(Promulgated by Decree No.231 of the State Council of the People's Republic of China on October 21, 1997, and effective on the date of promulgation)

Contents

Chapter I General Provisions
Chapter II Audit Offices and Auditors
Chapter III Duties of Audit Offices
Chapter IV Powers of Audit Offices
Chapter V Audit Procedures
Chapter VI Legal Liability
Chapter VII Supplementary Provisions

Chapter I General Provisions

Article 1
In accordance with the provisions of the Audit Law of the People's Republic of China (hereinafter called the "Audit Law"), this Regulation is formulated.

Article 2
Audit means an act which, in accordance with the law, the audit office shall independently examine accounting documents, books and statements as well as other materials and assets in connection with fiscal and financial revenues and expenditures of the unit to be audited, and supervise their truthfulness, lawfulness and beneficial results.

Article 3
Fiscal revenues and expenditures under audit supervision mean those which, in accordance with the provisions of the Budget Law of the People's Republic of China and other relevant regulations of the State, shall be included in the budget management, and those in connection with extra-budgetary funds.

Financial revenues and expenditures under audit supervision mean those in connection with various funds for accounting affairs, activities and control in accordance with the State's regulations on the financial and accounting system of State-owned financial institutions, enterprises, institutions and other units which, as required by the State, shall be subject to audit supervision.

Article 4
Audit offices render audit supervision in accordance with the duties, powers and procedures laid down by the Audit Law, this Regulation and other relevant laws and regulations.

Audit offices make audit judgment, treatment and punishment in accordance with laws, regulations and other relevant provisions of the State on fiscal and financial revenues and expenditures.

Article 5
The audit office shall render audit supervision on the following main items in budget performance:

1. budget replies to all corresponding departments by the finance department of the corresponding people's government in accordance with the corresponding budget approved by the corresponding people's congress, adjustments and changes in budget revenues and expenditures in the corresponding budget performance;
2. collection of budget revenues by budget revenue collection departments in accordance with laws, administrative regulations and other relevant provisions of the State;
3. allocation of funds for corresponding budget expenditures by the finance department of the corresponding people's government in accordance with the approved annual budget and funds application programme, budget grade and procedures;
4. allocation of funds for budget expenditures as subsidy to people's governments at the lower level and final settlement by the finance department of the State Council or of the local people's government at or above the county level in accordance with the provisions of laws and administrative regulations and the budget management system;
5. performance of all departments at the corresponding level of annual budget expenditures and fiscal and financial systems as well as the related economic construction and industry development, and the turnover of budget revenues by the relevant departments and units;
6. budget revenues collection and budget expenditures allocation by the corresponding State Treasury in accordance with the relevant regulations of the State;
7. receipts and payment of budget funds under special management in accordance with the relevant regulations of the State; and
8. other items in budget performance as prescribed by laws and regulations.

Article 6
The audit office shall render audit supervision on the following main items in other fiscal revenues and expenditures:

1. management and utilization of extra-budgetary funds and reimbursable budgetary funds by the finance department of the corresponding people's government in accordance with the provisions of laws, administrative regulations and other relevant provisions of the State;
2. management and utilization of extra-budgetary funds by all corresponding departments in accordance with the provisions of laws, administrative regulations and other relevant provisions of the State; and
3. the final settlement of all corresponding departments and the governments at the lower level.

Chapter II Audit Offices and Auditors

Article 7
Under the leadership of the Premier of the State Council, the National Audit Office takes charge of the audit work throughout the country and perform the duties prescribed by the Audit Law and the State Council.

Under the leadership of the administrative leader of the corresponding people's government and the audit office at the next higher level, the local audit office are responsible for the audit work within its jurisdiction and perform the duties prescribed by laws, regulations and the corresponding people's government.

