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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II AUDITING ORGANS AND AUDITORS CHAPTER III FUNCTIONS AND RESPONSIBILITIES OF AUDITING ORGANS CHAPTER IV LIMITS OF POWER OF AUDITING ORGANS CHAPTER V AUDIT PROCEDURES CHAPTER VI LEGAL LIABILITIES CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. This Law is formulated in accordance with the Constitution with a view to strengthening the audit supervision of the State, maintaining the fiscal and economic order of the State, enhancing the efficiency in using fiscal capital, promoting the building of a clean government and ensuring the sound development of national economy and the society. Article 2. The State shall implement an audit supervision system. The State Council and the local people's governments at or above the county level shall establish auditing organs. The government revenues and expenditures of all the departments of the State Council, of the local people's governments at various levels and their departments, the financial revenues and expenditures of State-owned financial institutions, enterprises and public institutions, as well as other government revenues and expenditures and financial revenues and expenditures that should be subject to audit according to this Law shall be subject to the audit supervision in accordance with the provisions of this Law. Auditing organs shall carry out audit supervision over the authenticity, legality and effectiveness of the government revenues and expenditures or financial revenues and expenditures specified in the preceding Paragraph. Article 3. Auditing organs shall conduct audit supervision in accordance with the functions and procedures as prescribed by law. An auditing organ shall carry out audit evaluation according to the laws and regulations on government revenues and expenditures and financial revenues and expenditures as well as other relevant provisions of the State, and shall make an audit decision within the scope of its statutory authorities. Article 4. The State Council and the local people's government at or above the county level shall annually present to the standing committee of the people's congress at the corresponding level with an audit work report of the auditing organ on budget implementation and other government revenues and expenditures. An audit work report shall give emphasis to the audit of budget implementation. When necessary, the standing committee of the people's congress may make a resolution on the audit work report. The State Council and the local people's government at or above the county level shall report the correction of the problems found out in the audit work report and the handling results to the standing committee of the people's congress at the same level. Article 5. Auditing organs shall independently exercise their power of audit supervision in accordance with the law, and be free from interference of any administrative organ, social organization or individual. Article 6. Auditing organs and auditors shall, when handling audit matters, be objective and fair, practical and realistic, clean and honest, and shall keep secrets to themselves. CHAPTER II AUDITING ORGANS AND AUDITORS Article 7. The State Council shall establish the National Audit Office to take charge of the audit work throughout the country under the leadership of the Premier of the State Council. The Auditor-General shall be the administrative leader of the National Audit Office. Article 8. The auditing organs of the people's governments of the provinces, autonomous regions, municipalities directly under the Central Government, cities divided into districts, autonomous prefectures, counties, autonomous counties, cities that are not divided into districts, and districts under the jurisdiction of cities shall be in charge of the audit work within their respective administrative areas under the respective leadership of the governor of the provinces, chairman of the autonomous regions, mayors, head of prefectures, counties and districts, as well as under the leadership of auditing organs at the next higher levels. Article 9. Local auditing organs at various levels shall be responsible for reporting their work to the people's governments at the corresponding levels and the auditing organs at the next higher level, and their audit work shall be chiefly directed by the auditing organs at the next higher level. Article 10. An auditing organ may, according to the requirements for the work and upon approval of the people's government at the same level, establish dispatched offices within its audit jurisdiction. The dispatched organs shall carry out the audit work upon the strength of the empowerment of the auditing organ. Article 11. The funds necessary for auditing organs to perform their functions shall be included into the government budgets and be guaranteed by the people's government at the corresponding level. Article 12. Auditors shall possess the professional knowledge and ability suitable for the audit work they engage in. Article 13. If an auditor has interests with the entity under audit or the audited items when handling audit matters, he shall withdraw. Article 14. An auditor shall be entitled to keep to themselves the State secrets and the business secrets of the entity being audited he has access to when performing his functions. Article 15. An auditor shall be protected by law when performing his functions in accordance with the law. No organization or individual may refuse or obstruct auditors' performance of their functions in accordance with the law, or retaliate against auditors. The persons-in-charge of the auditing organs shall be appointed or dismissed in accordance with statutory procedures. None of them may be dismissed or replaced at will unless they are found guilty of illegal acts, or negligent of duties or no longer qualified for the post. For the appointment and dismissal of the person in-charge of the local auditing organ at any level, it is necessary to solicit the opinions of the auditing organ at the next higher level in advance. CHAPTER III FUNCTIONS AND RESPONSIBILITIES OF AUDITING ORGANS Article 16. The auditing organs shall exercise audit supervision over the