In a series of scathing remarks, Victorian Ombudsman Deborah Glass lashed out at the fire brigade for the unprecedented breach.

"Some cases I have investigated over the years seem so unlikely you could not make them up," Ms Glass said.

"Except, as in this case, they did.

"Often the cases are minor, although wrong. Not this time - this was a case of deception where the family nest was feathered, plain and simple."

The ombudsman's investigation revealed that Mary Powderly-Hughes falsified the curriculum vitae of her first son, David Patrick Powderly-Hughes, and coached him before his interview.

The investigation found that on June 17, 2014, three weeks before a job interview, David Hughes changed his name to David Hewson to conceal their relationship.

Ms Powderly-Hughes then authorised a pay rise for her son before she shifted him into a permanent role, the investigation found.

She then hired her second son, Barry Vincent Hughes, who changed his name to Barry Robinson on August 1 last year to conceal their relationship.

In a similar pattern of deception, she again falsified Mr Robinson's CV before interviewing him at her home for the job.

Ms Glass said her office regularly encountered cases of nepotism, but that they rarely displayed such calculated behaviour.

She said it was a "blatant a case of deception" which had cost the public more than $400,000 over a number of years.

Acknowledging that this case involved conduct very difficult for organisations to detect, Ms Glass said it demonstrated the need for public sector leaders to ensure conflict-of-interest policies were embedded in the organisational culture.

"Although all three subjects are no longer in the public sector, I am tabling this report to expose both the reality and the danger of such behaviour," Ms Glass said.

"Even the most stringent policies cannot prevent what occurred in this case. But while the agency in this case cannot be held responsible for the deception perpetrated upon it, its conflict-of-interest policies were weak, and did not reflect best practice."

Ms Glass said the case also served as a "salient reminder" of the importance of people acting on their suspicions that something is awry in their workplace.

"More often than not, as the saying goes, where there is smoke, there is fire," Ms Glass said.

Ms Powderly-Hughes employed her sons as administration staff rather than frontline firefighters.

The MFB said it had forwarded the case to police.

In a statement a spokesman said it fully co-operated with the investigation and "acknowledges" the report's findings.

"As soon as MFB was made aware of the conduct in question, we took immediate action to ensure that the staff members were no longer employed or engaged," he said.

The spokesman said the brigade had also begun working to implement the report's recommendations.