Government departments and local officials manipulated figures, ignored financial management rules, exaggerated spending and squandered state funds on banquets, the auditor-general says. In his latest report, Li Jinhua found that in addition to corruption at the now-defunct State Power Corporation, the Ministry of Finance mismanaged funds earned by state lottery units. He also revealed failure in enforcing budget discipline among local governments, and poor management of subsidies assigned to these authorities. Mr Li's report, delivered to the National People's Congress Standing Committee on Wednesday, reviewed the financial performance of government departments and state banks in 2003 and identified eight main problems. Departments and units covered included central government units, military research institutes and rural education offices. The problems found ranged from loans by state banks in violation of regulations to extravagance among officials in poverty-stricken areas. Poverty-relief funds were often swallowed up by administrative costs, and peasants received little real benefit, Mr Li said. His report showed that investment and special budgets approved by the central government were diverted by officials to build staff quarters or to fund their commercial activities. Ministry officials and local governments also routinely lied about their finances such as exaggerating their budget needs, and treated investment by the state as their own money, it said. The report found the former state planning commission spent 859 million yuan in 1994 to build offices for seven research units under its supervision. However, it rented out the offices instead of handing them over to the units, earning 32.8 million yuan over a two-year period.