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China Red Cross Says Accounting Errors Caused Irregularities

June 30 (Bloomberg) -- The Red Cross Society of China denied misusing funds after auditors found it overspent 4.2 million yuan ($650,000) on medical training dummies.

The group said in a June 28 statement that spending irregularities cited in a report by China’s National Audit Office were the result of accounting mistakes.

The findings have fuelled criticism of the fact that China’s Red Cross and other charitable groups in the country, which are mostly government-run, are not required to disclose their finances, said Deng Guosheng, director of the NGO Research Center at Tsinghua University in Beijing.

“The public don’t trust such philanthropic organizations due to a lack of transparency,” Deng said in a telephone interview. “There’s no specific law in China that requires the Red Cross association to disclose information. You can’t find regular financial data on its website.”

Branches of the Chinese Red Cross have their own bank accounts and receive funds from local governments, Deng said. They can also take donations from the public, he said.

The Chinese Red Cross is making efforts to become more transparent, Zha Huiqin, director of the association’s finance department, said in a telephone interview. It will start an online tracking system that lets donors see how their money is spent, she said.

The Chinese Red Cross is a member of the International Federation of Red Cross and Red Crescent Societies. Francis Markus, an IFRC spokesman in Beijing, declined to comment.

On June 27, the National Audit Office released a report saying the Chinese Red Cross exceeded a 12.3 million-yuan budget to buy medical training dummies by 4.2 million yuan, or 34 percent.

The Red Cross said public donations were not spent, according to a statement on its website. In a separate statement yesterday, it blamed the overspending on “irregular accounting practices” and pledged to abide more closely by accounting rules.

To contact Bloomberg News staff for this story: Emma Dong in Beijing at edong10@bloomberg.net

To contact the editor responsible for this story: John Liu in Beijing at jliu42@bloomberg.net

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