LTA has cleared 25 of the 52 buses belonging to the Nasese Buses Limited that were grounded following bus fire incidents last month.
Authority CEO Naisa Tuinaceva said during the audit they discovered a lot of buses had a lot of defects.
Mr Tuinaceva said they also established that the two bus fire incidents were caused by electrical fault.
"Some buses have failed. They have defects and they need to be rectified," Mr Tuinaceva said. "When I say fail I mean the whole system of the buses, the electrical and mechanical.
"The rest of the fleet is still audited."
A series of bus fires, tampering of electrical systems and unapproved installation of radio accessories prompted authorities to ground the fleet of Nasese Buses Limited.