The Shaanxi provincial audit office reported that about 13.7 billion yuan (US$2 billion) had been misused in the past 18 months.
A further 843 million yuan had been lost or wasted on provincial projects, it said.
Qu Fangfang, director of the office, submitted a report to the local people's congress on Wednesday on 10,000 government departments and units in the province.
The office found some problems relating to the construction and repair of rural schools.
By the end of last year, work on 94 out of 1,147 such projects, which should have been completed, had even not started on them.
About 212 million yuan for rural medical care, drinking water safety and agricultural promotion was not properly paid out.
The 18-month audit found that 90 government officials were guilty of improper conduct in economic cases involving 2.26 billion yuan, and 14 provincial departments had shown a lack of economic discipline.
The report also found there were serious faults in the use of relief materials and funds sent to the province after the May 12 earthquake.
"Our 4,827 audit suggestions were adopted by the departments and units concerned and most problems have now been corrected," Qu said.
(China Daily October 21, 2008)