Opinions of the State Council on Strengthening Government Auditing
October 9, 2014
People's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, all the ministries and commissions of the State Council, and all the institutions directly under the State Council,
In order to strengthen government auditing, facilitate the deployment of major national decisions and the implementation of relevant policies, better serve reform and development, maintain economic orders, and promote a sustained and healthy development of the economy and society, the State Council puts forward the following opinions.
Ⅰ. General Requirements
1. Guidelines.
To conduct goverment auditing in accordance with the law and in a more intensive manner, audit institutions must fully implement the guiding principles of the 18th National Congress of the Communist Party of China (CPC) and the 2nd and 3rd Plenary Sessions of the 18th CPC Central Committee, and take the Deng Xiaoping Theory, the important thought of the Three Represents and the Scientific Outlook on Development as our guide. Audit methodologies shall be innovated and audit efficiency shall be improved. The implementation of policies and measures that stabilize growth, promote reform, adjust structure, benefit people's livelihood, and prevent risks shall be audited, as well as public funds, state-owned assets, state-owned resources and the economic accountability of leaders, so as to realize the full coverage of audit supervision and further the modernization of national governance and the healthy development of the national economy.
2. Basic Principles.
—Focus on central tasks, and serve the overall objectives. Audit institutions shall, focusing tightly on national priorities, serve reform and development, help improve people’s livelihoods, promote social justice, and provide solid support for building a clean, thrifty and law-based government.
—Identify issues, and improve mechanisms. Audit institutions shall identify key issues arising from the execution of national policies and measures as well as leads of major violations of laws and disciplines, so as to safeguard financial laws and disciplines and promote the building of a clean government. Audit institutions shall also identify pronounced contradictions and risks lurking in economic and social operations so as to maintain the economic security of our country. Furthermore, audit institutions shall identify good practices and experience as well as problems of economic operations, analyze causes regarding mechanisms, systems and institutions and put forward suggestions, so as to deepen reform and innovate in mechanisms and systems.
—Audit in conformity with laws, and excercise power impartially. Audit institutions shall fulfill the obligations as prescribed by the Constitution and the law, take responsibilities courageously and abide by audit disciplines and various provisions on integrity and confidentiality. Audit institutions shall also take careful approaches to work, to ensure legality, civility and integrity in auditing.
Ⅱ. Ensure Through Auditing the Deployment and Implementation of Major Decisions of the Country
3. Accelerate the implementation of policies and measures. With continuous real time auditing on the implementation of major national policies and measures and the deployment of macroeconomic control, audit institutions shall focus on inspecting and overseeing the specific deployment, progress and actual effects of policies and measures implemented by various regions and departments, which aim to stabilize growth, promote reform, adjust structure, improve people’s livelihood, and prevent risks, with a particular emphasis on the execution of major projects, the guarantee of key funds, and the promotion of streamlining administrative procedures and delegating powers to lower levels. Moreover, audit institutions shall identify and correct breaches of orders and prohibitions in a timely manner, give exposure to both good practices and experience as well as new circumstances and new issues, in order to propel the implementation and improvement of policies and measures.
4. Facilitate safe and efficient utilization of public funds. To safeguard public funds, audit institutions shall take strict precautions against corruption, extravagance and other violations of laws and regulations and ensure the safety of public funds. Audit institutions shall bear performance in mind throughout the auditing process, enhance the auditing of budget execution and other revenues and expenditures; with close attention to the existing and additional government funds, audit institutions shall reduce financial deposits, make good use of existing funds and spend wisely in order to promote the reasonable allocation and efficient utilization of fiscal funds. Based on the CPC Central Committee's eight-point decision on improving Party and government conduct and the State Council's three-point decision on curbing government spending, audit institutions shall intensify the auditing of spending on official overseas visits, official vehicles, and official hospitality, usage of meeting expenses, and constructions of offices, halls or guest houses, promote the practice of frugality and regulate administration, so as to build a thrifty government.
5. Maintain the economic security of the country. Audit institutions shall scale up our efforts in auditing risks lurking in economic operations, paying attention to weak links and hidden dangers in public finance, banking, people’s livelihood, state-owned assets, energy, resources and environmental protection as well as destabilizing factors probably triggered by the above aspects, while attaching special importance to local government debts and regional financial stability. Audit institutions shall also identify and give exposure to issues that signal unfavorable trends and proactively propound suggestions on resolving problems and mitigating risks.
