Official audit results released Friday for 10 State-owned enterprises (SOEs) exposed unregulated financial management resulting in millions of yuan in losses and the subsequent suspension of 15 senior executives.
The audited companies, which are administered by the central government, cover the telecommunications, mining and aviation industries. All were found to have malpractices or law violations in 2011, according to the National Auditing Office (NAO).
Inaccurate accounting, illegal investment and incomplete financial statement compilation were among violations exposed by China's top auditing body, said Wei Qiang, director of the NAO's enterprise audit department.
China Mobile Communications Corporation, the country's largest telecom operator, was found to have fabricated accounting records and illegally conducted bidding activities.
Power producer China Guodian Corporation invested nearly 30 billion yuan ($4.78 billion) in projects that did not have official approval, while the State Development and Investment Corporation illegally invested in villas, NAO reports found.
"Most companies we audited have improved their internal management, company restructuring and technology innovation, leading to better performances," Wei told reporters at a news conference Friday.
Auditors found some companies had made poor investment decisions, placed inadequate emphasis on internal management and carried out other practices violating industry laws and regulations, Wei said.
"We traced back quite a number of sources indicating major economic cases involving violations. The NAO has informed discipline inspectors and procurators for further investigations, and we'll make announcements when the results are ready," Wei said.
Most companies have made open responses to the audit reports, vowing to make changes and address the problems. China Mobile said via an online announcement Friday that it had started an overall internal inspection. The telecom company has modified company rules and fired 29 employees responsible for problems listed in the auditing report, it said.
By the end of March, the companies in question had stipulated or improved 785 regulations, made supplementary tax payments of 537 million yuan and penalized 70 people for the problems, including 15 senior executives, according to the NAO.
"The reports indicate the government's determination to enhance transparency in dealing with existing problems plaguing SOEs, while also placing them under public scrutiny," said Jia Kang, director of the Research Institute for Fiscal Science under the Ministry of Finance.
Problems listed in the NAO report are also common among many private companies, he added.
The NAO audits the financial accounting of SOEs annually in an effort to uncover problems and risks to the value of State assets. Auditing work for 2013 will highlight enforcement of major financial policies, security of State assets, exposure of major violations within companies and anti-graft inspections, according to the NAO.
"Since the 'eight guidelines' aiming to cut red tape and corruption were issued by the new leadership last year, the public has begun paying closer attention to how officials and SOEs enforce them to improve their public image. For example, how much money they spend in an official banquet," said Yang Zhiyong, an expert on fiscal policy with the Chinese Academy of Social Sciences.
The NAO began auditing the financial accounting of 10 central SOEs last year, including Huaneng Group, China Minmetals Corporation, China Grain Reserves Corporation, China Publishing Group Corporation, State Nuclear Power Technology Corporation, Commercial Aircraft Corporation of China and China National Aviation Holding Company. The office also released audit results for Export-Import Bank of China, China Agricultural Bank and China Construction Bank.
Xinhua contributed to this story