Article 8
The audit office of a prefectural administration set up by the people's government of a province or autonomous region is responsible for and reports its work to the prefectural administration and the audit office of the people's government of the province or autonomous region, and its audit business shall be directed chiefly by the audit office of the people's government of the province or autonomous region.

Article 9
The audit office shall formulate the draft budget of annual expenses for performance of its duties in accordance with --

1. laws and regulations;
2. the decision and requirements of the corresponding people's government;
3. its duties, targets and plan;
4. the standards for staffing quota; and
5. budget execution of the preceding year and variable factors in the current year.

Expenses budget required by the audit office for performance of its duties shall be listed separately in the corresponding budget and guaranteed by the corresponding people's government.

Article 10
In respect to the auditors, it shall have the audit professional qualifications system. Specific and concrete measures shall be governed by the relevant regulations of the State.

According to the needs of its work, the audit office may appoint persons having professional knowledge related to the audit items to participate in the audit work.

Article 11
An auditor shall withdraw from the post on his own, or the unit to be audited is entitled to apply for his withdrawal therefrom under one of the following circumstances:

1. having husband-and-wife relationship, direct blood relationship, collateral relationship by blood in three generations or close relationship by marriage with the head or any other person in charge of the unit to be audited;
2. having the economic interest relation with the unit or item to be audited; or
3. having any other interest relation with the unit or item to be audited, which may adversely affect fair performance of duties.

The person responsible for the audit office decides the withdrawal of the auditor. The corresponding people's government or the person responsible for the audit office at the next higher level decides the withdrawal of the person responsible for the audit office at the next lower level.

Article 12
In appointing or dismissing the person responsible for or the person holding deputy post of any local audit office, it shall have opinions of the audit office at the next higher level in advance.

Article 13
No person responsible for the audit office may be arbitrarily dismissed during its term of office under one of the following circumstances:

1. without being demanded for criminal responsibility due to a crime;
2. without having been given an administrative sanction for serious violation of law or negligence of duty and no longer suitable for the post;
3. without a failure to perform duties for more than one year due to health reasons; or
4. without a failure to meet any other requirements of the post prescribed by the State.

Chapter III Duties of Audit Offices

Article 14
The audit office shall, according to law, impose audit supervision on governmental organs, armed forces units, political and mass organizations, which have direct relations of budget turnover and allocations with the finance department of the corresponding people's government, and on enterprises and institutions, which have direct relations of budget turnover and allocations with the finance department of the corresponding people's government.

Article 15
Extra-budgetary funds under audit supervision include the following fiscal funds which are, in accordance with the relevant regulations of the State, collected, withdrawn, arranged for use and not included in budget management by governmental organs, institutions, mass organizations for performance or substitution performance of governmental functions:

1. various additional revenues and other funds and foundations raised, which are managed by finance departments and not included in the budget;
2. various administrative fees and institutional charges, which are collected by administrative organs and institutions and not included in the budget;
3. funds which are collected by relevant competent governmental departments from their subordinate units and turned in to the higher authorities; and
4. other fiscal funds and foundations not included in budget management.

Article 16
The audit office shall, after the end of each budget year, render the auditing of budget performance and other public revenues and expenditures and may, when necessary, impose the auditing and inspection on relevant items of the fiscal revenues and expenditures in the current budget year or in the past budget years.

Article 17
The audit report of the audit office on the corresponding budget performance shall contain the following particulars:

1. corresponding budget performance organized by the finance department;
2. budget revenues organized by the corresponding budget revenues collection departments;
3. information on the business of budget revenues and expenditures conducted by the corresponding State Treasury;
4. the audit judgment of the audit organ on the corresponding budget performance;
5. problems existing in the corresponding budget performance and measures taken by the audit organ according to law;
6. the audit organ's proposals for treatment and suggestions for improving the work of corresponding budget performance; and
7. other information required by the corresponding government.

Article 18
The National Audit Office shall impose audit supervision according to law on all financial revenues and expenditures of the Central Bank and its branch offices in engaging in financial business activities and in performing duties of financial supervision and control.

