Audit Findings on the 2006 Budgets Enforcement and
Other Financial Revenues and Expenditures of 49 Departments and Units
1. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Foreign Affairs
2. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the National Development and Reform Commission
3. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Information Center
4. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Education
5. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Science and Technology
6. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Commission of Science, Technology and Industry of National Defense
7. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Public Security
8. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Civil Affairs
9. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Justice
10. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Finance
11. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Labor and Social Security
12. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Land and Resources
13. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Railways
14. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Information Industry
15. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Water Resources
16. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Agriculture
17. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Commerce
18. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Culture
19. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Ministry of Health
20. Audit Findings on the 2006 Financial Revenues and Expenditure of the People¡¯s Bank of China
21. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State-owned Assets Supervision and Administration Commission of the State Council
22. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the General Administration of Customs
23. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Administration of Taxation
24. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Administration of Industry and Commerce
25. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Environmental Protection Administration
26. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Civil Aviation Administration of China
27. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Administration of Radio, Film and Television
28. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the General Administration of Press and Publication
29. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Administration of Work Safety
30. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the National Tourism Administration
31. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Administration for Religious Affairs
32. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Chinese Academy of Sciences
33. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Chinese Academy of Engineering
34. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the China Meteorological Administration
35. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the China Banking Regulatory Commission
36. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the China Securities Regulatory Commission
37. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the China Insurance Regulatory Commission
38. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Electricity Regulatory Commission
39. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Tobacco Monopoly Bureau
40. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Oceanic Administration
41. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Post Bureau
42. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Cultural Relics Bureau
43. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the State Administration of Traditional Chinese Medicine
44. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the All-China Federation of Supply and Marketing Cooperatives
45. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Office of the South-North Water Diversion Project Construction Committee of the State Council
46. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the China Federation of Literary and Art Circles
47. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the China Science and Technology Association
48. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Chinese People¡¯s Association for Friendship with Foreign Countries
49. Audit Findings on the 2006 Budget Enforcement and Other Financial Revenue and Expenditure of the Supreme People¡¯s Court
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Foreign Affairs
(Announced on September 14, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, from December 2006 to March 2007 the National Audit Office of China (CNAO) performed an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Foreign Affairs and a random audit of 5 of its affiliated departments.
1. Background
The Ministry of Foreign Affairs is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 6 tier-2 budgetary departments.
The audit findings indicated that in 2006 the budgetary revenues and expenditures of the Ministry of Foreign Affairs basically conformed to the stipulations of the related state laws and regulations on budget and finance. Its accounting practices generally accorded with the provisions of the Accounting Law, related accounting norms and regimes. The ministry budgeted its expenses according to its income and constantly improved the effectiveness of the use of fund. However, the audit discovered some problems which needed to be rectified and improved.
2. The main problems found in the audit
(1) The settlement price of printed visa stickers paid for by financial fund was 62.0278 million yuan higher than the actual cost.
Since 2000, the Ministry of Foreign Affairs entrusted the Diplomatic Papers Printing Office of the Service Center of the Head Office and Overseas Missions of the Ministry of Foreign Affairs to produce visa stickers. The per-unit settlement price was 3.8 yuan, double the actual average production cost 1.9 yuan. In the past 7 years, the total settlement price that the Ministry of Foreign Affairs paid for visa stickers was 62.0278 million yuan higher than the actual production cost of the printing office.
(2) Some departments (bureaus), making use of financial fund and during the office hours, compiled books and collected author¡¯s remuneration at a rate higher than the average market rate.
From 2005 to 2006, some departments (bureaus) of the Ministry of Foreign Affairs compiled and wrote some books and articles during the office hours and collected author¡¯s remuneration from the publishing fund allocated by financial fund. The remuneration represented 33% to 46.44% of the publishing fund (higher than the average market rate of 30%) with 526,300 yuan more than the due amount.
(3) The trade union under the administrative center of the ministry spent 5.8985 million yuan of staff benefits and operations fund by substituting drawing for reimbursement.
From April 2005 to the end of 2006, the trade union under the administrative center of the Ministry of Foreign Affairs distributed to the trade unions of the departments and bureaus, at the monthly per capita average of 50 yuan, 5.8985 million yuan for staff benefits and trade union activities. In accounting calculations, it substituted drawing for reimbursement.
