Laws of the Guangdong Province

Regulations of Shenzhen Special Economic Zone on the Auditing Supervision to Projects with Governmental Investments

 (Adopted at the thirty-second Meeting of the Standing Committee of the Third Shenzhen Municipal People' s Congress on June 25, 2004)

Chapter ¢ñ General Provisions

Article 1 In order to strengthen the auditing supervision to projects with governmental investments, normalize the investments, raise investing efficiency, promote scientific decision-making and make full use of the social and economic benefits of projects with governmental investments, these regulations are formulated according to the provisions of the Law of the People' s Republic of China on Auditing and other relevant laws and regulations, and combining with the actual situations of Shenzhen Special Economic Zone.

Article 2 These regulations shall be applicable to the preceding auditing to projects with governmental investments, the execution auditing to project budget and the auditing of returns to completed projects, and shall be applicable to the auditing supervision to the truthfulness, legality and beneficial results of financial receipts and expenditures of the constructing, building, reconnoitering, designing, construction controlling and purchasing units involved in project constructions which are conducted by auditing organizations under municipal or district people' s governments.

The project with governmental investments (hereinafter refers to as project) mentioned in these regulations refers to a construction project with fixed assets investment which makes use of government' s budgetary funds, land development funds or other financial capital.

Article 3 Auditing organizations shall strengthen the supervision and inspection to the professional work involved in project auditing which are undertaken by social audit bodies, consulting agencies of construction cost, internal auditing agencies and other units.

Article 4 If a project' s investment is mainly or totally of the municipal level, it shall be subjected to the auditing supervision conducted by the municipal auditing organization. If a project' s investment is mainly or totally of a district level, it shall be subjected to the auditing supervision conducted by a district auditing organization. If there is dispute on the jurisdiction of auditing supervision, the municipal auditing organization shall determine which organization shall exercise the jurisdiction.

The municipal auditing organization may entrust a district auditing organization with auditing a project within its jurisdiction, and may directly audit a project within the jurisdiction of a district auditing organization.

Article 5 Auditing organizations shall independently exercise their functions and powers of auditing supervision to projects according to law, and shall be subjected to no interference by any administrative organ, public organization or individual.

The outlay required by an auditing organization to perform its functions and duties of auditing supervision to projects shall be arranged by the people' s government at the corresponding level and shall be included into the financial budget.

Article 6 Government departments, and all other units and individuals relevant to project constructions shall cooperate with and assist auditing organizations in the auditing supervision to projects.

Article 7 Auditing organizations shall exercise auditing supervision to projects according to the following rules:

 (1) auditing organization shall exercise comprehensive auditing to the project whose amount of invested capital goes beyond the limit set by the municipal or a district people' s government, or which affects the economy and people' s livelihood within the area under the auditing organization' s jurisdiction;

(2) to other projects, auditing organizations shall audit their final accounts when they are finished, and shall exercise preceding audit to projects or execution audit to project budget selectively according to the requirements of playing emphasis on priorities, optimizing procedures and raising efficiency, and on the basis of the project' s characters, and the annual auditing plan.

(3) to an emergency project with governmental investments, auditing organization shall conduct synchronous follow-up auditing.

Article 8 Auditing organizations shall work out the annual project auditing plan according to the provisions of Article 7 of these regulations, and inform its content and adjustment to relevant departments and the audited units. Auditing supervision to projects shall be conducted according to the plan.

Article 9  Every auditing organization shall solicit opinions from the audited unit about the project' s auditing report. The time spent for soliciting opinions shall not be counted in the auditing period limit.

Article 10 The auditing decision made by an auditing organization shall be enforced by the audited unit, and relevant departments, units and individuals.

Other conclusive auditing documents made by an auditing organization shall have binding force on the audited unit, and relevant departments, units and individuals.

Article 11 The conclusive auditing document issued by an auditing organization shall record the confirmed facts, and the reasons and basis of determination.

If an audited unit dissents from a conclusive auditing document, it shall put forward its objection to the auditing organization in writing.  The auditing organization shall make a written reply to the audited unit within 30 days from receiving its objection.