budget implementation, final settlement of accounts as well as other government revenues and expenditures of all the other departments (including subordinate organs) at the corresponding level and of the governments at lower levels. Article 17. The National Audit Office shall, under the leadership of the Premier of the State Council, exercise audit supervision over the implementation of the central budget and other government revenues and expenditures, and submit a report of audit results to the Premier. The local auditing organ at any level shall, under the respective leadership of the governor of the province, chairman of the autonomous region, mayor, head of the county and head of the district as well as the leadership of the auditing organ at the next higher level, exercise audit supervision over the budget implementation and other government revenues and expenditures of the corresponding level, and submit a report of audit results to the people's government at the corresponding level and the auditing organ at the next higher level. Article 18. The National Audit Office shall exercise audit supervision over the financial revenues and expenditures of the Central Bank. Auditing organs shall exercise audit supervision over the assets, liabilities, profits and losses of State-owned financial institutions. Article 19. Auditing organs shall exercise audit supervision over the financial revenues and expenditures of public institutions of the State and other public organizations that use fiscal capital. Article 20. Auditing organs shall exercise audit supervision over the assets, liabilities, profits and losses of the State- owned enterprises. Article 21. The audit supervision over the enterprises and financial institutions in which the State-owned assets play a controlling or leading role shall be prescribed by the State Council. Article 22. Auditing organs shall exercise audit supervision over the budget implementation and final settlement of accounts relating to the construction projects that are invested or mainly invested by the government. Article 23. Auditing organs shall exercise audit supervision over the financial revenues and expenditures of the social security funds, funds from public donations and other relevant funds and capital managed by the government department or by any other entity on commission of the government department. Article 24. Auditing organs shall exercise audit supervision over the financial revenues and expenditures of projects with aids or loans provided by international organizations or governments of other countries. Article 25. Auditing organs shall, according to the relevant provision of the State, exercise audit supervision over the main principals of the state organs and other entities subject to audit supervision of the auditing organ for their fulfillment of economic liabilities of government revenues and expenditures, financial revenues and expenditures, and other economic activities for their respective regions, departments or entities during the course of holding their posts. Article 26. In addition to the audit matters as specified in this Law, auditing organs shall, in accordance with the provisions of this Law as well as relevant laws and administrative regulations, exercise audit supervision over the matters that shall be audited by auditing organs as stipulated by other laws or administrative regulations. Article 27. With regard to particular matters relating to the State revenues and expenditures, auditing organs shall have the power to carry out special audit investigations to relevant regions, departments or entities, and shall report the audit investigation results to the people's governments at the corresponding levels and the auditing organs at the next higher levels. Article 28. Auditing organs shall determine their audit jurisdiction on the basis of the subordination of fiscal and financial affairs or the State-owned asset supervisory and managerial relation of the entity under audit. Where any dispute over audit jurisdiction arises between auditing organs, an auditing organ superior to both parties shall determine the matter. Auditing organs at higher levels may authorize auditing organs at lower levels to audit the matters that are within the audit jurisdiction of the former and specified in Paragraph 2 of Article 18 through Article 25 in this Law. Auditing organs at higher levels may directly audit the major matters under the jurisdiction of auditing organs at lower levels. However, unnecessary repetitive audits shall be avoided. Article 29. The entities subject to audit supervision of auditing organs shall establish and improve their internal auditing systems in accordance with the relevant provisions of the State. And their internal auditing work shall be subject to the professional guidance and supervision of the auditing organs. Article 30. If an entity being audited by a social auditing organ is an object of audit supervision of the auditing organ, the auditing organ shall be entitled to check the relevant audit reports as issued by the aforesaid social auditing organ under the provisions of the State Council. CHAPTER IV LIMITS OF POWER OF AUDITING ORGANS Article 31. The auditing organs shall be entitled to require an entity under audit to submit, in accordance with the provisions of the auditing organ, the budget or plan on financial revenues and expenditures, budget implementation, final settlement of accounts, financial accounting reports, electronic data on government or financial revenues and expenditures stored and processed by computers and necessary computer technical documents, the information about the account opening at financial institutions, the audit reports issued by the social auditing organs as well as other materials about government or financial revenues and expenditures. The entity under audit shall not refuse or delay the submission of reports or give a false report. The person in-charge of an entity under audit shall be responsible for the authenticity and integrity of the financial accounting materials provided by his own entity. Article 32. Auditing organs shall, during the course of audit, be entitled to examine accounting vouchers, accounting books, financial accounting