(4) 5.7355 million yuan of surplus of the commodities in stock and 22.5178 million yuan of the balance of difference between the procurement and marketing of the commodities of the Service Center of the Head Office and Overseas Missions of the Ministry of Foreign Affairs were not cleaned up and settled.
At the end of 2002, in the running account of the Supply Division for Overseas Missions of that center, 5.7355 million yuan of surplus of the commodities in stock and 22.5178 million yuan of the balance of difference between the procurement and marketing of the commodities were not cleaned up and settled.
(5) The main problems of the Beijing World Knowledge Printing Factory:
I. 894,300 yuan of state-owned assets was lost.
The factory is a full-funded state-owned enterprise affiliated to the World Knowledge Publishing House of the Ministry of Foreign Affairs. In 1996, the factory bought, at the price of 3.4125 million yuan, an 8-color rotary press. The press remained all along idle after the purchase because of its poor quality. In July 2000, in the assessment of an intermediary agency the machine was estimated to value 2.4443 million yuan. In August 2001, the factory sold the press for 1.55 million yuan which was 894,300 yuan lower than the estimated price, leading to the loss of state-owned assets.
II. Without grounds, the factory turned 6.6499 million yuan of products in account books into assets loss to be handled and fraudulently increased 5.9893 million yuan of profit through hiding production cost.
In December 2001, the factory transferred, without grounds, 6.6499 million yuan of products in the account into the account of loss of circulating assets to be handled. The factory also turned 5.9893 million yuan of production cost into the account of loss of circulating assets to be handled to increase fraudulently profit of the same value.
Moreover, the factory had the problems of raising 63.0904 million yuan of fund at high interest rates and transferring 23.9434 million yuan of state-owned assets without authorization to a private enterprise. The National Audit Office of China referred these malpractices to the Ministry of Foreign Affairs for handling.
(6) 33.5851 million yuan of surplus of the Diaoyutai State Guesthouse Club was not included in the account books and statements.
The club is a non-legal-person agency and an independent accounting unit affiliated to the Diaoyutai State Guesthouse Administration of the Ministry of Foreign Affairs. Since 1986, the club began collecting membership dues from the members. At the end of 2006, the balance of the collected membership dues stood at 33.5851 million yuan which was not included in the balance sheet of the administration for the year.
(7) The enterprise run by a subsidiary unit hid 236,500 yuan of commodities sales revenue.
The Beijing Dimech Property Management Center affiliated to the Service Center of the Head Office and Overseas Mission of the Ministry of Foreign Affairs entered 56,100 yuan of 2005 commodities sales revenue and 180,400 yuan of 2006 commodities sales revenue into the current account or off-the-book accounts. In the corresponding account, the commodities sales revenue for 2005 stood at only 1.7811 million yuan and at 1.7562 million yuan for 2006 respectively. This led to the levying of value-added tax from the enterprise according to the standard of small tax payers (less than 1.8 million yuan of annual taxable sales) by the taxation department.
(8) 26.5 million yuan of fixed-term deposits was faced with loss.
In 1995 and 1996, the Housing Company affiliated to the Beijing Diplomatic Service Bureau successively made 8 high interest-rate fixed-term deposits totaling 80 million yuan. By the end of 2000, 62.7259 million yuan of principal and interest had been recovered. Later, because of the dismantling of a certain company, the remaining 22 million yuan of principal and interest was faced with the danger of loss.
