STANDARD ON AUDITING GOVERNMENT UNDERTAKINGS
(DRAFT SUBMITTED FOR REVIEW)
Article 1 This standard is formulated in accordance with the Audit Law of the People’s Republic of China, the Basic Government Audit Standards of the People’s Republic of China and other relevant regulations in order to standardize audit of government undertakings by audit institutions, ensure audit quality and clarify audit responsibilities.
Article 2 The term “undertakings” mentioned herein refers to China’s government undertakings at various levels.
Article 3 Audit institutions shall abide by this standard when auditing revenues and expenditures of the undertakings.
Article 4 Audit institutions shall review the truthfulness, completeness and compliance of the budgets and financial plans prepared by the
undertakings as well as the lawfulness of the procedure of submitting budgets for review and approval and adjusting budgets.
Article 5 When auditing budgetary implementation of the undertakings, audit institutions should determine the truthfulness and compliance of such budgetary implementation.
Article 6 When auditing the undertakings’ revenue from subsidies of
public finance, audit institutions shall determine whether departments of public finance and higher-level authorities reply to budget applications and pay
budgetary appropriations in a timely and complete manner and in compliance with laws and regulations.
Article 7 When auditing various charges made by the undertakings,
audit institutions shall determine whether such charges are lawful and whether revenues that should be managed by special extra-budgetary accounts are handed in time and full.
Article 8 When auditing the undertakings, audit institutions shall
determine the truthfulness and compliance of various taxes and rates that should by paid by the audited bodies.
Article 9 When auditing assets of the undertakings, audit institutions shall review the truthfulness, completeness and lawfulness of cash, bank deposits, bills receivable, accounts receivable, prepayments, other
receivables, materials, finished goods, outward investments, fixed assets and intangible assets.
Article 10 When auditing liabilities of the undertakings, audit institutions shall review truthfulness, completeness and lawfulness of borrowings,
accounts payable, receipts of advances, other payables and various amounts to be paid.
Article 11 When auditing net assets of the undertakings, audit
institutions shall review truthfulness and completeness of operating funds,
fixed funds, special funds and balances as well as the accuracy of accounting treatments adopted by the audited bodies.
Article 12 When auditing revenues of the undertakings, audit institutions shall review truthfulness and lawfulness of the audited bodies’ revenues from public finance subsidy, subsidies from higher-level undertakings, special
appropriations, undertaking income, operating income, amounts handed in by subordinate undertakings and other sources of income as well as determine whether such incomes are uniformly included in the audited bodies’ budgetary management, whether revenues are recognized in time and full and whether relevant accounting treatments are correct.
Article 13 When auditing expenses of the undertakings, audit institutions shall review truthfulness and lawfulness of operating funds and special funds appropriated outward, special expenses, undertaking expenses, operating expenses, costs, sales tax, amounts handed in to higher-level undertakings, subsidies to subordinate undertakings and capital construction expenses from self-financed funds brought forward.
Article 14 When auditing the preparation, summarization and
submission of final accounts and financial statements of the undertakings, audit institutions shall review the truthfulness and lawfulness of such final
accounts and financial statements, objectivity and correctness of the process of preparing and summarizing final accounts and financial statements and the consistency of the format, content and timing adopted for submission of final accounts and financial statements with relevant government stipulations.
Article 15 When conducting VFM audit of the undertakings, audit
institutions shall assess economy, efficiency and effectiveness of the audited bodies in collecting, distributing, utilizing and managing funds in accordance with relevant economic and social indicators and determine the social and economic benefits brought to the development of the audited bodies through the utilization of operating funds.
Article 16 When auditing the undertakings, audit institutions shall review the audited bodies’ implementation of audit decisions and audit opinions produced by the audit institutions in previous years and determine the
timeliness and completeness of such implementation.
Article 17 When auditing the undertakings, audit institutions may
conduct special audits or special audit investigations of the collection,
distribution, utilization and management of funds from public finance and other sources and other relevant issues.
Article 18 When auditing the undertakings, audit institutions shall pay attention to the new situations and new requirements emerging from China’s economic reform and determine audit priorities, approaches and methods accordingly.
Article 19 When auditing undertakings that practice entrepreneurial management, production /operation units that are subordinate to the
undertakings but enjoy independent accounting treatments and projects that are operated by undertakings and accept other organizations’ requirements
for return on investment, audit institutions shall follow the Standard on Auditing State-owned Enterprises (Trial Version). When auditing capital construction funds, social securities funds and application of foreign funds, audit
institutions shall follow corresponding standards.
Article 20 The authority to interpret this Standard rests with the CNAO.
Article 21 This Standard shall come into effect as of its date of
promulgation when the Practice Directions of Audit institutions for Auditing
Operating Funds (Audit/Administrative/Issue Ref [1996] 349) promulgated on December 13 1996 shall be abolished simultaneously.