The report was compiled by an investigation team led by Paul Ochieng, the dean of students at Strathmore University in the capital, Nairobi, Reuters reports.
It said that the money that had been earmarked to buy air tickets for the team members was taken by unidentified ministry officials.
The report says the National Olympic Committee of Kenya (NOCK) also diverted money and kit from U.S. sports equipment manufacturer Nike worth millions of shillings.
“Some (sports) ministry officials misappropriated 88,611,480 shillings ($871,190) meant for air tickets. NOCK has been misappropriating Nike contract funds and kit amounting to 126 million shillings per year meant for athletes since 2013,” the report said.
“The eight-year (2013-2020) contract between Nike and NOCK on behalf of all national teams is heavily skewed towards Nike and needs review or cancellation.”
The Kenyan team, despite finishing as the best African team at the Olympic Games, was marred by controversy as some team members reportedly paid their own travel expenses.
Photos of the athletes in Rio also emerged online showing very poor accommodation.
Athletes told the investigation committee that bonuses from Nike for medals won at Olympic and Commonwealth Games did not reach them.