In 1999, Diaoyutai Hotel affiliated to the Diaoyutai State Guesthouse Administration made a 5 million yuan one-year fixed-term deposit in a certain fund. In 2000 that fund was sealed up by the department in charge due to illegalities and crime. In 2002, 500,000 yuan of the principal was returned to Diaoyutai Hotel with the remaining 4.5 million yuan facing loss.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued the audit report and audit decisions in a timely manner in compliance with the state laws and regulations. In regard to the problem of higher than normal settlement price of printed visa stickers, the CNAO requested a rational adjustment of the settlement price in accordance with the actual cost of visa stickers. For the collection of author¡¯s remuneration at a rate higher than the market average, it was requested to rectify, suspend the irrational contract on book publication and strictly standardize book publication. As to the problem of substituting drawing for reimbursement in staff benefits and operational expenses, it was requested that the wrong practice be stopped and that the balance of benefit fund in the departments be taken back and that various revenues and expenditures be calculated in a unified way. It was demanded that the surplus of commodities in stock and the balance of the difference between the procurement and marketing of commodities of the service center be cleaned up and settled as soon as possible. For the problems of the loss of state-owned assets and violation of the rules in handling account books by the Beijing World Knowledge Printing Factory, it was requested that the department concerned be instructed to find out the reasons and investigate the responsibilities of the related personnel for the loss of assets and adjust the account books mishandled in violation of the rules. And a sound relevant financial regime should be set up to prevent the recurrence of similar problems. As to the surplus of the membership dues of the Diaoyutai State Guesthouse Club not being included in the account books, it was required to instruct the administration of the guesthouse to include the balance of the membership dues into the annual final balance sheet of the administration. In regard to the problem of the hiding of sales revenue by the Beijing Dimech Property Management Center, the center was requested to correct the malpractice and pay the due tax in accordance with the law. For the deposits facing losses of the affiliated departments, it was required that the departments concerned be instructed to expedite the recovery of the principals and interest.
4. The status of the problems found in the audit
Prior to the audit, the Ministry of Foreign Affairs conducted a self-examination and rectified the problems discovered in it. The ministry attached great importance to the problems found in this audit and instructed the relevant departments to conscientiously rectify the problems in compliance with the audit opinions. With the exception of the higher than normal settlement price of printed visa stickers, which was to be resolved in the reform of the management system of the administrative public institutions, measures have been or are being taken to rectify the other problems. For the collection of author¡¯s remuneration at a rate higher than the market average, the departments concerned were instructed to fix rates of author¡¯s remuneration lower than the market price and proceed with an all-round cleaning up and overhaul. With regard to the problem of substituting drawing for reimbursement of staff benefits and operational fund by the trade union under the administrative center of the ministry, it was decided to immediately stop the original practice and strictly abide by the related rules and regulations. Relevant personnel are organized for sorting out and checking the problems of un-cleaned up and un-settled surplus of commodities in stock and the balance of the difference between the procurement and marketing of commodities of the Supply Division of the Service Center. The Beijing World Knowledge Printing Factory was instructed to find out the reasons for the loss of state-owned assets and mishandling of account books in violation of the rules, correct them through account adjustment and investigate the responsibility of the personnel concerned and punish them. As to the raising fund at high rates and transferring state-owned assets without authorization by the Beijing World Knowledge Printing Factory, examination is actively conducted and a rectification plan is being formulated. For the mishandling of account books against the rules by other departments, they were instructed to correct through account adjustment. Regarding the possible loss of deposits of subordinate units, persons have been designated to be in charge of recovering the fund. The Ministry of Foreign Affairs requested the departments concerned to set up sound financial and accounting regimes and strictly enforce the financial examination and approval procedures to prevent the recurrence of similar problems.
Moreover, the CNAO sent a letter of audit recommendations for a few problems of non-standardized management discovered in the audit and the ministry already rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the National Development and Reform Commission
(Announced on September 14, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, from December 2006 to March 2007, the National Audit Office of China (CNAO) performed an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the National Development and Reform Commission (NDRC) and a random audit of 46 departments and enterprises affiliated to it.
1. Background
The NDRC is a tier-1 budgetary department of central government finance. Its budget is composed of the budget of the commission itself and those of 15 tier-2 budgetary units.
The audit findings showed that the budgetary revenues and expenditures of the NDRC in 2006 basically conformed to the stipulations of the state laws and regulations on budget and finance. Its accounting practices generally accorded with the stipulations of the Accounting Law, related accounting norms and regimes. The NDRC did a good job in organizing the drawing up of budgets of the commission, approved the budgets in a timely manner and further enhanced budget and financial management. It set up and improved the related regimes and earnestly rectified the problems discovered in the audits of the previous years. But the audit found some problems which needed to be rectified and improved.
2. The main problems found in the audit
(1) Collection of 13.4 million yuan of sponsoring fund from enterprises in the process of holding large-scale conferences and exhibitions.
