Rampant financial irregularities at the mainland's four asset-management companies were highlighted in a report submitted to the National People's Congress Standing Committee by the state auditor yesterday. Mismanagement and irregularities at China Huarong Asset Management, China Great Wall Asset Management, China Orient Asset Management and China Cinda Asset Management and their branches amounted to 71.54 billion yuan, according to the report. The figure represents 13 per cent of the audited amount of 554.4 billion yuan. The four companies were set up in 1999 to purchase, manage and dispose of 1.4 trillion yuan in non-performing loans acquired from four top state banks - the Bank of China, China Construction Bank, the Industrial and Commercial Bank of China and the Agricultural Bank of China. Last year's audit covered 39 per cent of the total non-performing loans the four institutions have purchased. Auditor-General Li Jinhua said there were 'different levels' of irregularities in the disposal and auctioning of NPLs amounting to 16.9 billion yuan, while underpriced NPLs accounted for another 27.2 billion yuan, according to Xinhua. In one case, 475 companies in Hubei province illegally declared insolvency and passed debts totaling 5.5 billion yuan to Huarong, Great Wall and Cinda, who recovered only 18 million yuan of the amount, or 0.33 per cent. Liu Jibin , vice-chairman of the NPC Financial and Economic Committee, said institutional reforms and a strengthening of punishments were needed to solve the problems in the asset-management companies. His committee recommended a thorough auditing of the companies. The report did not mention Xu Fangming , director-general of the Ministry of Finance's Finance Department, who has been arrested for alleged corrupt conduct involving millions of yuan. Xu's department represents the central government in managing the state banks, asset-management companies, state-owned development banks and state-controlled securities companies. Mr Li said his office also looked into 10 state-owned companies and discovered mismanagement and irregularities involving 14.5 billion yuan in areas such as investment, borrowing and collateral, Xinhua reported. The 10 state-owned companies include State Development and Investment Corp and Shenhua Group. Five were found to have overstated profits by 4.6 billion yuan, while the rest understated profits by 3 billion yuan. The report also discovered 9.06 billion yuan of misused funds spanning 38 central government departments. What the auditors found Irregularities involving 71.5 billion yuan at four state asset-management firms - 13 per cent of the amount audited; Bad investments and loan guarantees by 10 top state-owned enterprises resulted in losses of 14.5 billion yuan; Misuse of more than 9 billion yuan by 38 central government ministries and departments last year; Companies in charge of state lotteries exaggerated expenses by more than 558 million yuan; Ministry of Water Resources and other related departments in provinces misused 4.9 billion yuan earmarked for water conservancy projects; Ministry of Health and 10 hospitals in Beijing overcharged patients 11.27 million yuan and took 300 million yuan in rebates from pharmaceutical companies; Eighteen colleges belonging to central government departments overcharged parents 868 million yuan.