The National Audit Office (CNAO) said it will intensify supervision of projects using foreign aid this year.

Chen Hua, director of the CNAO's Department of Foreign Funds Application Auditing, was quoted in Wednesday's China Audit Post as saying that the focus will be on notarizing the annual reports of over 500 projects using foreign aid loans, and on probing foreign-funded projects.

She was addressing a course in Beijing attended by more than 70 CNAO trainees, which ended today.

The auditing of foreign aid funds used to focus on loan projects, since most loan providers demand notarization of annual financial reports.

"The office's plan this year shows more attention to other projects such as aid programs," said an International Cooperation Department official from the Ministry of Commerce. "It will be the first time it conducts such massive investigation of foreign aid projects."

China has received more than 1,000 foreign aid programs since 1980, involving US$5.6 billion in cash, according to the ministry.

Some 70 percent of the money is invested in the country's less well-off central and western regions.

The CNAO has become known for taking on powerful government units to fight financial abuse and corruption.

It stirred an "auditing storm" last year by reporting high-profile economic crime and misconduct by senior officials in organizations such as the General Administration of Sport and the State Power Corporation.

The office set up a department to monitor the use of foreign funds in 1984. Nationwide, 513 projects funded by foreign aid loans were audited last year, and 516 reports issued, including 25 in which reservations were noted and two in which auditors refused to state opinions.

"Auditors' notarization is not only a procedure now, but is making progress on substantive matters," the China Audit Post quoted Dong Dasheng, the CNAO's deputy auditor-general, as saying.

Dong said that efficiency is as much an issue as legality in these cases.

An audit of railway projects funded by the government's external treasury bonds last year found that some major engineering and rail maintenance equipment as well as communication facilities remained idle because of poor planning and management.

It also reported abuses in the public bidding process for equipment purchases, but the newspaper did not mention the amount of money involved.

(China Daily January 27, 2005)