Article 12 The municipal and district people' s governments shall report the results of auditing supervision to projects to the standing committees of people' s congresses at the corresponding level every year.

Auditing organizations shall circulate the results of project auditing to relevant departments according to relevant regulations, and may publicize them to the society.

When an auditing organization circulate or publicize an auditing result, it shall keep the State' s secretes and keep the business secretes for the audited unit according to law, and shall observe relevant provisions of the State.

Article 13 Auditing organizations and auditors shall be object and fair, practical and realistic, clean and honest, and shall keep secretes when dealing with auditing matters.

Any auditor who undertakes the specific professional work of auditing shall be familiar with relevant provisions of laws, regulations and policies, and shall have necessary professional knowledge and skills.

Article 14  An auditing organization may hire persons with relevant professional knowledge or relevant professional institutes to assist it in project auditing on the basis of its working needs. Auditing organizations shall strengthen the supervision and administration to their hired persons and institutes.

No auditing organization may charge any fees from the audited unit in any form.

Chapter ¢òPreceding Auditing to Projects

Article 15 The preceding auditing to projects mentioned in these regulations refers to the kind of auditing supervision which is conducted by an auditing organization to the truthfulness, legality, efficiency and consistency of a project' s first-phase preparations, first-phase capital operations, construction procedures and budget of construction chart (including the gross budget, item budget and single budget of project) before the project starts construction.

Article 16  When a competent department assigns a project plan, it shall make a copy of the scale and standards of the project' s investments, investments arrangement of the year, construction objects, general estimate and sub-item  estimate to the auditing organization.

Article 17  If a project is listed in the annual auditing plan and shall be subjected to preceding auditing, the construction unit shall submit the following materials according to the requirements of auditing organization:

 (1) the examination and approval documents of project and plan, the project' s general estimate and sub-item estimate;

 (2) relevant materials concerning the project' s first-phase financial expenditure;

 (3) the budget of construction chart (sub-item budget or single project' s budget) and the basis on which it is worked out;

 (4) other materials relevant to the project' s preceding auditing.

The sub-item budget (estimate) mentioned in these regulations refers to the budget (estimate) for single section or item of a project which is worked out according to the project' s construction objects and the plan of bids invitation and submission.

Article 18 The main items of preceding auditing to projects include the followings:

 (1) whether the project' s construction scale, objects and standards accord with the approved project plan;

 (2) whether the project' s general budget and sub-item budget accord with the general estimate and sub-item estimate;

 (3) the truthfulness and legality of the project' s first-phase work, such as land expropriation and removal, reconnaissance, design, construction control and consultation, and the project' s operations of capital.

Article 19  When an auditing organization conduct preceding auditing to a project, it shall issue a conclusive auditing document within 30 days from the audited unit submit all the materials stipulated in Article 17 of these regulations, and shall serve it to the audited unit, examination and approval authority of the project and other relevant departments.

Chapter ¢óExecution Auditing to Project Budget

Article 20 The execution auditing to project' s budget mentioned in these regulations refers to the kind of auditing supervision which is conducted by an auditing organization to the truthfulness, legality and efficiency of the matters involved in the project' s construction, such as the construction cost, on-the-spot certification, alteration of design, purchase of equipments and materials and settlement, and of the project' s relevant financial revenue and expenditure.

Article 21  When an auditing organ conduct execution auditing to a project' s budget, the audited unit shall submit the following materials according to its requirements:

 (1) the materials stipulated in Article 17 of these regulations;

 (2) relevant documents of bids invitation and submission, report of tender comment and contract text;

 (3) relevant materials concerning the construction cost in project management, including the purchasing list of equipments and materials, list of project' s load calculation, alteration of design, on¨Cthe-spot certification, relevant instructions and summaries of meetings;

 (4) the materials of the project' s cost settlement, including the written letter of construction cost, written letter of project' s load calculation, relevant documents of valuation, and basis of valuation;

(5) other materials relevant to the execution auditing to the project' s budget.

