The Department for Culture, Media and Sport, which part-funds CABE, has commissioned an accountant to investigate the design review process on redevelopment schemes at South Kensington Tube station and Croydon Gateway.
It is understood the inquiry, being handled by AHL, will investigate allegations made in a letter to culture secretary Tessa Jowell. This claimed that there was a potential conflict of interests in Sir Stuart Lipton's role as chairman of CABE and developer Stanhope, which is working on both schemes.
Stanhope has been at the centre of a dispute with rival developer Arrowcroft over the Croydon scheme. Both firms put in bids for the project and both bids were reviewed by CABE last year.
A DCMS spokesperson said no conclusions had been reached in the investigation. But he said: "There were allegations made concerning conflicts of interest among commissioners.
"We are doing a quick audit of CABE's procedures and process, which should report back in two to three weeks."
He said there is no suggestion of corruption, adding: "This is not a witch hunt."
Some industry insiders consider the resident's letter to be motivated more by a desire to scupper local developments than a genuine concern over conflict of interests.
One said: "You have to consider what CABE has achieved over the past four years. It is hugely dangerous to be influenced by one individual who is upset about a [development] in his own back yard."
The investigation comes as several industry observers questioned the appointment of Ken Shuttleworth, a former partner at Foster and Partners, as chair of the design review panel.
They feel that the problem of commercial competitors judging schemes designed by rivals will be exacerbated because Shuttleworth is perceived as less impartial than his predecessor, journalist Paul Finch.
One observer said: "I feel very uncomfortable about it. What happens when a Norman Foster scheme comes up?"
A CABE spokesperson said that Shuttleworth would be running the design review panel in a more collegiate system.
He added that they would be taking the AHL audit very seriously.