6. Promote the improvement of people’s livelihood and further ecological progress. Audit institutions shall strengthen the auditing of funds and projects of great significance concerning people’s livelihoods, including the development of agriculture, rural areas and farmers, social security, education, culture, health care, poverty relief, disaster relief, and government-subsidized housing projects. Audit institutions shall enhance the auditing of environmental protection of natural resources like land and minerals as well as the treatment of polluted air, water and solid waste. Audit institutions shall also explore a way to conduct audits of outgoing officials concerning natural resource assets and dig into the correlation between financial investment and the progress and development of programs in order to facilitate the implementation of policies that benefit people, and protect resources and the environment.
7. Advance the deepening of reforms. With close attention to the coordination among all reform measures, audit institutions shall propel reforms to create better systems, integration and coordination. On the one hand, audit institutions shall grasp new issues arising from reforms and development; on the other hand, audit institutions shall give timely exposure to regulations that are untimely, unfavorable and obstructive to development so as to help make improvements.
Ⅲ. Strengthen the Supervisory Role of government auditing
8. Promote law-based governance and administration. Audit institutions shall intensify the auditing of law-based administration and identify issues where laws are not observed and strictly enforced, in order to accelerate the building of a law-based government and to assert the dignity of law. Audit institutions shall focus on giving exposure to issues that harm the interests of the public and hamper equal competition, so as to maintain order of the market economy and social equality and justice.
9. Strengthen efforts to uphold integrity. Audit institutions shall conduct thorough and solid investigations on major violations of laws and regulations identified through auditing. Audit institutions shall emphasize on the allocation of government funds, the approval of major investment decisions and projects, major procurement and tendering and bidding, the granting of loans and securities trading, the transfer of state-owned assets and equity, land and mineral transactions as well as other key areas. Audit institutions shall also give exposure to issues related to people who abuse their power for personal gain, neglect their duties, embezzle public money, take bribes, and conduct insider trading, in order to advance the building of a clean government.
10. Promote the diligent performance of duties. Audit institutions shall increase the thoroughness of the accountability auditing of leaders, focus on inspecting how they comply with laws, regulations and disciplines and fulfill their duties, and encourage leaders at all levels to pursue a proactive, effective and responsible approach. Audit institutions shall give exposure to leaders who fail to do their jobs or do them sluggishly or irresponsibly in accordance with the law and discipline so as to promote and improve the mechanism of accountability.
Ⅳ. Improve Audit Work Mechanisms
11. Accept audit supervision in accordance with law. Departments, entities and individuals involved in managing, distributing and using state-owned funds, assets and resources shall be subject to auditing and cooperate with the auditors without hindering their work. Relevant departments and entities shall provide documentation and information on financial accounting, business operation and management as required by law in a timely and comprehensive manner. However, they shall not stipulate provisions that limit audit institutions' access to documentation or queries in their IT systems and existing provisions of that kind must be amended or abolished. Audit institutions shall keep the documentation acquired strictly confidential.
12. Provide intact, accurate, and authentic electronic data. Relevant departments, financial institutions, state-owned enterprises and public institutions shall, in accordance with the requirements of audit work, provide electronic data and technical documents regarding the performance of duties of the abovementioned entities and systems to audit institutions. They shall cooperate with audit institutions to conduct online auditing in the context of data and information security. During field audits, audited entities shall provide a proper work environment to auditors for electronic data analysis.
13. Actively assist in audit work. Help and supports are required from relevant departments and entities when audit institutions perform their duties, and relevant audit information shall be strictly confidential. A sound coordination mechanism among audit, discipline inspection, public security and procuratorial organs shall be established, so that relevant authorities investigate clues to violations of laws and disciplines as transferred from audit institutions carefully, and release the results to the audit institutions in time. Audit institutions shall track the results of investigations, and inform the public in due time.
Ⅴ. Pay close attention to the rectifications of problems revealed through auditing
14. Improve the accountability mechanism for rectification. As the principal persons responsible for rectification, the heads of the audited entities shall focus on the rectification of problems identified, and supervise the rectification personally when it comes to major issues. Problems identified shall be fixed in time, and audit recommendations carefully studied. Audit institutions shall be informed of the results of rectification in written form, which, in the meantime, shall also be reported to governments of the same level or competent departments and announced to the public.