Article 22 In the event that the alteration of design or on-the-spot certification results in the budget exceeding the sub-item estimate or general estimate, the construction unit shall report to the auditing organization for record in writing within 5 days from the alteration of design or on-the-spot certification.  The auditing organization shall audit the alteration of design or on-the-spot certification when the project is settled. The main items of auditing supervision to the alteration of design or on-the-spot certification include the followings:

 (1) whether it accords with legal examination and approval procedures;

 (2) the reason and responsibility of the alteration or certification ;

 (3) the truthfulness and legality of the altered object and work load of the project' s construction;

 (4) whether the valuation accords with the provisions of bid document, contract and other document of valuation.

In the event that the alteration of design or on-the-spot certification results in the budget exceeding the general budget or sub-item estimate over 5 percent and the amount is over 500,000 yuan, the construction unit shall inform the auditing organization to send persons to witness it on the spot. The auditing organization shall send persons to be on the spot in time and confirm it with 10 days.

Article 23 The main items of auditing supervision conducted by an auditing organization to a project' s settlement include the followings:

 (1) whether the project' s cost is overestimated, calculated fraudulently, or falsely reported;

 (2) whether the project' s work load is increased because of repeat computation;

 (3) whether the project' s construction object is changed arbitrarily to increase construction cost;

 (4) whether the single project' s settlement accords with the single project' s budget.

Auditing organization shall conduct settlement auditing to a single project and issue a conclusive auditing document within 45 days from the audited unit submit all the settlement materials. If the settlement of single project (sub-item settlement) exceeds the corresponding budget, the auditing organization shall suggest the government at the corresponding level, relevant departments and units to investigate for the responsibility, and shall defer appropriating the funds to pay the excessive part.

Article 24  If a project is required to be audited according to the annual project auditing plan, the construction unit shall make agreement with the other party on reserving a certain portion of money unpaid till the settlement auditing finishes when it makes a contract relevant to the project.

Article 25  An auditing organization shall conduct the following items of auditing supervision to the financial revenue and expenditure of the audited unit happened during the execution of project budget:

(1)the total calculation of construction cost;

(2) the accounting of investments waiting for appropriation;

(3) the calculation of single project' s cost .

When an auditing organization audits the financial revenue and expenditure, the auditing and dealing procedures shall accord with the provisions of relevant laws and regulations of the State.

Article 26 Auditing organizations may examine the implementation of financial policies at various links of project design and construction, and the establishment and enforcement of the project' s systems of internal control.

Chapter ¢ô Auditing of Returns to Completed Projects

Article 27 Every project shall be subjected to auditing of returns when it is finished construction.

Article 28 The construction and building units relevant to a project construction shall submit the following materials to the auditing organization within 90 days from the checkup for acceptance of a completed project:

 (1) the materials stipulated in Article 21 of these regulations;

 (2) the materials of completion, including the chart of completed project and the report on checkup for acceptance of the completed project;

 (3) the forms reporting the final accounts of the completed project;

 (4) other materials relevant to the auditing of returns to the completed project.

Article 29 The main items of auditing of returns to completed projects include the followings:

 (1) the truthfulness and legality of the forms reporting the final accounts of the completed project and the description letter of its final accounts;

 (2) the scale of project construction, the controlling over total investment, the availability of capital and its influence on the project;

 (3) the expenditure for land expropriation and removal and its management;

 (4) the truthfulness and legality of the usage of construction funds, and whether there is any circumstance of transference, embezzlement or appropriation of construction capital, or illegal collection of money, illegal apportion or charge;

 (5) the truthfulness and legality of the accounting of construction and installation projects, the accounting of investments on equipments, the listed expenditure and allocation of the investments waiting for appropriation and other listed expenditure of investment;

 (6) the truthfulness, legality and integrality of the assets delivered for use;

 (7) the truthfulness and legality of the source, distribution, turning in, retaining and usage of the income of project' s basic construction; 

 (8) the truthfulness of the achievement of targets relevant to the project investment and the legality of the allocation of the surplus capital;

(9) the truthfulness of the work load of a project' s remaining part, and the truthfulness of money reserved for paying the project.

