The annual report that Auditor-General Liu Jiayi made to the top national legislature on Wednesday has underscored many problems in the use of public funds in 2007. It should serve as a reminder that government departments and related agencies must better discipline themselves in the face of a surging fiscal surplus this year.

According to the top auditor's annual report to the National People's Congress Standing Committee, central government departments and their subordinate units misused or embezzled about 4.52 billion yuan ($661.09 million) last year, for which 14 officials have been detained.

By naming 10 central departments, including the education and commerce ministries, the National Bureau of Statistics, State Administration of Taxation and the State Administration of Radio, Film and Television, as the violators, the National Audit Office has given a warning to all government agencies against mismanagement of public funds.

Admittedly, after years of "audit storm", government departments have become more adept at handling budgets.

Though the size of the government's budget has kept expanding, the amount of misused public funds last year actually marked a decrease from 5.51 billion yuan in 2005 and 7 billion yuan in 2006.

Yet, it is also obvious that more steps need to be taken to better manage allocations of budgetary funds, especially in view of the ongoing rapid growth of fiscal revenues.

In the first seven months, China's fiscal revenue reached 4.09 trillion yuan ($598 billion), up 30.5 percent year-on-year. The sum already reached almost 70 percent of the national budgeted incomes set at the National People's Congress (NPC) in March.

Meanwhile, the country's fiscal expenditure amounted to 2.74 trillion yuan in the first seven months, up 29.7 percent, accounting for only 45.1 percent of the budgeted expenditures.

The 1.3-trillion-yuan fiscal surplus means that the government will have a deep pocket to tap into if fiscal incentives are needed to maintain the growth momentum.

The country's economic growth has slowed 1.8 percentage points in the year to June, thanks to domestic credit control and weakening overseas demand.

Fiscal expansion will certainly help cushion the negative impact on China's growth should global demand for Chinese products slows down too much. The government has indeed made it clear that it will maintain a proper scale of investment in the second half of this year to continue the economy's stable growth.

Yet, a government spending spree may risk increased mismanagement of public funds if government departments and related agencies cannot be held accountable on time.

In this sense, aggressive auditing is badly needed to stop and correct irregularities in the use of our swelling public funds.

The National Audit Office has done a good job in exposing and censuring those who violated budgetary discipline last year. It is hoped that the auditing watchdog will keep working hard to ensure better and more efficient use of public funds in the interest of all people.

(China Daily August 29, 2008)