A branch office of the property management bureau in Jingzhou, Hubei province embezzled more than 96,000 yuan in affordable-housing money to buy cars and air conditioners.
Tang Jun, a social policy researcher with the Chinese Academy of Social Sciences, said the embezzlement cases will affect the public's confidence in government, and audit offices should reveal where the money has gone.
Construction and discipline authorities in many provinces, including Fujian and Jiangxi, waged special campaigns in 2012 to crack down on embezzlement.
Fujian province's housing and urban-rural development authority, for instance, has imposed a monitoring system to track the money and the progress of projects, and asked those performing the work to publicly release information about affordable housing.
The National Audit Office's report on Wednesday said its audit has canceled about 7,000 unqualified households' rights to benefit from subsidized housing.
The audit work has resulted in notices being sent to more than 1,600 households, asking them to move out or informing them they may no longer benefit from the projects.
It has also frozen or terminated 1,410 attempts that households have made to illegally sell the residences.
The report said the office's investigation into the 2011 budget had, by October, helped the government recover 105.6 billion yuan in mishandled money.
About 660 people involved in the misconduct have been punished, it added.
Railway staff members express Spring Festival greetings