Laws of the People's Republic of China

Standing Committee of the National People's Congress

Order of the President of the People's Republic of China

No. 48

The Decision of the Standing Committee of the National People's Congress on Amending the Audit Law of the People's Republic of China, which was adopted at the 20th meeting of the Standing Committee of the 10th National People's Congress of the People's Republic of China on February 28, 2006, is hereby promulgated and shall come into force as of June 1, 2006.

President of the People's Republic of China, Hu Jintao

February 28, 2006

Decision of the Standing Committee of the National People's Congress on Amending the Audit Law of the People's Republic of China

(Adopted at the 20th meeting of the Standing Committee of the 10th National People's Congress of the People's Republic of China on February 28, 2006)

It is decided at the 20th meeting of the Standing Committee of the 10th National People's Congress of the People's Republic of China to amend the Audit Law of the People's Republic of China as follows:

1.

Article 1 shall be amended as: "This Law is formulated in accordance with the Constitution for the purpose of 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 society."

2.

A new paragraph shall be added to Article 3 as Paragraph 2: "An auditing organ shall carry out audit evaluation according to the laws and regulations on fiscal 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."

3.

Article 4 shall be amended as: "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 fiscal 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 conditions on the correction circumstance of the problems pointed out in the audit work report and the handling results to the standing committee of the people's congress at the same level."

4.

Article 10 shall be amended as: "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 offices shall carry out the audit work according to law based on the strength of the authorization by the auditing organ."

5.

A new paragraph shall be added to Article 15 as Paragraph 4: "For the appointment and dismissal of the person in-charge of the local auditing organ at any level, it is necessary to seek the opinions of the auditing organ at the next higher level in advance."

6.

Article 16 shall be amended as: "The auditing organ shall exercise audit supervision over the budget implementation, final settlement of accounts as well as other fiscal revenues and expenditures of all the other departments (including subordinate organs) at the corresponding level and the governments at lower levels."

7.

Article 17 shall be amended as: "The National Audit Office shall, under the leadership of the Premier of the State Council, exercise audit supervision over the implementation of central budget and other fiscal revenues and expenditures, and submit reports on audit results to the Premier of the State Council.

"The local auditing organ at any level shall, under the respective leadership of the governor of the province, chairmen of the autonomous region, mayor, prefect, 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 fiscal revenues and expenditures of the corresponding level, and submit reports on audit results to the people's government at the corresponding level and the auditing organ at the next higher level."

8.

Article 19 shall be amended as: "The auditing organ shall exercise audit supervision over the financial revenues and expenditures to the public institutions and organizations of the State and other public institutions and organizations that use fiscal capital."

9.

Article 21 shall be deleted.

10.

Article 22 shall be changed into Article 21 and amended as: "The audit supervision over the enterprises and financial institutions in which the State-owned capital play a controlling or leading role shall be prescribed by the State Council."

11.

Article 23 shall be changed into Article 22 and amended as: "The auditing organ 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."

12.

Article 24 shall be changed into Article 23 and amended as: "An auditing organ 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 commissioned by government "

13.

A new article shall be added as Article 25 : "An auditing organ shall, according to the relevant provision of the State, exercise audit supervision over the main principals of state organs and other entities belonging to the audit supervision object of the auditing organ according to law for their fulfillment of economic liabilities of fiscal revenues and expenditures, financial revenues and expenditures and other economic activities for their respective regions, departments or entities during the course of holding posts."

14.

Article 29 shall be amended as: "The entities subject to audit supervision object of the auditing organ according to law 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 organ."

15.

Article 30 shall be amended as: "If an entity under audit by a social audit institution is an object of audit supervision of the auditing organ according to law, the auditing organ shall be entitled to check the relevant audit report as issued by the aforesaid social audit institution in the light of the provisions of the State Council."

16.

Article 31 shall be amended as: "The auditing organ 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 fiscal or financial revenues and expenditures stored and disposed by computers and necessary computer technical documents, the conditions about the account opening at the financial institution, the audit report issued by the social audit institution as well as other materials about fiscal or financial revenues and expenditures. And the entity under audit shall not refuse or delay the submission 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."

17.

Article 32 shall be amended as: "The auditing organ shall, during the course of audit, be entitled to examine accounting vouchers, accounting books, financial accounting reports, the electronic data system of fiscal or financial revenues and expenditures operated and managed by computers as well as other materials and assets related to fiscal or financial revenues and expenditures. And the entity under audit shall not refuse to submit them."

18.

A new paragraph shall be added to Article 33 as Paragraph 2: "The auditing organ shall be entitled to inquiry the account of an entity under audit at the financial institution upon approval of the person in-charge of the auditing organ of the people's government at or above the county level."

And a new paragraph shall be added as Paragraph 3: "If the auditing organ can prove that an entity under audit deposits public money in the name of individuals, it shall be entitled to inquire about the deposits of the entity under audit in the name of individuals at the financial institution upon approval of the person in-charge of the auditing organ of the people's government at or above the county level."

19.

