Comptroller Micha Lindenstrauss has been ordered by the Knesset's State Control Committee to investigate actions taken by Israel's governments over the years to release Pollard, who has been jailed in the US since 1987 after being convicted of spying for Israel.
The inquiry is aimed at determining whether past governments have done enough to promote Pollard's release.
The comptroller's office has been gathering documents from the relevant government ministries, and has already heard testimonies from former ministers and senior state officials.
Meetings have also been scheduled with former prime ministers Benjamin Netanyahu and Ehud Barak, and with Prime Minister Ehud Olmert.
Report to remain confidential
"This is an outrageous decision," a senior defense official said recently. "Only a state gone mad would be willing to allow the state comptroller, who operates like a bull in a china shop, to investigate such a sensitive matter that is beyond his authority."
Other officials warned that the investigation could hinder future attempts to set Pollard free.
Meanwhile, sources in the State Comptroller's Office strongly rejected Tuesday the accusations against the inquiry, claiming that it was launched following direct instructions from the Knesset.
In any case, the comptroller's report, which is set to be completed within a few weeks, will most likely remain confidential in large part, so as not to jeopardize Israel's foreign relations.