The audit report on central budget performance submitted by the National Audit Office to the Premier of the State Council shall contain information on the financial revenues and expenditures of the Central Bank.

Article 19
Audit offices shall, according to law, impose audit supervision on the following State-owned financial institutions:

1. the State policy bank;
2. State-owned commercial banks;
3. State-owned non-bank financial institutions; and
4. banks or non-bank financial institutions with the State-owned assets as the majority shares or as the mainstream.

Article 20
Audit offices shall, according to law, impose audit supervision on the following enterprises with the State-owned assets as the majority shares or as the mainstream:

1. enterprises wherein the State-owned capital accounts for fifty percent or more of their total capital; and
2. enterprises wherein the State-owned capital accounts for less than fifty percent of their total capital and investors of the State-owned assets in essence possess the holding right.

Unless the State Council provides otherwise, the audit supervision of audit offices on the enterprises listed in the preceding paragraph shall be governed by applying mutatis matandis the provisions of Articles 20 and 21 of the Audit Law.

Article 21
State construction projects under audit supervision mean capital construction and technological transformation projects chiefly with the investment of State-owned assets or accommodation of funds.

Financial revenues and expenditures of development, design, construction, purchasing and other units directly related to the State construction projects shall be subject to the audit supervision of audit offices.

Article 22
Audit offices shall, according to law, impose audit supervision on the performance of the general budget or budget estimate, annual budget performance and final settlements, and final settlements on the completion of projects of the State construction projects.

Article 23
Social security funds under audit supervision include such social insurance funds as pension, medicare, work injuries, unemployment and birth, such social relief funds as relief, disaster relief and assistance to poor areas, and social welfare funds for the development of the cause of social welfare.

Social endowment funds under audit supervision include money, marketable securities and articles in kind donated for social services by domestic and foreign enterprises, organizations and persons.

Article 24
Audit offices shall, according to law, impose audit supervision on the following assistances and loans of international organizations and foreign governments:

1. loans provided by international financial institutions, foreign governments and their organs to the Chinese Government and its organs;
2. loans provided by international organizations, foreign governments and their organs to Chinese enterprises and institutions and guaranteed by the Chinese Government and its organs;
3. assistances and grants provided by international organizations, foreign governments and their organs to the Chinese Government;
4. assistances and grants provided by international organizations, foreign governments and their organs to non-governmental organizations authorized by the Chinese Government to administer the relevant foundations and funds; and
5. other assistances and loans provided by international organizations and foreign governments.

Article 25
In conducting a special audit investigation, the audit office shall produce the written notice therefor to the locality, department or unit and persons to be investigated and give the relevant information. The locality, department or unit and persons concerned shall accept investigation, report the information truthfully and provide relevant materials.

Article 26
The audit office shall, in accordance with the fiscal and financial subordination relationship of the unit to be audited, determine its auditing dominion; if failing, its auditing dominion shall be determined in accordance with the supervision and administration relationship of the State-owned assets.

Audit supervision on enterprises and institutions invested by two or more investment bodies of the State-owned assets shall be rendered by the audit office which has auditing dominion over the chief investment body.

Article 27
Audit offices at all levels shall, in accordance with the determined auditing dominions, render audit supervision and special audit investigations.

Chapter IV Powers of Audit Offices

Article 28
At the period when the audit office imposes audit supervision according to law, the unit to be audited shall, in accordance with the time limit and requirements prescribed by the former, provide the former with the relevant information and materials on fiscal or financial revenues and expenditures.

The above-mentioned information and materials include the unit's accounts in banks and non-bank financial institutions, audit reports produced by social audit agencies, capital verification reports, assets valuation reports as well as other reports relating to the merging, spliting and liquidation of enterprises and institutions.