Article 30 When an auditing organization conduct auditing of returns to a completed project, it shall issue a conclusive auditing document within 45 days from the audited unit delivering all the materials prescribed in Article 28 of these regulations.

If it is necessary to extend the auditing period, the extension shall be approved by the leading official of the audit organization. The extended time shall not exceed 15 days.

Article 31  No project may be subjected to the property registration and transference until it has been subjected to the auditing of returns when it is completed and got the official reply of approval to the final accounts of finance.

Chapter ¢õPerformance Auditing

Article 32 The performance auditing mentioned in these regulations refers to a kind of special auditing which is conducted by an auditing organization to a project' s economical efficiency, construction efficiency and effect on the basis of auditing the truthfulness, legality of its relevant economic activities, and jointly with the analysis, appraisal and suggestions for improvement.

Article 33 When an auditing organization conducts performance auditing, the audited unit shall submit the following materials according to its requirements:

 (1) the researching report of the project' s feasibility, the statement of environmental impact assessment, the examination and approval document of y estimate, and the examination and approval document of establishing the project issued by the competent department of planning;

 (2) the document of bids invitation and submission and the document of deciding on a bid;

 (3) the design contract, construction chart, and construction contract;

 (4) the financial materials ,such as the material of opening a bank account, accounting voucher, accounting book and accounting statement form;

(5) other materials relevant to the performance auditing.

Article 34 The main items of performance auditing include the followings:

 (1) economical efficiency , including the quality, input and general cost controlling of every link of a project, such as the project' s establishment, the invitation of bids, design and construction;

 (2) efficiency, including the administrative policies, principles, systems, measures, organizational structures, utilization of funds and implementation at every link of a project, such as the project' s establishment, the invitation and submission of bids, design and construction;

(3) effect, including a project' s anticipated aim, economic and social benefit, and the synchronism and effectiveness of environmental protection equipments and project construction.

Article 35 When an audit organization conducts performance auditing, the units of assessment, reconnaissance, design, construction and construction control shall cooperate with it in the auditing work.  

Article 36 An audit organization shall exercise auditing and evaluation to the matters of a project' s feasibility, investment management, utilization of funds and effect of investment, and shall submit a report about the result of performance auditing to the government at the corresponding level. The report shall be considered as a reference and basis for the government to make a decision of investment and administer the investment.

If an audit organization thinks it is necessary for it to put forward opinions and suggestions for improvement, it may issue a written auditing opinion to the audited unit besides making evaluations to the audited matters. The audited unit shall make correction and improvement to increase investment benefits according to the auditing opinions and suggestions.

Chapter ¢ö Legal Responsibilities

Article 37 Any audited unit which violates the provisions of Article 17, Article 21, Article 28 or Article 33 of these regulations failing to provide relevant materials as the auditing organization requiring or providing false materials shall be prosecuted for responsibility by the audit organization according to the Article 49 of the Regulations for the Implementation of the Law of the People' s Republic of China on Auditing.

Article 38 If the fault of a reconnoitering unit or a designing unit causes a project' s important budget out of control or causes the lost of investment, the auditing organization shall report the circumstance to the government and order the construction unit or the project' s entity to investigate the compensation liability of the reconnoitering or designing unit according to law. If the circumstance is serious, the auditing organization shall suggest relevant department to degrade the unit' s qualification or revoke its qualification certificate according to law.

Article 39 If a construction unit arbitrarily expands the scale of construction, increases the grade of architectural ornament or goes beyond the purchasing limit of equipments, or construct an unplanned project, the auditing organization shall suggest relevant department to impose administrative sanctions to the person in charge who is directly liable and other persons directly liable.

If the alteration of design or on-the-spot certification is not examined and approved through legal procedures, the auditing organization shall suggest relevant department to impose administrative sanctions to the person in charge who is directly liable and other persons directly liable.

Article 40 If a project' s cost is over valuated in its settlement, the auditing organization shall order the construction or building unit to make correction. If the excessive money has already been paid, the auditing organization shall order the construction unit to take it back within a prescribed time limit, or directly confiscate the money by itself.

