(Adopted by the Ninth Session of the Standing Committee of the Eighth National People's Congress on August 31, 1994, promulgated by Order No.32 of the President of the People's Republic of China on August 31, 1994, and effective on January 1, 1995)

Contents

Chapter I General Provisions
Chapter II Auditing Organ and Auditor
Chapter III Duty of An Auditing Organ
Chapter IV Power of An Auditing Organ
Chapter V Procedure for Auditing
Chapter VI Legal Liability
Chapter VII Supplementary Provisions

Chapter I General Provisions

Article 1
Pursuant to the Constitution and for the purposes of strengthening the auditing supervision of the State, safeguarding the State's fiscal and economic order, promoting to keep government clean, and ensure the healthy development of the national economy, this Law is enacted.

Article 2
The State implements an auditing supervision system. The State Council and local people's governments at or above the county level shall set up auditing organs.

The fiscal revenues and expenditures of all departments of the State Council and of local people's governments at all levels and their departments, the financial incomes and expenses of State-owned financial institutions, enterprises and undertakings, as well as other fiscal revenues and expenditures and financial incomes and expenses which shall be placed under auditing supervision pursuant to this Law, shall be subject to auditing supervision in accordance with the provisions of this Law.

Auditing organs shall, according to law, to exercise auditing supervision in regard to the truthfulness, lawfulness and beneficial results of the fiscal revenues and expenditures or the financial incomes and expenses listed in the preceding paragraph.

Article 3
Auditing organs shall render auditing supervision in accordance with functions and powers and the procedures as provided by laws.

Article 4
The State Council and local people's governments at or above the county level shall each year submit reports of auditing work concluded by auditing organs on the implementation of budgets and other fiscal revenues and expenditures to the standing committees of the people's congresses at their respective levels.

Article 5
Auditing organs shall independently exercise the power of auditing supervision in accordance with the provisions of laws, and shall be subject to no interference from other administrative organs, social organizations or persons.

Article 6
Auditing organs and auditors shall be objective, impartial, practical and realistic, perform their official duties honestly, and keep secrets in dealing with auditing affairs.

Chapter II Auditing Organ and Auditor

Article 7
The State Council sets up the Auditing Administration which takes charge of the national auditing work under the leadership of the Premier of the State Council. Auditor-General is the chief administrative officer of the Auditing Administration.

Article 8
Auditing organs of people's governments of provinces, autonomous regions, municipalities directly under the Central Government, cities divided into districts, autonomous prefectures, counties, autonomous counties, cities not divided into districts and municipal districts are responsible for the auditing work in their administrative regions respectively under the leadership of governors, autonomous region chairmen, mayors, prefects, heads of counties or districts as well as the auditing organs at the next higher level.

Article 9
Local auditing organs at different levels are accountable to people's governments at their levels and to the auditing organs at the next higher level and make reports of their work, and their auditing works are guided mainly by the superior auditing organs.

Article 10
An auditing organ may, according to the need of its work, dispatch special auditors to the areas within its auditing dominion.

A special auditor shall, based on the authorization by the auditing organ, perform the auditing work according to law.

Article 11
The needed funds for an auditing organ to do its duty shall be included into the fiscal budget and guaranteed by the people's government at its level.

Article 12
An auditor shall have the professional knowledge and vocational ability required to perform the auditing work he or she is engaged in.

Article 13
An auditor whose interests are related to the unit to be audited or the item to be audited shall withdraw from his or her post.

Article 14
An auditor has the obligation to keep secret over the state secrets and commercial secrets of the unit to be audited he or she gets familiar with in performing his or her duty.

Article 15
Auditors are subject to the protection by law in performing their duties according to law.

No organization or individual may refuse or hinder auditors to perform their duties according to law, and may retaliate or revenge against the auditors.

Persons responsible for auditing organs are appointed or dismissed in accordance with the official procedures. A person responsible for an auditing organ may not be arbitrarily dismissed under the conditions where the person responsible does not violate laws and neglect his or her duty or does not fail to meet the requirements for holding the position.

Chapter III Duty of An Auditing Organ

Article 16
An auditing organ is to carry out auditing supervision over the implementation of the budget, final accounting of revenues and expenditures, and over the management and utilization of funds out of the budget of all departments at its level (including the directly subordinate units) and governments at its lower level.

Article 17
The Auditing Administration, under the leadership of the Premier of the State Council, is to carry out auditing supervision over the implementation of the central budget and submit reports of auditing conclusions to the Premier of the State Council.

Local auditing organs at different levels, respectively under the leadership of governors, autonomous region chairmen, mayors, prefects, heads of counties or districts and the auditing organs at the next higher level, are to carry out auditing supervision over the implementation of the budget of their levels, and submit reports of auditing conclusions to people's governments at their levels and the auditing organs at the next higher level.

Article 18
The Auditing Administration is to carry out auditing supervision over the financial incomes and expenses of the central bank.

Auditing organs are to carry out auditing supervision over assets, debts, losses and gains of the state-owned financial institutions.

Article 19
Auditing organs are to carry out auditing supervision over financial incomes and expenses of the state's undertakings.

