China Law Online Database : novexcn.com

You are using Guest Account

Subscribe To This Law Only

Subscribe To All Law Contents

Print This Page

Back




	STANDARDS OF AUDIT AUTHORITIES FOR AUDITED ITEMS ASSESSMENT

	(Order No.5 of the National Audit Office issued on December 15, 2003 and shall come into force as of February 1, 2004)


SUBJECT : AUDITING; AUDITED ITEMS ASSESSMENT
ISSUING DEPARTMENT : THE NATIONAL AUDIT OFFICE OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 12/15/2003
IMPLEMENT DATE : 02/01/2004
LENGTH : 1,035 words
TEXT :

Article 1. In order to regulate the acts of auditing by audit authorities and to guarantee the quality of auditing work, the present Standards are formulated in accordance with the National General Auditing Standards of the People's Republic of China.

Article 2. The term "audited item assessment" mentioned herein refers to the act of the audit authorities, pursuant to fixed audit objectives, to make analysis and judgment, and present audit opinions with respect to the truthfulness, legality, and effectiveness of the revenue income and expenditure and the financial income and expenditure of the audited entities.

Article 3. The audit authorities shall assess the audited items in accordance with the relevant laws, regulations, rules and other related provisions of the state.

Article 4. The assessment of audited items shall be made independently by the audit authority that carries out the auditing.

In the assessment of audited items, the audit authorities should be practical and realistic, objective, just, and prudent.

Article 5. The audit authority shall, according to the audit objectives provided for by the audit schemes, determine the scope of the assessment of audited items and make assessment of the truthfulness, legality, and effectiveness of the revenue and financial income and expenditure of the audited entities.

Article 6. The term "assessment of truthfulness" refers to the assessment of the compliance of the accounting process of the audited entity with the relevant accounting standards and accounting systems, as well as the consistency of the relevant accounting information with the actual status of revenue and financial income and expenditures and the achievements of business activities.

Article 7. The term "assessment of legality" refers to the assessment of the compliance of the revenue and financial income and expenditure of the audited entity with the relevant laws, regulations, rules, and other normative documents.

Article 8. The term "assessment of effectiveness" refers to the assessment of the revenue and financial income and expenditure of the audited entity as well as the economy, efficiency, and effects of its economic activities. The term "economy" refers to whether the economic activities of the audited entity achieve the objective of being thrift; the term "efficiency" refers to the ratio between the input and output of the economic activities; and the term "effect" refers to whether the economic activities have achieved the expected goals.

Article 9. The audit authority shall not assess the following items:

(1) Items going beyond the scope of its auditing duties;

(2) Items for which the evidence is inadequate or the assessment basis or standards are unclear; and

(3) Matters not involved in the auditing process.

Article 10. The audit group shall present preliminary opinions of audit assessment in the auditing report, and the audit authority shall examine the auditing report and present assessment opinions with respect to the audited entity.

Article 11. When making the audit assessment, the authority shall first explain the overall status of the revenue and financial income and expenditure examined, and then assess the achievements made by the audited entity and the existing problems.

Article 12. Assessment of truthfulness shall be made respectively according to the following different situations:

(1) If no important untrue item is found out through the auditing and it is deemed through professional judgment that the audit entity does not have any such items, the audited entity may be deemed as having truthfully reflected its revenue and financial income and expenditure;

(2) If one or two important untrue items (exceeding the important level) are found out through the auditing, but such items do not affect the overall reflection of the revenue and financial income and expenditure, the audited entity may be deemed as having basically truthfully reflected the revenue and financial income and expenditure, and the problems existing shall be pointed out at the same time;

(3) If it is found out through the auditing that the accounting information of the audited entity is seriously untrue, and can not reasonably reflect its revenue and financial income and expenditure, the audited entity may be deemed as failing to truthfully reflect its revenue and financial income and expenditure, and the reasons shall be explained at the same time.

Article 13. Assessment of legality shall be carried out with respect to whether the audited entity has committed any act of revenue and financial income and expenditure that violates the provisions of the state, as well as the seriousness of the violation. Assessment of legality shall be made respectively according to the following different situations:

(1) If no important act of revenue and financial income and expenditure that violates the provisions of the state is found out through the auditing, the audited entity may be deemed as having relatively well abided by the relevant finance and economic laws and regulations;

(2) If one or two important acts of revenue and financial income and expenditure that violate the provisions of the state are found out through the auditing, the audited entity may be deemed as having basically abided by the relevant finance and economic laws and regulations except for those items found out;

(3) If acts of revenue and financial income and expenditure that seriously violate the provisions of the state are found out through the auditing, the audited entity may be deemed as having failed to abide by the relevant finance and economic laws and regulations.

Article 14. With regard to assessment of effectiveness, the audit authority shall first explain the actual effects of the economic activities of the audited entity, and at the same time, shall reveal the result of comparing those effects with the relevant assessment standards.

In the assessment of effectiveness, indicators such as budgetary or planning indicator, historical indicator, and trade leading indicator, etc., may be used as assessment standards. The basis for selection of the relevant standards and the concrete contents thereof shall be explained in the assessment.

Article 15. The power to interpret the present Standards shall remain with the National Audit Office.

Article 16. The present Standards shall come into force as of February 1, 2004. The Standards of Audit Authorities for Assessment of Audited Items (No.360 [1996] of the National Audit Office) promulgated by the National Audit Office on December 16, 1996 shall be repealed at the same time.