A Department for Education and Employment spokeswoman said the grant-maintained Oakbank school in Keighley, West Yorkshire, "did not have the business sponsorship it claimed".
"We believe there are irregularities at Oakbank, and if we had known about them at the time we would not have awarded them specialist status," she added.
Schools seeking specialist status have to secure pound;100,000 of external finance to support their bids. Sixteen of the country's 363 specialist schools have lost or given up their status for various other reasons.
Oakbank's head, John Roberts, said the school would refute the criticisms and wanted its specialist sports status back. Governors were due to meet the DFEE, Bradford council and the Funding Agency for Schools as The TES went to press.
"We are absolutely convinced that that we have done nothing wrong and have been completely open," he said.
The school would be asking the FAS to withdraw large sections of an audit report, and it has already agreed an action plan with the agency to tackle issues raised in am earlier report, issued in March.