Article 29
Finance, taxation and other departments of the corresponding people's government shall submit the following materials to the audit office:

1. budget approved by the corresponding people's congress, budgets of all corresponding departments approved by the finance department of the corresponding people's government, annual revenue plan of the budget revenue collection department and budgets of their subordinate units approved by all corresponding departments;
2. monthly and annual reports and final accounts on the performance of corresponding budget revenues and expenditures and the fulfillment of revenue plans of budget revenue collection departments, final accounts of revenues and expenditures of extra-budgetary funds, and revenues and expenditures of compensated fiscal funds;
3. comprehensive annual statistical statements on finance and taxation work, briefings, and rules, regulations and system relating to finance, budget, taxation, financial affairs and accounting; and
4. draft final accounts of departments compiled in summary by all corresponding departments.

Article 30
The audit office has the power to inspect the financial accounting system for managing fiscal and financial revenues and expenditures through electronic computers by the unit to be audited. The latter shall provide the former with the electronic data and relevant information of fiscal and financial revenues and expenditures stored and processed by electronic computers.

Article 31
In carrying out investigations among units and persons concerned of issues relating to the item of audit, the audit office has the power to inquire about all deposits in financial institutions by the unit to be audited, and obtain documentary evidences; the financial institutions concerned shall provide assistance and documentary evidences.

In making inquiry about the deposits in financial institutions by the unit to be audited, the audit office shall carry the inquiry notice signed by the person responsible for the audit office at or above the county level and has the obligation to keep secret.

Article 32
In the case where the audit office has the facts to believe that the unit to be audited may transfer, conceal, alter or destroy accounting documents, books or statements or any other information relating to fiscal or financial revenues or expenditures, it has the power to take measures for collecting evidences and, when necessary and with approval of the person responsible for it, temporarily to seal up for safekeeping accounts, books and other materials relating to fiscal or financial revenues and expenditures of the unit to be audited which do not conform to the regulations of the State.

Article 33
At the period when the audit office renders audit supervision according to law, no unit to be audited may transfer or conceal the following assets acquired in violation of the regulations of the State:

1. financial allocations, bank loans and materials acquired through falsification and cheating;
2. assets acquired through enjoyment of such preferential policies as the State subsidy, assistance, premium, interest exemption, tax reduction, tax exemption and tax refund in violation of the State;
3. money and goods in kind collected from other persons in violation of the State;
4. benefits acquired through disposing of the State-owned assets in violation of the State; and
5. other assets acquired in violation of the regulations of the State.

The audit office may, in accordance with legal procedures, notify the department which is responsible for administering the allocation of funds or for supervision over the use of funds of the unit to be audited to temporarily suspend the allocation of funds directly related to the acts of fiscal or financial revenues and expenditures in violation of the regulations of the State and to suspend the use of the funds already allocated.

Article 34
The audit office may, if, in rendering audit supervision according to law, finding embezzlement, abusive use or illegal use of loan funds on the part of the unit to be audited in violation of the regulations of the State, suggest the State-owned financial institution concerned to take corresponding measures to ensure the safety of the loan funds.

Article 35
The audit office may issue circulars about their audit results on the items of audit to the relevant governmental departments and put forth opinions and suggestions on related issues.

The audit office may publish audit results to the public on the following items of audit:

1. those as required to be published to the public by the corresponding people's government or superior audit offices;
2. those which attract public concern of society; and
3. audit results of other items to be published prescribed by laws and regulations.

Chapter V Audit Procedures

Article 36
An audit office shall, in accordance with laws, regulations and other relevant provisions of the State and the requirements of the corresponding people's government and superior audit offices, determine the key items of annual audit work and produce the annual plan of audit items.

Article 37
An audit office may, if intending to begin an auditing according to law, serve the audit paper in person or by post. In the case of personal service, the date of signature on the receipt annotated by the unit to be audited shall be the date of service; and in the case of postal service, the date of annotated on the receipt shall be the date of service.

