Australia Post will face a one-month investigation examining the organisation's gift and expense culture after watches worth almost $20,000 were handed to senior executives.
The federal government on Monday released the terms of reference for the communications department inquiry which will be assisted by a private law firm.
Australia Post chief executive Christine Holgate and former chair John Stanhope's involvement in four Cartier watches being gifted to senior staff will be scrutinised.
The management culture at the government-owned enterprise, in relation to gifts, rewards and expenses, will form part of the investigation.
That will include personal expenses of executives.
Luxury watches with a combined price tag of $19,950 were dished out to four senior executives for helping clinch a deal to facilitate banking in post offices.
Bonus payments worth more than $97 million were made, with the majority going to staff in senior roles.
Greens senator Sarah Hanson-Young criticised the terms of reference for not mentioning executive bonuses.
"No one working in the public service should be taking home multi-million-dollar salaries and paid bonuses," she said.
"It's not just the Cartier watches that are the problem. It's Australia Post becoming a quasi-private, quasi-public organisation that is now out of step with community expectations."
Labor used Question Time to quiz Communications Minister Paul Fletcher about how many of Australia Post's eight non-executive board members were linked to the Liberal Party.
"A hint, the number's four," opposition frontbencher Tony Burke told parliament after Mr Fletcher dodged the question.
The minister retorted by listing a number of Australia Post board appointments with Labor ties made under previous governments.
The probe will check if Australia Post meets public expectations around leadership and governance, while also looking at how it spends taxpayers' money.
Labor also asked the minister why an Australia Post agency on the Gold Coast was able to display a Liberal National Party state election campaign corflute inside the premises.
Mr Fletcher said he was not aware of it but would find out.
An Australia Post spokesman told AAP the materials had now been removed from the outlet.
"While we acknowledge that our employees and other representatives are entitled to their individual views, as a government business enterprise Australia Post needs to ensure its post offices and other facilities are not used for making statements on political issues," the spokesman said.
Australian Associated Press