A nationwide audit on cutting energy use and emission levels revealed that local governments have withheld 448 million yuan (US$67.12 million) of State funds allocated for this purpose and misused another 43.5 million yuan during the country's 11th Five-Year Plan (2006-2010) period.

Nine people have been punished for their involvement in the financial irregularity, the National Audit Office (NAO) said on Thursday, adding that the funds have been recovered.

The central government had allocated more than 200 billion yuan to meet its goals of cutting energy use and emission levels from 2007 to 2009, as set out in the five-year plan that ends this year.

However, according to the audit results, some regions failed to fully implement the State policy.

The NAO's Nanjing resident office found that some governments had approved projects of benefit to their jurisdictions instead of carrying out the State policy as instructed.

Some of the projects involved received funding after applying with false information and some governments illegally gave contractors projects that ran at a loss to the State, according to Ni Zhiwei, deputy head of the Nanjing resident office.

In one case, the Jiangsu provincial audit office discovered the Lucun Sewage Treatment Plant in Wuxi city overclaimed 20 million yuan for updating its facilities on a project that cost 180 million yuan.

The State Council issued a notice in May stating that conserving 20 percent of energy per unit of GDP by the end of 2010 was a "considerable challenge".

The notice said the State Council urged authorities to act, especially since demand was expected to increase in energy-consuming and emissions-producing sectors from the third quarter onward.

Since audits can play an effective role in monitoring the process, the NAO assigned 600 employees to conduct two audits on conserving energy and reducing emissions, which ran from October 2009 to September 2010.

Huang Daoguo, director of the NAO's department of agriculture, resources and environmental protection, said State funds were usually used and managed correctly by local governments to meet the country's energy goals.

He said this year's audit picked up where the 2009 audit left off, focusing on how the government's energy policy is being implemented in key industries like power and steel.

From the audits, the NAO hoped not only to uncover problems, but for them to be analyzed as well and for solutions to be proposed on effectively managing State funds.

Energy conservation and reduction is a completely new area for auditors, Huang added.

Cai Jinwei, an official from Jiangsu provincial audit office, said auditors also advised local authorities on improvements that can be made to meet environmental targets.