Study on the Auditing System of Socialism with Chinese Characteristics

Preface xv

Introduction 1

1. About the Systems 1

2. About the Auditing System 3

3. About the Auditing System of Socialism with Chinese Characteristics 9

4. About the Significance of Studying the Auditing System of Socialism with Chinese Characteristics 12

Chapter 1: The Birth and Development of the Auditing System of Socialism with Chinese Characteristics 15

1. History of the Chinese Auditing System 15

(1) Official Auditing System during the Shang and Zhou Dynasties 16

(2) Censorate Auditing System during the Qin and Han Dynasties 19

(3) Bibu (Court of Auditors) Auditing System during the Tang and Song Dynasties 21

(4) Kedao Audit Supervising System during the Ming and Qing Dynasties 24

(5) Auditing System in the Early Days of the Republic of China and Nanjing KMT Government Period 26

2. Auditing System during the New Democratic Revolution Led by the Communist Party of China 28

(1) Auditing Exploration during the Establishment of the Communist Party of China and the Great Revolution Period 28

(2) Auditing during the Agrarian Revolutionary War Period 29

(3) Auditing during the Period of the National War of Resistance against Japanese Aggression 31

(4) Auditing during the Liberation War of China 32

3. Establishment and Development of the Auditing System of Socialism with Chinese Characteristics 35

(1) Establishment of the Auditing System in the Early Days of the Reform and Opening-up Period 36

1) Government Audit System Established Stipulated by the Constitution 36

2) Establishment of audit institutions 37

3) Thereafter, Audit Work Was Positively Explored and Carried Out 38

4) Standardization of Audit Work 39

(2) Auditing System in the Period of Transition from the Planned Economy to Socialist Market Economy 40

1) Continuous Improvement of the Audit Institution System 41

2) Establishing Professional Auditing System of Various Industries 42

3) Promoting Framework Building of Audit Laws and Regulations 45

(3) Auditing System at the Establishment of the Socialist Market Economic System 47

1) Adjusting the Institutional Setting and Reinforcing Audit Independence 48

2) Preliminary Establishment of the Audit Law System 48

3) Continuously Enhancing Audit Supervision 51

(4) Auditing System during Improvement of the Socialist Market Economic System 53

1) Defining Guidelines for Audit Work 54

2) Building the "3 + 1" Audit Pattern 55

3) Improving Talents Capacity, Legal Framework, and Technologies 57

4) Building the System of Announcement of Audit Findings 59

(5) Auditing System during the Overall Building of a Well-Off Society in the New Period 60

1) Improving the Government Audit Pattern 62

2) Exploring and Innovating the Audit Methods and Ways 63

3) Improving the Audit Law System 66

4. Conclusion and Enlightenment 67

Chapter 2: Foundation of the Auditing System of Socialism with Chinese Characteristics 73

1. Theoretical Foundation of the Auditing System of Socialism with Chinese Characteristics 73

(1) The Theoretical System of Socialism with Chinese Characteristics Provides the Ideological Foundation for the Establishment and Development of the Auditing System of Socialism with Chinese Characteristics 78

(2) The Theoretical System of Socialism with Chinese Characteristics Guides the Establishment and Development of the Auditing System of Socialism with Chinese Characteristics 79

(3) The Theoretical System of Socialism with Chinese Characteristics Provides the Practical and Theoretical Foundation for the Contents and Arrangements of the Auditing System of Socialism with Chinese Characteristics 80

(4) The Theoretical System of Socialism with Chinese Characteristics Leads the Continuous Exploration and Innovation of the Auditing System of Socialism with Chinese Characteristics, and Guides and Promotes the Development and Improvement of the Auditing System 80

2. Institutional Foundation of the Auditing System of Socialism with Chinese Characteristics 84

(1) State Political System Determines the Political Nature of the Auditing System 86

1) CPC Leadership is the Primary Political Precondition for the Establishment and Improvement of the Audit System of Socialism with Chinese Characteristics 86

2) The System of People's Congresses is an Institutional Guarantee of the Establishment and Improvement of the Auditing System of Socialism with Chinese Characteristics 92

3) The Unitary State Structure is the Organizational Foundation of the Establishment and Improvement of Auditing System of Socialism with Chinese Characteristics 93

(2) State Economic System Determines the Duties and Responsibilities of the Auditing System 94

1) The Basic Economic System with Public Ownership as the Mainstay Determines the Audit Scope and Audited Entities 95

2) Government Functions under the Socialist Market Economy System Determine Audit Functions 96