Article 38
An auditor shall render auditing in accordance with the following provisions:

1. to prepare the audit working paper, record completely and accurately the matters found in auditing, and annotate their sources.
2. to collect and obtain original information, related documents and materials capable of proving the items of audit; when it is impossible or not suitable to obtain, such methods as duplication and photography may be employed to obtain evidences.
3. to record the contents of meetings and conversations relating to the items of audit or to require the recorded materials of meetings in accordance with the needs of the audit work.

Article 39
The documentary evidences obtained by the auditor from investigations among relevant units and persons shall bear the signatures or seals of the providers; if failed, the auditor shall give reasons therefor.

Article 40
The audit group shall, prior to the submission of the audit report to the audit office, solicit opinions from the unit to be audited. The latter shall, within 10 days following the date of receipt of the audit report, submit its written opinions. No submission of written opinions within the above-mentioned time limits shall be regarded as having no objection.

The audit group shall examine the opinions of the unit to be audited on the audit report, further verify the information, make necessary modifications in the audit report in accordance with the verified information, and submit the audit report and the written opinions of the unit to be audited to the audit office.

Article 41
The audit report submitted by the audit group shall, after being reviewed by the special department or persons of the audit office, be examined and handled by the audit office in accordance with the following provisions:

1. In the case where no act in respect to fiscal and financial revenues and expenditures violates the regulations of the State, it shall make a judgment on the item of audit and issue the auditor's comments. In the case where an act in respect to fiscal or financial revenues and expenditures violates the regulations of the State and the circumstances are markedly minor, it shall point out and order the violator to make correction on his own, make judgment on the item of audit, and issue the auditor's comments.
2. In the case where an act in respect to fiscal or financial revenues and expenditures violates the regulations of the State and shall be treated or punished according to law, it shall, in addition to judgment on the item of audit and issuance of the auditor's comments, make the audit decision on treating or punishing the violation of fiscal or financial revenues and expenditures within the scope of legitimate authority.
3. The audit office shall, if believing that an act violating the regulations of the State in respect to fiscal or financial revenues and expenditures shall be treated or penalized by the relevant competent authority, make the written auditing recommendations and submit its proposals on treatment and penalties to the relevant competent authority.

Article 42
The audit office shall, if, in auditing, believing that an item under auditing infringes on the State's or public interests and does not have clear basis for treatment or punishment, report it to the corresponding people's government and the superior audit office.

Article 43
The audit office shall, after making an audit decision, serve it on the unit to be audited for execution and, if the execution of the audit decision needs the assistance of the relevant competent department, produce the notice for assistance in the execution of the audit decision.

Article 44
The unit to be audited shall execute the audit decision and make the payment due to special accounts in accordance with the finance management system and the relevant regulations of the State. All illegal gains confiscated and fines according to law shall be turned over to the State Treasury.

The unit to be audited or the relevant competent department assisting in execution shall, within 30 days from the date following entery into force of the audit decision, submit in writing the execution of the audit decision to the audit office.

Article 45
The audit office shall, within 3 months following the date of entery into force of the audit decision, inspect the execution of the audit decision. Where the unit to be audited fails to execute the audit decision as required within the specified time limit, the audit office shall order it to execute the decision and, if the unit further fails in execution, apply to a people's court for enforcement.

Article 46
Anyone who disagrees with the audit decision made by the local audit office shall file an application with the audit office at the next higher level or the corresponding people's government for reconsideration. Anyone who disagrees with the audit decision made by the National Audit Office shall first file an application with the National Audit Office for reconsideration.

The audit office shall, within 2 months following the date following receipt of the application for reconsideration, make the reconsideration decision. Under special circumstances, the period of time for reconsideration may be appropriately extended; however, the longest extention may not exceed two months. The audit office shall in time inform the applicant for reconsideration of the extended period of time and the reasons.

Article 47
The audit office shall, in accordance with the relevant regulations of the State, establish and perfect the audit archive systems for the items of audit, investigation, reconsideration and appeal acceptance.

