Nearly 31 billion yuan (US$4 billion) of social security funds was misused last year, according to the National Audit Office (NAO).

The massive misappropriation was uncovered by the NAO's nationwide audit, which looked at social security funds as well as housing provident funds from 45 cities and the implementation of budgets by social security fund councils.

In total the audit covered more than 800 billion yuan (US$103 billion) of funding, of which 30.8 billion yuan almost 4 percent was not properly accounted for, Yu Xiaoming, deputy chief auditor, told the China Audit News yesterday.

Shanghai and the Tibet Autonomous Region were excluded from the audit, the paper said without citing a reason.

Yu said that auditing social security expenditure remained an important task.

This year local audit departments will launch their own audits of social security funds.

The NAO will also dispatch staff to audit money allotted for disaster alleviation in 13 provinces. Special teams will also be sent to audit the funeral and interment industry in three provinces because the NAO received complaints that some government departments overcharge mourning relatives.

An NAO report published last October said around 7.1 billion yuan (US$916 million) of social security funds had been misappropriated by 2005.

Speaking on the sidelines of the NPC session on Tuesday, Liu Yongfu, vice-minister of labor and social security, said the ministry is addressing the problem of misused funds.

A rapid reporting system, which demands that labor and social security bureaus at all levels report any misappropriation or fraud involving the funds as soon as they are detected, has been established, he said.