3. Cultural Foundation of the Auditing System of Socialism with Chinese Characteristics 100

(1) Excellent Chinese Traditional Culture Constitutes the Cultural Source of the Auditing System of Socialism with Chinese Characteristics 100

(2) Socialist Core Value System Determines the Value Orientation of the Auditing System of Socialism with Chinese Characteristics 104

(3) The Socialist Core Value is the Ideological Force Propelling the Development of the Auditing of Socialism with Chinese Characteristics 106

(4) Core Values of Auditors Are the Dynamic Force for the Improvement of the Auditing System of Socialism with Chinese Characteristics 110

Chapter 3: Basic Framework of the Auditing System of Socialism with Chinese Characteristics 113

1. Audit Law and Regulations 113

(1) The Constitution of the People's Republic of China 114

(2) The Audit Law and Other Relevant Laws 116

(3) Regulations for the Implementation of the Audit Law and Other Relevant Administrative Regulations 118

(4) Local Audit Regulations 119

(5) Audit Rules 120

2. Audit Organization System 123

(1) Establishment of Audit Institutions 124

(2) Relationship between Upper- and Lower-Level Audit institutions 125

(3) Audit Institutionalization Framework 126

3. Duties and Powers of Audit Institutions 128

(1) Duties of Audit Institutions 131

1) Supervision through Auditing Over the Statutory Subject Matters 131

2) Special Audit Investigation in Terms of Specific Matters Relating to State Financial Revenues and Expenditures 138

3) Guidance and Supervision Over the Internal Audit Work of Units that are Subject to Supervision through Auditing by Audit Institutions in Accordance with Law 138

4) Verifying the Audit Reports Issued by Public Audit Institutions for Units that are Subject to Supervision through Auditing by Audit Institutions in Accordance with Law 139

(2) Audit Jurisdiction System 139

1) General Principles of Audit Jurisdiction 140

2) Accountability Audit Jurisdiction System 140

3) Authorized Audit, Direct Auditing System, and Settlement Mechanism of Disputes Over Audit Jurisdiction 141

(3) Powers of Audit Institutions 141

1) Right to Request the Submission of Materials 142

2) Right to Examine 142

3) Right to Investigate and Obtain Evidence 143

4) Right to Adopt Administrative Compulsory Measures 143

5) Right to Seek Assistance 143

6) Right to Transfer and Recommend 144

7) Right to Dispose and Punish 144

8) Right to Notify or Publish Auditing Results 144

4. Auditor Management System 145

(1) Professional Requirements for Auditors 146

(2) System for Employment, Appointment, and Dismissal of Auditors 148

(3) Professional Qualification System of Auditors 149

(4) Professional Education System for Auditors 149

(5) Performance Evaluation System for Auditors 150

5. Audit Operation Mechanism 151

(1) Audit Work Plan 151

1) System of Strategic Plan on Audit Work 151

(2) Execution of Audit Assignments 152

1) System of Audit Notification 152

2) System of Audit Program 153

3) System of Audit Evidence 154

4) System of Audit Documentation 154

5) System of Audit Field Management 154

(3) Audit Results Reporting and Publication 155

1) System of Audit Report 155

2) System of Audit Disposal and Punishment and Audit Transfer 156

3) System of Audit Newsletter, Specific Report, and Comprehensive Report 157

4) System of "Two Reports" 158

5) System of Announcement of Audit Results 159

6) System of Disclosure of Government Information 159

(4) Audit Quality Control 160

1) Hierarchical Audit Quality Control 161

2) Mechanism of "Control Review-Assurance Review-Approval" for Audit Report 161

3) System of Registration and Reporting of Intervention in Audit Work 162

4) System of audit Quality Check 162

5) System of Excellent Audit Project Selection 163

(5) Rectification of Problems Disclosed by the Audit 164

1) System of Rectification by Auditees 164

2) System of Government Supervision Over Rectification 164

3) System of Supervising and Assisting Rectification by Relevant Authorities 165

4) System of Follow-up of Rectification by Audit Institutions 165

(6) Settlement of Audit Disputes 166

1) System of Applying for Government Ruling 167

2) System of Applying for Administrative Reconsideration or Instituting Any Administrative Litigation 167

3) System of Complaint, Review, and Reexamination 167

(7) Coordination and Cooperation with Parties Concerned 168

1) Coordination and Cooperation at the Stage of Audit Planning, Implementation, and Utilization of Audit Results 168

2) Coordination and Cooperation in the Accountability Audit 168

3) Coordination and Cooperation in Investigating the Major Irregularities 169

Chapter 4: Features, Effects, and Experience of the Auditing System of Socialism with Chinese Characteristics 171