reports, the electronic data system of government or financial revenues and expenditures operated by computers as well as other materials and assets about government or financial revenues and expenditures. And the entity under audit shall not refuse to submit them. Article 33. Auditing organs shall, when conducting audits, have the power to carry out investigations to relevant entities or individuals involved in audit matters and obtain relevant certification materials. The entities and individuals concerned shall support and assist the auditing organs in their work by providing them with truthful information and relevant certification materials. Auditing organs shall be entitled to inquire about the account of an entity under audit at the financial institution upon the approval of the person in-charge of the auditing organ of the people's government at or above the county level. If the auditing organ can prove that an entity under audit deposits public money in the name of individuals, it shall be entitled to look into the deposits of the entity under audit in the name of individuals at the financial institution upon the approval of the person in-charge of the auditing organ of the people's government at or above the county level. Article 34. When an auditing organ carries out an audit, the entity under audit shall not transfer, conceal, alter or destroy any of its accounting vouchers, accounting books, financial accounting reports and other materials about fiscal or financial revenues and expenditures, nor may it transfer or conceal any of the assets it obtained in violation of the provisions of the State. Where an entity under audit violates the preceding Paragraph, the auditing organ shall be entitled to deter it, and, when necessary and upon approval of the person in-charge of the auditing organ of the people's government at or above the county level, the auditing organ may seal up the relevant materials and the assets obtained in violation of the provisions of the State. If the auditing organ needs to freeze the relevant deposits at the financial institution, it shall file an application with the people's court. Where an entity under audit is carrying out any act relating to government or financial revenues and expenditures in violation of the provisions of the State, the auditing organ shall be entitled to deter it. If the deterrence fails, the auditing organ shall, upon approval of the person-in-charge of the auditing organ of the people's government at or above the county level, notify the fiscal department and the competent authorities to suspend the allotment of money directly relevant to the act of government or financial revenues and expenditures in violation of the provisions of the State; if the aforesaid money has been allotted, the use thereof shall be suspended. An auditing organ shall, when adopting the measures as prescribed by the preceding two paragraphs, not affect the lawful business operations or production and management activities of the entity under audit. Article 35. If any auditing organ believes that the provisions of the competent departments at any higher levels on government revenues and expenditures or financial revenues and expenditures implemented by the entity being audited contravene any of the laws or administrative regulations, it shall suggest the competent departments concerned to make rectifications. If the competent departments concerned do not make rectifications, the auditing organs shall refer the matter to the competent organs for disposition. Article 36. Auditing organs may circulate notices about their audit results to the relevant government departments or publish such results to the general public. Auditing organs shall, when circulating or publishing audit results, keep to themselves the State secrets and business secrets of the entities under audit in accordance with the law and observe the relevant provisions as set down by the State Council. Article 37. An auditing organ may, when performing the duty of audit supervision, request the administrative department of public security, supervision, public finance, taxation, customs, price or industry and commerce to offer assistance. CHAPTER V AUDIT PROCEDURES Article 38. An auditing organ shall form an audit team in light of the audit matters as determined in the plan on audit, and shall, within 3 days before the audit implementation, serve an audit notice to the entity under audit. In the case of any special circumstance, the auditing organ may, upon approval of the people's government at the same level, directly carry out the audit upon the strength of the audit notice. The entities being audited shall cooperate with the auditing organs in their work and provide necessary work conditions. Auditing organs shall enhance the efficiency of their audit work. Article 39. The auditors shall carry out their audit and obtain the certification materials by examining accounting vouchers, accounting books and financial accounting reports, consulting the documents and materials about audit matters, inspecting the cash, physical objects and securities, and making investigations of the relevant entities or individuals. The auditors shall, when making investigations among entities and individuals concerned, show their work certificates and duplicates of audit notices. Article 40. An audit team shall, after carrying out an audit to the auditing matters, submit an audit report to the auditing organ. However, the audit team shall, prior to the submission of the audit report, solicit the opinions of the entity under audit. The entity under audit shall, within ten days upon receipt of the audit report of the audit team, submit its written opinions to the audit team. The audit team shall submit the aforesaid written opinions to the auditing organ. Article 41. An auditing organ shall deliberate the audit report submitted by the audit team according to the procedures as set down by the National Audit Office, and present an audit report of its own after concurrently studying the opinions of the entity under audit about the audit report delivered by the audit team. It shall, within the scope of its statutory authorities, make an audit decision or put forward its opinions for