China boosts auditors' power as stimulus package spending prompts corruption concerns

21:43, February 21, 2010      

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China plans to audit all fiscal funds and all government-related construction projects, according to a newly-revised regulation, in a bid to ensure sound use of public money and effective prevention of corruption.

The regulation on the implementation of the Audit Law, issued Saturday by the State Council and to take effect on May 1, will help improve the country's auditing system, experts say. It will also boost supervision of areas with high incidences of corruption, such as construction projects.

Apart from state-owned companies and projects, auditors will be entitled to track and supervise fiscal funds use by other companies and projects that use public money, according to the regulation.

The regulation also makes it clear that construction projects whose government investment exceeds 50 percent, or those with less than 50 percent government investment but with construction and operation government controlled, must accept being audited.

"The track audit will be good for the legitimate and efficient use of public funds and will also provide clues for anti-corruption campaigns," said Mao Shoulong, public policy professor at Beijing's Renmin University.

In last year's government work report, Chinese Premier Wen Jiabao proposed auditing follow whenever public money is allocated.

Wen said auditors should be allowed to play a full role in detecting potential risks and guaranteeing economic security, as well as to fight against corruption.

"Audit work is of much significance to construction projects, where power-for-money deals often happen," said Wang Yukai, a professor with the Chinese Academy of Governance.

Over the past decade, a large amounts of public money has flowed into major construction projects nationwide, in the wake of the country's booming economy and rapid development. But frequent cases of bribery and corruption have caused wide public concern.

He Guoqiang, head of the Communist Party of China (CPC) Central Commission for Discipline Inspection (CCDI), the Party's internal anti-graft body, said in January that one of major tasks for the CCDI this year is to "severely deal with violations of laws and regulations in the construction area."

In the last two years, reconstruction funds for regions hit by the 2008 Sichuan earthquake and the 4 trillion yuan stimulus package to combat the global financial crisis have come under close public scrutiny, as both involve a large number of infrastructure and construction projects.

Premier Wen and other senior leaders have urged auditors to work on any projects in the post-quake reconstruction and the stimulus package.

China's National Audit Office (NAO) said in January 230 million yuan (33.7 million U.S. dollars) of reconstruction funds have been misused.

A total of 88 cases involving 198 Party officials misspending stimulus package money have been dealt with one year after its launch, an official with the CCDI said in December.

The anti-corruption issue has always ranked among the top three issues for Chinese netizens since launched an online survey in 2006. This year, up to 44 percent of voters believed "malpractice and corruption is a serious problem in the construction area."

Prof. Wang said regulation with explicit and detailed provisions will play a big role in containing and preventing corruption.

"Auditors can take more initiative," Wang said.

The regulation also specifies the extent of auditors' power and strengthens internal supervision among audit organs of various levels, which are well recognized by experts.

"Good procedures are indispensable for a good auditing system," Prof. Mao said.

The current Audit Law took effect in June 2006, after being passed by the Standing Committee of the 10th National People's Congress.

The range of publicly published audits is also expanding, according to the regulation. But listed companies must be notified of audit results five days before public announcement.

"It's good to see the regulation makes notable progress in normalizing operations, coordinating relations and many other details. I also expect further study and regulation on the self-evaluation of auditing work," Mao said.

(Xinhua correspondents Zha Wenye and Niu Qi contributed to the story.)

Source: Xinhua
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