Article 20
Auditing organs are to carry out auditing supervision over assets, debts, losses and gains of the state-owned enterprises.

Article 21
Auditing organs shall carry out planned and regular audits over the state-owned enterprises bearing vital significance to the national economy and the people's livelihood, over the state-owned enterprises which receive huge financial subsidy or incur large amount of losses, and over other state-owned enterprises as prescribed by the State Council or local people's governments at their levels.

Article 22
Auditing supervision over the enterprises with state-owned asset as the majority shares or with state-owned asset as the mainstream is to be prescribed by the State Council.

Article 23
Auditing organs are to carry out auditing supervision over the implementation of the budget and the final accounting of state construction projects.

Article 24
Auditing organs are to carry out auditing supervision over the financial incomes and expenses of social security funds, social donated funds and other relevant funds and capitals managed by governmental departments and social organizations as entrusted by governments.

Article 25
Auditing organs are to carry out auditing supervision over the financial incomes and expenses of projects funded by international organizations and foreign governmental assistance and loans.

Article 26
Except the auditing items as provided by this Law, auditing organs are to carry out auditing supervision in accordance with the provisions of this Law and relevant laws and administrative regulations over items which shall be audited by auditing organs as provided by other laws and administrative regulations.

Article 27
An auditing organ has the power to carry out specific auditing investigation into the related localities, departments and units on special items related to the state fiscal revenues and expenditures, and report the auditing investigation results to the people's government at its level and the auditing organ at the next higher level.

Article 28
An auditing organ shall determine its auditing dominion according to the fiscal and financial subordination relationship or the supervision and management relationship of the state-owned assets of an unit to be audited.

In case of disputes over auditing dominion among auditing organs, their common superior auditing organ shall define thereon.

A superior auditing organ may authorize its lower auditing organs to carry out the audit on the auditing items within its auditing dominion as provided in Paragraph 2 of Article 18 to Article 25 of this Law; a superior auditing organ may directly carry out audits on important auditing items in the dominion of its lower auditing organs, but unnecessary and overlap audits shall be prevented and avoided.

Article 29
All departments of the State Council, all departments of local people's governments, the state-owned financial institutions, enterprises and undertakings shall establish and perfect their internal auditing system in accordance with the relevant regulations of the state. The internal audits of all departments, state-owned financial institutions, enterprises and undertakings shall receive professional guidance and supervision from the auditing organs.

Article 30
The guidance, supervision and administration over the independently-operating social auditing agencies shall be conducted pursuant to relevant laws and the State Council's regulations.

Chapter IV Power of An Auditing Organ

Article 31
An auditing organ is entitled to demand an unit to be audited, according to regulations, to submit its budget or plans on financial incomes and expenses, the implementation of the budget, final account and financial reports, audit report issued by social auditing agencies and other materials related to the fiscal revenues and expenditures or financial incomes and expenses; the unit to be audited may not refuse, delay or provide false reports.

Article 32
An auditing organ, in carrying out auditing, has the power to check the accounting documents, accounting books, accounting statements and other materials related to the fiscal revenues and expenditures or financial incomes and expenses and assets of the unit to be audited; the unit to be audited may not refuse thereon.

Article 33
An auditing organ, in carrying out auditing, has the power to investigate units or individuals concerned on the issues related to the auditing item, and obtaining relevant documentary evidences; the units or individuals shall support and assist the auditing organ, report honestly on the conditions to the auditing organ and provide relevant documentary evidences.

Article 34
In the course of auditing by an auditing organ, the unit to be audited may not transfer, hide, alter or destroy accounting documents, accounting books, accounting statements and other materials related to fiscal revenues and expenditures or financial incomes and expenses; and may not transfer or hide assets it holds by violating state regulations.

An auditing organ has the power to prevent an unit to be audited from ongoing act(s) in respect to the fiscal revenues and expenditures or financial incomes and expenses which violate state regulations; where the prevention fails and with approval from the person responsible for an auditing organ at or above the county level, is to notify financial departments and relevant departments to temporarily suspend allocating capital which is directly related to the act(s) of fiscal revenues and expenditures or financial incomes and expenses which violate state regulations. Capital already allocated shall be temporarily stopped from being utilized. The adoption of such measures may not affect the normal business activities and production or operation activities of the unit to be audited.

Article 35
An auditing organ shall, when it believes an unit to be audited has followed the regulations of its competent superior department related to fiscal revenues and expenditures or financial incomes and expenses which run counter with laws and administrative regulations, suggest the relevant competent department to correct; where the relevant competent department fails to correct, the auditing organ shall request an organ which has the power to deal with for disposal according to law.

Article 36
An auditing organ may report auditing conclusions to relevant governmental departments or make auditing conclusions public.

An auditing organ shall, when reporting or making public auditing conclusions, safeguard state secrets and commercial secrets of the unit to be audited according to law, and abide by the relevant regulations of the State Council.

Chapter V Procedure for Auditing

Article 37
An auditing organ shall form auditing groups according to the auditing items in an auditing plan, and shall deliver an auditing notice to the unit to be audited three days prior to the commencement of auditing.

