The country's top auditing authority said yesterday that 230 million yuan ($34 million) of reconstruction funds for the 8.0-magnitude Wenchuan earthquake in Sichuan province had been misused.

The National Audit Office (NAO) announced the results of its audit on 72 major post-quake reconstruction projects and the building of 753 schools and urban and rural houses in 22 counties in Sichuan, Gansu and Shaanxi provinces, which were hit hard by the earthquake on May 12, 2008.

According to the NAO, 4,549 auditors tracked reconstruction projects in the three provinces from last June to November and found a number of problems.

An investment holding company in Mianyang, Sichuan, misappropriated the 140 million yuan for the reconstruction of the city's Yong'an Avenue to the construction of the city's Chengnan New District.

Departments in charge of highway construction in Longnan, Gansu, used more than 7 million yuan of reconstruction funds to repay bank loans borrowed before the earthquake and cover daily expenses.

Four departments in Guanghan, Sichuan, used nearly 83 million yuan of subsidies for the reconstruction of urban and rural residences to build low-rent houses and decorate the exterior of buildings in the street.

The problems had been corrected after auditing, the NAO said.

It was the second time the agency had announced its audit of reconstruction projects after the Wenchuan earthquake.

Last September, the NAO announced its first audit after sending more than 4,500 auditors to track 76 reconstruction projects with a planned investment of nearly 34 billion yuan in the three provinces.

Auditors found that Anxian county in Sichuan inflated its losses from the quake when planning dike construction in its new county seat.

As a result, central finances allocated an additional 15.5 million yuan to the project. Anxian also refunded the money after the audit.

Wenchuan county, the epicenter of the quake, applied for nearly 2.6 million yuan for the repair and reinforcement of six residential buildings, but the real cost was just more than 900,000 yuan.

The funds of five projects surpassing 26 million yuan were also used for other purposes.

The money was refunded after auditing, the NAO said.

Despite the problems found, the top auditing authority yesterday said reconstruction projects in general proceeded smoothly in the quake-hit provinces.

By the end of last October, 11 of the 72 major reconstruction projects had been completed and 54 launched. A total of 480 of the 753 schools to be reconstructed had been completed and 238 were under construction.

Repair of the 797,900 rural houses in the 22 counties had been also completed. Repairs on 212,900 urban houses had also been carried out, while repairs on 54,400 of the rest were under way.