If the construction unit camps work, stints materials or misstates, or falsely claims a large amount of project' s cost  seriously, the auditing organization shall deal with it according to the provisions of the preceding paragraph, and prosecute the administrative responsibility of the unit liable or the person directly liable according to law.

Article 41  If a unit changes the usage of a project funds, or transfers, embezzles or appropriates the construction capital of the project, the auditing organization shall stop its activity and order relevant unit to take over the money within a prescribed time limit.

If relevant unit fails to calculate or turn in the tax or fees which ought to be calculated or turned in, the auditing organization shall supervise and urge the unit to make calculation or turn it in, and shall deal with the circumstance according to the provisions of relevant laws and regulations.

Article 42 An auditing organization shall order the unit liable to make correction if it commits an activity of misstating investment, falsely listing the construction cost or concealing the surplus capital according to relevant provisions of the State and current accounting system.

Article 43 If a consulting agency of construction cost commits any one of the following activities, the auditing organization shall suggest the competent administrative department of construction to impose administrative punishment to it according to the provisions of relevant laws and regulations:

(1) making a project' s construction cost or providing consultation beyond the business scope limit prescribed in its qualification certificate;

(2)  intentionally calculating a project' s construction cost  less or more than the correct amount;

(3) collaborating with others to misstate a project' s construction cost;

(4) changing, leasing or transferring its qualification certificate;

(5) working out a project' s settlement document in which the construction cost is 5 percent higher or lower than the properly calculated cost.

Article 44  If a matter is beyond the scope of an auditing organization' s legal functions and powers, it shall transfer the relevant evidence and materials to the relevant competent department.  The competent department shall deal with the matter in time according to law.

An auditing organization shall put forward an auditing suggestion to a relevant department if it considers that the problem found in auditing is within the department' s jurisdiction.   The relevant department shall make a decision in time according to law and inform the auditing organization in writing of the dealing result.

Article 45 Auditing organizations or other relevant departments shall deal with the other activities in violations of laws or disciplines found in project auditing according to the provisions of relevant laws, regulations and rules.

Article 46 If an auditing organization violates the provisions of the second paragraph of Article 14 of these regulations or fails to perform its functions and duties of auditing supervision in violation of the provisions of these regulations, its person in charge who is directly liable and other persons directly liable shall be imposed administrative sanctions according to law.

Article 47 Any auditor who commits any one of the following activities shall be imposed an administrative or disciplinary sanction. If an auditor' s act constitutes a crime, he shall be prosecuted for criminal responsibility.

(1) failing to withdraw initiatively with full awareness of the existence of an interest relationship between him and the audited unit or audited matter and resulting in harmful effect;

(2) disclosing the State' s secrete or a business secrete of the audited unit;

(3) extorting or taking bribe, or receiving unjust interest which may influence the impartial performance of his functions and duties;

(4) concealing the audited unit' s violation of the national financial laws and disciplines;

 (5) abusing his power, playing irregularity for favoritism or neglecting his duty;

(6) committing other activity of violating laws or regulations.

Article 48 If an audited unit i does not agree with an auditing decision made by the auditing organization, it may apply to the superior auditing organization or the people' s government at the corresponding level for reconsideration within 60 days upon receiving the auditing decision.

An administrative organization of reconsideration shall make a reconsideration decision within 60 days upon receiving a reconsideration application. If the circumstance is complicated and the reconsideration decision cannot be made within the prescribed time limit, the period may be extended appropriately after being approved by the leading official of the administrative organization of reconsideration. Both parties of the reconsideration application shall be informed of the extension of period. The time extended shall not exceed 30 days. 

If an audited unit does not agree with the decision of reconsideration, it may file a lawsuit to the people' s court within 15 days upon receiving the written reconsideration decision of auditing. If an audited unit fails to apply for reconsideration within the time limit, and refuses to perform the auditing decision, the auditing organization making the auditing decision may apply to the people' s court for coercive enforcement according to law.

Chapter ¢÷ Supplementary Provisions

Article 49 The municipal government may enact the detailed rules for implementation according to these regulations.