit and the regulator supported it doing so.
Asked if the charity had pushed back at the time the report was published, Ms Robertson said, no.
"We find that it's always a difficult situation for a charity to be in, no one really wants to be in that position."
She said the regulator was "highly satisfied with the Hepatitis Foundation's response, not only to the investigation, but also to the findings''.
"Almost without exception every charity that we serve and that we work with is there with the express purpose of doing good.
"Now sometimes they make mistakes ... our job is to work with them to help them be successful and keep doing that social good.
"It doesn't serve anybody to be walking round seeking to punish as our starting position."
Wholesale publishing of reports 'doesn't serve anyone well'
The investigator that led the Hepatitis Foundation case recommended the report be published, but Charities Services decided not to.
Ms Robertson said that was because at the time the regulator was considering proactive release of all investigative reports, which prompted the investigator to come to that conclusion.
"Now you sit there and say what's the purpose of doing that? What good is that to the community?
"Where we landed was a wholesale publishing of our investigation reports doesn't actually serve anyone well, because the best thing charities can do is respond to the findings and make improvements."
Ms Robertson said there's no reason for the public not to have confidence in the regulator.
She said in hindsight Internal Affairs should have fronted for an interview sooner.
"What's emerged is a level of confusion or misunderstanding about the role of the regulator and our statutory independence from ministers, and I certainly didn't anticipate that level of confusion would continue.
"I think in hindsight if we'd guessed that or foreseen that, we would have responded earlier and in hindsight that's exactly what we should have done."
She said a number of people should have learnt lessons from the investigation and the reports that have emerged in the last week, including Internal Affairs, the Hepatitis Foundation, the media and commentators.
"An investigation is not just about punishment,'' she said.
The Hepatitis Foundation has refused RNZ's requests for an interview.