1. Features of the Auditing System of Socialism with Chinese Characteristics 172

(1) Features of the Auditing System 172

1) Audit Institutions Belong to Administrative Institutions 172

2) Local Audit Institutions Are Responsible to the Governments at Corresponding Levels and Audit Institutions at the Next Higher Level 173

3) Reporting to the Standing Committee of the National People's Congress upon Entrustment by the Government 176

(2) Features of Auditing Duties and Authorities 179

1) Supervision Scope of Government Auditing Reflects Chinese Characteristics 179

2) Economic Accountability Audit of Leading Officials 181

3) Follow-up Audit of Implementation of Policies and Measures 185

4) Authority in Regard to Audit Disposal and Punishment and Taking Coercive Measures 188

(3) Features of the Auditor Management System 189

1) High Professional Requirements 189

2) Strict Disciplinary Requirements 190

3) Comprehensive Examination and Evaluation 191

(4) Features of the Audit Operating Mechanism 192

1) Integrating Audit Resources to Realize Interaction between Higher and Lower Levels 192

2) Follow-up Audit on Major Matters 194

3) Stress on Revealing and Investigating Major Violations of Laws and Rules 197

4) Focus on the Role of Trial Mechanism in the Audit Quality Control 200

5) Publish the Auditing Findings to the Public 201

2. Practical Effects of Auditing System of Socialism with Chinese Characteristics 205

(1) Improve Economic Benefits 205

(2) Ensure Smooth Policy Implementation 210

(3) Safeguard National Security 216

(4) Promote Administration According to Law 218

(5) Promote Anti-corruption 219

(6) Safeguard the Interests of the People 223

(7) Promote the Deepening of Reform 228

(8) Promote Openness and Transparency 232

3. Experience of Building the Socialist System with Chinese Characteristics 233

Chapter 5: Future Development of the Auditing System of Socialism with Chinese Characteristics 247

1. General Goal and Requirement for Further Improvement of the Auditing System of Socialism with Chinese Characteristics 247

(1) General Goal 247

(2) General Requirement 248

2. Principles Indispensable for Development and Further Improvement of the Auditing System of Socialism with Chinese Characteristics 255

3. Key to Development and Further Improvement of the Auditing System of Socialism with Chinese Characteristics 257

(1) About the Auditing Arrangement 258

(2) About the Scope of Audit Duty and Authority 263

1) Improving the Working Mechanism Commensurate with Full Coverage of Auditing 263

2) Establishing and Improving the Real-Time Auditing System on the Implementation of National Major Policies and Measures and Macro-control Deployments 268

3) Improving the Auditing System of Budget Implementation and Final Accounts Drafting 271

4) Establishing and Improving the Auditing System of State Capitals of State-Owned Enterprises 273

5) Establishing the Auditing System of Off-Term Officials regarding Natural Resources and Assets 275

(3) About the Audit Operation Mechanism 276

1) Improving the Audit Plan and Program Systems 276

2) Improving the Organizational Way of Joint Auditing from Multidimensional and Multiple Angles 277

3) Creating an Audit Work Pattern of Big Data 277

4) Improving the Audit Reporting System, the System of Government Information Disclosure, and the Rectification and Examination Mechanism 278

5) Improving the Performance Report System of Audit institutions 278

6) Improving the System of Purchasing Social Audit Services 279

(4) About the Audit Professionalization 279

1) Establishing a Classified Management System for Auditors 280

2) Establishing a Post Order of Professional and Technical Civil Servants of Auditing 280

3) Improving the Selection and Appointment Mechanism for Auditors 280

4) Improving the Responsibility Investigation Mechanism for Auditing Posts 281

5) Improving the Occupational Guarantee Mechanism of Auditing 281

(5) About Supervision of Audit institutions 281

1) Strengthening the Supervision of Higher-Level Audit institutions Over Lower-Level Audit institutions 282

2) Improving the Accountability Audit System for Main Leading Officials of Local Audit institutions 282

3) Creating a List of Powers and Responsibilities of Audit institutions 282

4) Improving the System of Special Auditors 283

5) Exploring and Establishing an External Auditing System for Audit institutions 283

6) Strengthening the Supervision of Society and Public Opinion 283

(6) About the Audit Law System 283

Appendix A: Information on Development of China's Auditing System 285

Appendix B: Brief Introduction to the Auditing Systems of 12 Major Countries 297

Major References 313

Postscript 319

Index 321