disposition and punishment to the competent authorities in case the disposition or punishment should be imposed on an act of fiscal or financial revenues and expenditures in violation of the provisions of the State. An auditing organ shall serve the audit report and audit decision of its own to the entity under audit and the competent organ or entity. The audit decision shall enter into force as of the date of service. Article 42. If an auditing organ at a higher level considers that an audit decision made by an auditing organ at a lower level has violated the relevant provisions of the State, it may order the auditing organ at the lower level to alter or cancel the aforesaid decision, and may directly make a decision on alteration or cancellation when necessary. CHAPTER VI LEGAL LIABILITIES Article 43. If an entity under audit violates any provisions in this Law by refusing or delaying the provision of the materials about audit matters, providing untrue or incomplete materials, or refusing or impeding the inspection, the auditing organ may order it to make corrections, circulate a notice of criticism and give it a warning. If the entity under audit refuses to make corrections, it shall be subject to liabilities. Article 44. Where an entity under audit violates the provisions in this Law by transferring, concealing, altering or destroying any accounting vouchers, accounting accounts, financial accounting reports or other materials about government or financial revenues and expenditures, or transferring or concealing the assets obtained in violation of the provisions of the State, and if the auditing organ considers that the principal and other persons held to be directly responsible should be given sanctions, the auditing organ shall put forward suggestions for punishment. The entity under audit or the organ at the higher level and the supervisory organ shall make a timely decision, and notify the result to the auditing organ in written form. If a crime is constituted, the entity under audit shall be subject to criminal liabilities. Article 45. Where any other department (including subordinate entities) at the corresponding level or the government at the lower level commits the acts against the budget or other acts of government revenues and expenditures against the provisions of the State, the auditing organ, the people's government or the competent authorities shall, within the scope of its statutory authorities and in accordance with the laws and administrative regulations, take the following measures in light of the specific situation: (1) Ordering it to pay the money that should be turned over within the time limit; (2) Ordering it to return the occupied state-owned assets within the time limit; (3) Ordering it to refund the unlawful proceeds within the time limit; (4) Ordering to handle the matter in accordance with the relevant provisions on the unified national accounting system; and (5) Other measures. Article 46. Where an entity under audit commits the acts of financial revenues and expenditures in violation of the provisions of the State, the auditing organ, the people's government or the competent authorities shall, within the scope of its statutory authorities and in accordance with the laws and administrative regulations, take measures as prescribed in the preceding Article in light of the specific situation, and may impose punishments on the entity under audit according to law. Article 47. The auditing organ shall make an audit decision within the scope of its statutory authorities, and the entity under audit shall implement the aforesaid decision. Where the auditing organ orders an entity under audit to pay the money that should be turned over, but the entity under audit refuses to do so, the auditing organ shall circulate a notice to the competent authorities, and the competent authorities shall, according to the laws and administrative regulations, deduct the aforesaid money and take other measures, and notify the results to the auditing organ in written form. Article 48. Where an entity under audit holds objection to an audit decision on financial revenues and expenditures as delivered by the auditing organ, it may file an application for administrative reconsideration or lodge an administrative lawsuit. Where an entity under audit holds objection to an audit decision on government revenues and expenditures as delivered by the auditing organ, it may request the people's government at the same level as the auditing organ for ruling, and the ruling delivered by the people's government at the same level shall be final. Article 49. Where the government or financial revenues and expenditures of an entity under audit conflict with the provisions of the State and the auditing organ considers it necessary to punish the principal and other persons held to be directly responsible, it shall put forward suggestions for punishment, and the entity under audit, the organ at the higher level or the supervisory organ shall make a timely decision and notify the results to the auditing organ in written form. Article 50. Where the government or financial revenues and expenditures of an entity being audited violates any of the laws or administrative regulations and a crime is constituted, the entity being audited shall be subject to criminal liabilities. Article 51. Anyone who retaliates or makes a false charge against the auditor shall be given sanctions; and shall be subject to criminal liabilities if any crime is constituted. Article 52. Where an auditor abuses his authorities, resorts to frauds for personal ends, neglects his duties or divulges national secrets or business secrets he has access to, he shall be punished; and if a crime is constituted, he shall be subject to criminal liabilities. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 53. The provisions on audit work of Chinese People's Liberation Army shall be formulated by the Central Military Commission in accordance with this Law. Article 54. This Law shall come into force as of January 1, 1995. The Audit Regulation of the People's Republic of China promulgated by the State Council on November 30, 1988 shall be simultaneously repealed. |
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