The unit to be audited shall support the work of the auditing organ, and provide necessary working conditions.

Article 38
Auditors shall carry out auditing in such ways as examining accounting documents, accounting books and statements, checking and reading documents and materials related to the auditing items, checking cash, inventory and valued securities, and investigating into relevant units and individuals, and acquire documentary evidences thereon.

When investigating into relevant units and individuals, auditors shall present and show their work credentials and duplicate copy of the auditing notice.

Article 39
An auditing group shall, after the completion of auditing over the auditing items, submit an audit report to the auditing organ. Prior to submitting the audit report to the auditing organ, opinions of the unit to be audited shall be solicited. The unit to be audited shall, within 10 days from the date of receiving the audit report, submit its opinions in writing to the auditing group or the auditing organ.

Article 40
The auditing organ shall examine the audit report, make assessment and evaluation on the auditing items, and work out an auditing opinion letters; and, within the confines of its official power, make an auditing decision and forward its opinions to the relevant competent department on handling and punishing of the act(s) of fiscal revenues and expenditures or financial incomes and expenses which violate the State's regulations and are subject to be handled or punished according to law.

The auditing organ shall, within 30 days from the date of receiving the audit report, deliver the auditing opinion letters and auditing decision to the unit to be audited and relevant units.

The auditing decision shall take effect as of the date of delivery.

Chapter VI Legal Liability

Article 41
An unit to be audited which, in violation of the provisions of this Law, refuses or delays to provide materials related to the auditing items, or refuses or hinders the inspection, shall be ordered to correct by the auditing organ, and may be criticized through open notice and given a warning; if failing to correct, responsibility shall be investigated according to law.

Article 42
An auditing organ, on finding that the unit to be audited, in violation of the provisions of this Law, transfers, hides, alters or destroys accounting documents, books, statements or other materials related to fiscal revenues and expenditures or financial incomes and expenses, has the power to prevent these violations.

If an unit to be audited commits one act or acts listed in the preceding paragraph, the auditing organ shall, when it deems that administrative penalties shall be applied to the leading person in charge of direct responsibility and other persons directly responsible according to law, make suggestions to apply administrative penalties, the unit to be audited, its superior organ or the supervisory organ shall promptly make an decision according to law; where their act(s) constitutes a crime, criminal responsibility shall be investigated by a judicial organ according to law.

Article 43
Where an unit to be audited, in violation of the provisions of this Law, transfers or hides assets illegally obtained, the auditing organ, the people's government or the relevant competent department, within the confines of its official power, has the power to prevent thereon, or applies to the court to adopt preservative measures.

If an unit to be audited commits one act or acts listed in the preceding paragraph, the auditing organ shall, when it deems that administrative penalties shall be applied to the leading person in charge of direct responsibility and other persons directly responsible according to law, make suggestions to apply administrative penalties, the unit to be audited, its superior organ or the supervisory organ shall promptly make an decision according to law; where their act(s) constitutes a crime, criminal responsibility shall be investigated by a judicial organ according to law.

Article 44
Where a department at its level (or a directly subordinate unit) or a government at its lower level has the act violating the budget or other acts of fiscal revenues and expenditures violating the State's regulations, the auditing organ, the people's government or the relevant competent department shall, within the confines of its official power, handle the case in accordance with the provisions of laws and administrative regulations.

Article 45
With respect to the act(s) of financial incomes and expenses of an unit to be audited which violates state regulations, the auditing organ, the people's government or the relevant competent department shall, within the confines of its official power and in accordance with the provisions of laws and administrative regulations, order to hand in, within a definite time, the income which shall be handed in, return the ill-gotten gains within a definite time, return within a definite time the state-owned assets seized, as well as adopt other correcting measures, and may apply punishments according to law.

Article 46
An auditing organ shall, when it deems that administrative penalties shall be applied according to law to the leading person in charge of direct responsibility and other persons directly responsible for the act(s) of the unit to be audited which violates state regulations in respect of fiscal revenue and expenditure or financial incomes and expenses, make suggestions to apply administrative penalties, and the unit to be audited, it's superior organ or the supervisory organ shall promptly make a decision according to law.

Article 47
Where the fiscal revenues and expenditures or financial incomes and expenses of an unit to be audited, in violation of the provisions of laws and administrative regulations, constitute a crime, criminal responsibility shall be investigated according to law.

Article 48
Where revenging against or framing up the auditors constitutes a crime, criminal responsibility shall be investigated according to law; where a crime is not constituted, administrative penalties shall be imposed.

Article 49
An auditor who abuses his or her power of office, practices favoritism or other irregularities, or neglects his or her duty, if his or her act constitutes a crime, shall be investigated for criminal responsibility according to law; if not constituting a crime, administrative penalties shall be imposed.

Chapter VII Supplementary Provisions

Article 50
Regulations on the auditing work of the Chinese People's Liberation Army shall be formulated by the Central Military Commission pursuant to this Law.

Article 51
This Law shall enter into force on January 1, 1995. The Auditing Regulations of the People's Republic of China promulgated by the State Council on November 30, 1988 shall be repealed on the same date.