BEIJING, Jan. 27 -- The National Audit Office will intensify supervision of projects using foreign aid this year, officials said.

    Topping the auditors' agenda will be notarizing the annual reports of more than 500 projects using foreign aid loans, and probing projects funded by foreign cash infusions, Chen Hua, director of the auditing office's Department of Foreign Funds Application Auditing. Chen was quoted in yesterday's China Audit Post, as saying.

    She was addressing a training class in Beijing on foreign funds auditing. More than 70 trainees from the office and local auditing offices attended the class, which ended today.

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

    "The office's plan this year shows more attention to other (foreign aid) projects such as free government aid programmes," said an official with the Ministry of Commerce's international co-operation department.

    "It will be the first time the office conducts such massive investigation of foreign aid projects," the official said, asking to remain anonymous.

    China has received more than 1,000 foreign aid programmes since 1980, involving US$5.6 billion in cash, according to the Ministry of Commerce.

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

    The office is known for its challenges of powerful government units, taking institutions on to fight financial abuse and corruption.

    "Auditing storm"

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

    The office set up a department of foreign funds application auditing in 1984 to monitor the use of foreign funds.

    Audit offices countrywide audited some 513 projects funded by foreign aid loans last year, and issued 516 reports, including 25 in which reservations were noted and two in which auditors refused to state opinions.

    "Auditors' notarization (in foreign aid projects) is not only a procedure now, but is making progress on substantive matters," the Post quoted Dong Dasheng, the office's deputy auditor-general, as saying.

    The auditing of foreign funds is not only about legality but also about the efficiency of using money, according to Dong.

    The office audited railway projects funded by the government's external treasury bonds last year.

    The auditors made selective examinations of 21 billion yuan (US$2.5 billion) used for railway equipment in these projects, which included 10.6 billion yuan (US$1.3 billion) in foreign funds, according to the Post.

    It turned out some major engineering and rail maintenance equipment as well as communication facilities remained idle because of poor planning and management. There were other abuses in the public bidding process for railway equipment purchases, the Post said, but it did not mention the amount of money involved.

    By the end of 2003, there were 68 railway projects funded by external bonds, involving US$9 billion in contractual foreign loans, according to the newspaper.

(Source: China Daily)