Financial reform to close loopholes

However, the NAO also pointed out a number of loopholes concerning budget implementation and management of the central treasury.

Auditors discovered vague categorizing and confusing definition in the central budget and inefficient arrangement of the revenue, Liu said.

Also, malpractice was found in the allocation of government money. Auditors uncovered 1.86 billion yuan of central funds that were falsely claimed by local governments or embezzled by officials.

According to the report, a large amount of government funds was not put into effective use. By the end of 2013, 32 central government departments audited by the NAO reported about 49.38 billion yuan that remained in their bank accounts for more than a year and 836 million yuan of that was there for more than five years.

The NAO suggested in the report that the central government strictly implement financial protocols and speed up fiscal reform so as to streamline the allocation of government funds between central and local governments and prevent malpractice.