Article 48
The National Audit Office shall prescribe the contents and forms of such audit documents as the audit notice, audit report, auditor's comment and audit decision.

Chapter VI Legal Liability

Article 49
In the case where an unit to be audited, in violation of the provisions of the Audit Law, refuses or delays to provide information or materials relating to the item of audit, or refuses or hinders inspection, the audit office shall order it to make correction and may give criticism in a circular and a warning; if it fails to make correction, responsibility shall be demanded for in accordance with the following provisions:

1. The unit to be audited shall be imposed a fine not exceeding 50,000 yuan;
2. The audit office shall, if believing that the leading person directly responsible or other person directly responsible of the unit to be audited shall be given administrative or disciplinary sanctions, submit its proposals to the relevant department and unit for the administrative or disciplinary sanctions; and
3. If a crime is constituted, criminal responsibility shall be demanded for according to law.

After its responsibility is demanded for in accordance with the provisions of the preceding paragraph, the unit to be audited must be subject to the audit supervision of the audit office.

Article 50
The audit office shall, if finding that the unit to be audited transfers, conceals, alters or destroys any accounting documents, books or statements or any other information or materials relating to fiscal or financial revenues and expenditures, be entitled to stop it, order it to hand out and to make correction or take remedial measures and measures prescribed in Article 32 of this Regulation.

Article 51
The audit office shall, if finding that the unit to be audited transfers or conceals illegally acquired assets, be entitled to stop it or apply to the people's government or the relevant competent department to stop it, or apply to a people's court to take property preservation measures according to law.

Article 52
As regards the acts violating the budget and other acts of fiscal revenues and expenditures violating the regulations of the State of all corresponding departments (including units directly under them) and the governments at the lower level, the audit office shall, within the scope of legitimate authority and in accordance with the circumstances, dispose of the illegally acquired assets in accordance with the following provisions:

1. to order the violator to pay or turn over, within the prescribed period of time, the fiscal revenues due;
2. to order the violator to return, within the prescribed period of time, the State-owned assets seized;
3. to order the violator to return the illegal gains within the prescribed period of time;
4. to order the violator to offset or adjust the related accounting items; and
5. to take other correction measures.

Article 53
In the case where a unit to be audited commits an act of financial revenues and expenditures which violates the regulations of the State, the audit office shall, within the scope of legitimate authority, order it to make correction, give a warning thereto and criticism in a circular, and dispose of the illegally acquired assets in accordance with the provisions of Article 52 of this Regulation and, if there are illegal gains therefrom, impose thereon a fine exceeding one time and not exceeding five times of the illegal gains or, if there are no illegal gains therefrom, impose thereon a fine not exceeding 50,000 yuan. The audit office shall, if believing that the leading person directly responsible and other persons directly responsible of the unit to be audited shall be given administrative or disciplinary sanctions, submit its proposals for administrative or disciplinary sanctions to the relevant department or unit.

In the case where laws and administrative regulations have the provisions for treating and penalizing the acts of financial revenues and expenditures of the unit to be audited which violate the regulations of the State, those provisions shall prevail.

Article 54
In the case where an audit office submits its proposals for treating or penalizing the unit to be audited or for the administrative or disciplinary sanctions on the leading person directly responsible and other persons directly responsible for the unit to be audited, the relevant department or unit shall, without delay, make a decision according to law, and inform the audit office of the results in writing.

Article 55
In the case where an auditor abuses power, practises favourism or other irregularities, or neglects his duty, criminal responsibility shall be demanded for according to law if a crime is constituted, and administrative sanction shall be given according to law if no crime is condstituted.

Money and property acquired by an auditor in violation of law and discipline shall be recovered, confiscated or ordered to pay compensation according to law.

Chapter VII Supplementary Provisions

Article 56 This Regulation shall enter into force on the date of promulgation.