Siapa has until August 31 to provide an account of its use of the loan.
The authority's governing body agreed to hire an external company to carry out the audit, which will be carried out by one of eight companies selected by IDB.
The multilateral provided the loan in 2008 for the Todos con Agua (water for everyone), aimed at providing potable water and sewerage connections to urban areas lacking the services.
In May this year, eight Siapa employees were dismissed after allegedly participating in the misuse of 348mn pesos of the loan.
The employees formed part of the company's technical management department, which was tasked to oversee the project.
Companies who failed to comply with agreements for the completion of waterworks in the city will also be subject to legal proceedings, Siapa director José Luis Hernández Amaya was reported as saying.