15. Strengthen the supervision and inspection of rectification. Governments of all levels shall specifically study the auditing of major policies and arrangements of the country and the execution of relevant policies and measures, as well as the rectification of problems identified through auditing the execution of their own budget and other revenues and expenditures, which shall be inspected and supervised. For the problems revealed through auditing, the departments in charge of the audited entities shall supervise the rectification in time. Audit institutions shall establish a tracking mechanism to monitor the rectification, and request the assistance of relevant authorities in carrying out the rectification if necessary.
16. Strengthen accountability for rectification. All regions and departments shall regard audit findings and rectification results as important references for performance evaluations, rewards and punishment. Major problems revealed through auditing shall be handled in accordance with laws and disciplines, and relevant persons shall be held accountable. Problems that signal unfavorable trends identified through auditing shall be studied without delay, and provisions and regulations shall be improved. The heads of audited entities that fail to make thorough rectifications shall be interviewed, whereas those who fail every audit and rectification shall be called to account strictly.
Ⅵ. Increase auditors’ competence
17. Build stronger audit teams. Efforts shall be exerted at improving the professional competence of auditors, promoting the professionalism of auditors, establishing an occupational guarantee system for auditors, implementing a professional and technical qualification system for auditing, and improving the auditing professional education and training system in order to build audit teams with high political consciousness and professional quality. In principle, heads of audit institutions shall have work experience as related to the economics, law and management. As for the recruitment of auditors, necessary audit knowledge and skills can be examined additionally, and contract jobs can be provided for some positions with heavy demand on expertise.
18. Innovate audit methodologies. Audit plans of the audit institutions shall be well coordinated, the distribution of audit resources shall be optimized, major audit projects with overall significance shall be conducted properly, and a phased audit method for budget executions shall be explored. Real time audits of major policies and measures, investment projects, special funds and emergencies shall be conducted throughout the whole process. According to the execution requirements of the audit projects, ways of outsourcing audit services shall be explored. Audit institutions at higher levels shall enhance their leadership over the ones at lower levels, and establish and improve mechanisms including the work report system. Local audit institutions at various levels, when submitting audit reports and leads of major cases to governments at corresponding levels, shall also report to the immediately higher audit institutions.
19. Accelerate the IT application in auditing. Efforts shall be made to accelerate information sharing between audit institutions and relevant departments, financial institutions, state-owned enterprises and public institutions, in order to centralize data further and build a national audit database. Ways shall also be explored to apply big data technology to audit practices, strengthen the comprehensive utilization of big data, and improve the ability for using information technology to identify problems, evaluate, and make macro-analysis. Electronic audit techniques shall be innovated, to improve the capacity, quality and efficiency of auditing. Audits of the security, reliability, and economy of IT systems in various departments and entities shall be strengthened.
20. Ensure the necessary manpower and funds to perform audit duties. With increasing audit tasks, audit manpower shall be allocated rationally. In accordance with the principles of reasonable calculation and necessity, the outlays of the audit institutions shall be guaranteed in the annual fiscal budgets at the corresponding levels, to provide the audit institutions with proper working conditions. Internal auditing shall be reinforced and made full use of.
VII. Strengthen leadership and organization
21. Build on the leadership mechanism of audit work. The heads of local governments at various levels, shall lead the audit institutions at the corresponding levels directly in accordance with the law, support the work of the audit institutions, receive regular briefings on auditing, study and solve any prominent problems encountered during the audit work, and use the audit results as an important basis for decision-making. Communication among government supervisory and inspection institutions shall be strengthened, to make full use of existing inspection results and avoid redundant work.
22. Maintain the independence of auditing. Local governments at various levels shall make sure that the audit institutions conduct audits, identify problems, and announce the audit results to the public in accordance with the law, subject to no interference by any other administrative department or any public organization or individual, and supervise the execution of audit laws and regulations regularly. Those who refuse, obstruct, interfere or do not cooperate with the audit, or threat, intimidate or retaliate against auditors shall be investigated and punished in accordance with the law and discipline.