The International Monetary Fund approved a $4.5 billion loan to Russia last week even though Russia's Central Bank used previous loan proceeds to invest in risky short-term government bonds, a new audit of Central Bank transactions shows.

Financial analysts who reviewed the audit Monday said it shows the Central Bank improperly speculated with the IMF funds in the Russian government's own bond market. It was previously known that the Central Bank plowed some of its hard currency into the high-flying GKO bonds, but not that it used the IMF's money for that purpose.

The audit shows that the Central Bank transferred $719 million of IMF funds it received in late 1992 to two subsidiaries before the money ended up in the accounts of an offshore firm the bank indirectly controls. That firm, Financial Management Co., or Fimaco, invested the IMF funds in government bonds in 1996 in the months before President Boris Yeltsin's election. The audit does not spell out what happened to the profits from those transactions.

At the heart of the controversy over the Central Bank's actions are unanswered questions about why it took the risky and unorthodox approach of turning over Russia's scarce hard currency reserves to an obscure offshore firm, and who benefited from handling the billions of dollars that were transferred through it.

In a review of the Russian economy released Monday, the IMF directors condemned the channeling of money through Fimaco and what they termed a "fictitious claim" involving the firm, which is based in the Channel Islands off the northwestern coast of France. According to IMF officials, in 1996 the Central Bank left the IMF with the impression that $1.2 billion remained in its currency reserves when in fact the money had been routed elsewhere. Had the IMF's directors known the truth, subsequent loans might have been delayed, the directors said.

Stanley Fischer, the IMF's first deputy managing director, said last week the directors of the lending institution realize "we were lied to" and have demanded reporting changes to ensure Russian officials can't "do what they did the last time again." He also said there is no evidence of large-scale misappropriation of funds or of inaccurate reporting of $4.8 billion in funds the Central Bank received in July 1998.

The auditors for PricewaterhouseCoopers tracked a number of highly complex transactions without characterizing the bank's actions in any way. Even banking experts in Moscow who studied the 21-page report said they had trouble deciphering it. The audit has not yet been released, as the IMF has requested, but a copy of it was made available to The Washington Post.

The report said the auditors could not find or were not allowed access to certain records, "which is appalling," said Vladimir Konovalov, an economist in the Moscow office of the investment bank Credit Suisse First Boston.

It also details what financial experts describe as highly unusual practices. For instance, through a subsidiary, the Central Bank granted up to $300 million in short-term loans to Russian commercial banks between 1994 and 1996, accepting as collateral the government's own bonds. That meant "the C.B. bore the credit risk," the auditors wrote. Of those loans, $70 million "are not being paid off," the report said.