China's top auditor Li Jinhua on Tuesday said the National Audit Office (NAO) has found that 48 central government departments misappropriated 5.51 billion yuan of central budget in 2005.

Li Jinhua, Auditor-General of the National Audit Office, said in his annual audit report to the Standing Committee of the National People's Congress on the central budget that "the general situation of the central budget performance in 2005 is good. The government's budgetary and accounting management capabilities have been improved."

However, problems exist. Nine central government departments cheated a combined 176 million yuan of central budgetary funds by lying about the number of their subordinate units or applied for budgetary funds by reporting fabricated projects.

Eighteen departments embezzled 702 million yuan of central budgetary funds or other special funds for building office buildings or for daily expenditures on themselves.

Seven departments earned 360 million yuan worth of central budgetary funds by hiding their revenue or fabricating expenditures.

Twelve departments failed to allocate 28.531 billion yuan of budgetary funds to specific projects or units in time, causing at least 1.037 billion yuan of budgetary funds not to be used in its fiscal year.

Li Jinhua, dubbed the "iron-faced auditor", has for several years exposed budgetary funds misappropriation by governmental departments.

"But changes have emerged. The focus of his annual audit report has shifted from exposure of budgetary fund misappropriation to institutional construction. It will help the Chinese government administrate by law and intensify anti-corruption efforts ," said some lawmakers after hearing Li's report.

According to this year's audit report, 176 people were punished in 106 budgetary funds misuse cases, while according to last year's report, 762 people were given criminal or disciplinary punishments for budgetary fund misuse.

"It is down to the enhanced inner supervision by government departments themselves," Li said in his report, adding that after several year's stringent audit supervision, government departments are starting to implement financial laws and regulations.

Since 1999, a large number of government departments have been exposed as misappropriating funds in the annual audit report by Li Jinhua.

But Li said, "Ninety-nine percent of officials I have exposed are honest and upright. Budgetary misuse occurred mostly because of institutional defects, not through an official's lack of morality.

Li focused on institutional defects in this year's audit report. He said local annual budgets were widely found to exclude tax rebates from the central government and subsidies from the central government. This resulted in 420 billion yuan of funds not being supervised last year.

Currently, 57 percent of central government expenditure is for subsidizing local finance. The fund is listed in local budget plans and is under public supervision.

(Xinhua News Agency June 28, 2006)