An independent board of inquiry has been formed to uncover how more than $US800,000 earmarked for the Bougainville Disaster Office went missing.
Former Papua New Guinea ombudsman and police commissioner Sir Ila Geno has been appointed to lead the investigation.
The president of Bougainville, John Momis, said a number of departmental secretaries had been suspended while the inquiry was underway.
The money was supposed to fund government services and belonged to the people, not corrupt officials, Mr Momis said.
The Autonomous Bougainville Government was serious about stamping out corruption, meaning the PNG province had to embed good governance and due process in everything it did, he said.