Paragraph 1 of Article 34 shall be amended as: "When an auditing organ carries out an audit, the entity under audit shall not transfer, conceal, alter or destroy its accounting vouchers, accounting books, financial accounting reports and other materials about fiscal or financial revenues and expenditures, nor may it transfer or conceal the assets it obtained in violation of the provisions of the State."

A new paragraph shall be added as Paragraph 2: "Where an entity under audit has the action to 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 have the right to 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 to the people's court."

Paragraph 2 shall be changed into two paragraphs as Paragraphs 3 and 4 and be amended as: "Where an entity under audit is carrying out any act relating to fiscal or financial revenues and expenditures in violation of the provisions of the State, the auditing organ shall be entitled to deter it. If the determent 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 relevant competent authorities to suspend the allotment of money directly related to the act of fiscal 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.

"The measures adopted by auditing organ as prescribed by the preceding two paragraphs shall not affect the lawful business operations or production and management activities of the entity under audit."

20.

A new article shall be added as Article 37 : "The 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."

21.

Article 37 shall be changed into Article 38 , and Paragraph 1 shall be amended as: "The auditing organ shall form an audit team in light of the audit matters as determined in the plan on the 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 with the audit notice."

A new paragraph shall be added as Paragraph 3: "The auditing organ shall enhance the efficiency of audit work."

22.

Article 38 shall be changed into Article 39 , and Paragraph 1 shall be amended as: "The auditors shall carry out their audit and obtain the prove materials through the way of 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 to the relevant entities or individuals."

23.

Article 39 shall be changed into Article 40 and be amended as: "An audit team shall, after carrying out the audit of matters, submit an audit report to the auditing organ. However, the audit team shall, prior to the submission of the audit report to the auditing organ, 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 together with the audit report to the auditing organ."

24.

Article 40 shall be changed into Article 41 and be amended as: "The 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 the opinions for disposition and punishment to the competent authorities in case the disposition or punishment should be imposed according to law on an act of fiscal or financial revenues and expenditures in violation of the provisions of the State.

"The auditing organ shall serve the audit report and audit decision of its own to the entity under audit and the relevant competent organ or entity. The audit decision shall enter into force as of the date of service."

25.

A new article shall be added as Article 42 : "If the auditing organ at the higher level considers that an audit decision made by an auditing organ at the 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."

26.

Article 41 shall be changed into Article 43 and be amended as: "If an entity under audit violates any provisions in this Law by refusing or delaying to provide the materials about audit matters, or providing untrue or incomplete materials, or refusing or impeding the inspection, the auditing organ may order it to make corrections, and may circulate a notice of criticism and give a warning. If the entity under audit refuses to make corrections, it shall be subject to liabilities according to law."

27.

Articles 42 and 43 shall be incorporated into one article as Article 44 and be amended as: "Where an entity under audit violates the provisions in this Law by transferring, concealing, altering or destroying accounting vouchers, accounting accounts, financial accounting reports or other materials related to fiscal or financial revenues and expenditures, or transferring or concealing the assets obtained by 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 according to law, the auditing organ shall put forward the suggestions for punishment, and the entity under audit or the organ at the higher level and the supervisory organ shall make a timely decision according to law, and notify the result to the auditing organ in written form; and if a crime is constituted, the entity under audit shall be subject to criminal liabilities according to law."

28.

Article 44 shall be changed into Article 45 and be amended as: "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 fiscal 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 dispose the matter in accordance with the relevant provisions on the unified national accounting system; and

(5)

Other disposal measures.

29.

Article 45 shall be changed into Article 46 and be amended as: "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."

30.

A new article shall be added as 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 turn over a sum of money that should be turned over according to law, 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, withhold the aforesaid money or take other disposal measures, and notify the results to the auditing organ in written form."

31.

A new article shall be added as Article 48 : "Where an entity under audit holds objection to an audit decision on financial revenues and expenditures made by the auditing organ, it may file an application for administrative reconsideration or lodge an administrative lawsuit according to law.

"Where an entity under audit holds objection to an audit decision on fiscal revenues and expenditures made by the auditing organ, it may request the people's government at the same level with the auditing organ for ruling, and the ruling made by the people's government at the same level shall be the final decision."

32.

Article 46 shall be changed into Article 49 and be amended as: "Where the fiscal or financial revenues and expenditures of an entity under audit break 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 the suggestions for punishment, and the entity under audit, the organ at the higher level or the supervisory organ shall timely make a decision according to law and notify the results to the auditing organ in written form.

33.

Article 48 shall be changed into Article 51 and be amended as: "Anyone who retaliates or makes a false charge against the auditor shall be given sanctions according to law; and shall be subject to criminal liabilities according to law if any crime is constituted ."

34.

Article 49 shall be changed into Article 52 and be amended as: "Where an auditor abuses his authorities, resorts to frauds for personal ends, neglects his duties or divulges national secrets or business secrets he has learnt about, he shall be punished according to law; and if a crime is constituted, he shall be subject to criminal liabilities according to law."

This Decision shall come into force as of June 1, 2006.

The Audit Law of the People's Republic of China shall be re-promulgated after the amendments have been made and the sequential numbers of the articles are correspondingly adjusted according to this Decision.