In 2005, the NDRC held Beijing International Renewable Energy Conference and Exhibition on Building Conservation-Oriented Society 2005 and collected 8.4 million yuan of sponsoring fund from 23 enterprises. In 2006, the Office of the Western Region Development of the State Council, in order to raise the original capital for the Fund of Western Region Talent Development of China, collected 5 million yuan of sponsoring fund from China Petroleum & Chemical Group.
(2) A project was not executed in accordance with the plan, which led to 1 million yuan of financial fund being idle.
In October 2006, under the circumstances where changes had taken place in the industrial policy of ethanol production and the related project could not be started temporarily, the NDRC appropriated 1 million yuan for the project Planning and Layout Research of the Ethanol Petrol Marshalling Center. This led to the fund remaining idle in the project undertaking unit, without playing its due role.
(3) It issued a grade-A certificate of engineering consultation to its subordinate company in violation of the regulations.
In 1998, the former National Planning Commission issued a grade-A certificate of engineering consultation to Beijing Huazi Engineering Design Co., a company affiliated to the China Engineering Consultation Association under its jurisdiction. The actual capital of the said company stood at only 450,000 yuan which fell short of the 1 million yuan standard of registered capital required for the grade-A consultation units. In 2005, the China Engineering Consultation Association filled the gap to the 1 million yuan registered capital for the company. Yet at that time, the standard for grade-A consultation units had been raised to 5 million yuan so that the company still did not meet the requirement for the certificate.
(4) Without approval, the NDRC disposed of 2.58 million yuan of original value of fixed assets.
In May 2006, the Printing Factory of the Administrative Service Center of the NDRC transferred to the General Office of the Jiangxi Provincial Government an offset press of original value of 230,000 yuan without compensation. In August and October, printing equipment of the original value of 2.35 million yuan was sold in two batches. The transfer and sales of the above equipment were not reported to and approved by the Bureau of Government Offices Administration of the State Council.
(5) 49.38 million yuan of state construction fund was withheld and diverted by its subsidiary units.
A certain state petroleum reserve base company limited under the administration of the NDRC withheld and diverted 49.38 million yuan of state construction fund in violation of the regulations. Of the sum, from January to November 2006, the company used 44.8201 million yuan for the payment of loan interest which should be borne by the production cost. From May to December 2006, the company, without approval, used 2.0491 million yuan of reserves on its own. From September 2005 to November 2006, the company diverted 2.5108 million yuan of construction fund for distributing bonuses.
(6) An affiliated department withheld 20.0939 million yuan of compensation fund for housing demolition and relocation.
In 2003, Beijing Jixin Housing Demolition and Relocation Service Co. Ltd. under the Capital Construction and Property Management Center of the NDRC demolished 3,437.84 square meters of housing owned by the NDRC and resettled the affected residents in the staff dormitories put up by the NDRC with financial funding. The company, after getting 20.0939 million yuan of compensation fund for the housing demolition and relocation, withheld the money in its own account and did not return it to the NDRC.
(7) A subordinate unit did not report on and hand in enterprise income tax in a timely manner.
From 2002 to 2006, Xinhua Real Estate Development Co. attached to the Capital Construction and Property Management Center of the NDRC, after receiving the money for housing purchase from the State Statistics Bureau and China Tobacco General Co., did not report to and hand in the enterprise income tax to the taxation agency. By the end of 2006, the company had collected a total of 1.039 billion yuan of housing sales.
(8) One of its subsidiaries paid 36.8819 million yuan less than the due sum of land use right leasing fees.
In 2002, Xinhua Real Estate Development Co. affiliated to the Capital Construction and Property Management Center of the NDRC acquired the right to land use of the F section of division 1 in Sanlihe, Xicheng District of Beijing. According to the regulations, the company should hand in 142 million yuan of land use right leasing fees by December 15. Yet by the end of 2006, it still owed 36.8819 million yuan.
(9) A social organization under its jurisdiction used 30 million yuan of membership dues for the construction of a certain base.
Since its establishment in February 2006, the China Industrial Development Promotion Council under the NDRC collected membership dues and took donations which totaled 65.34 million yuan. In July 2006, the council used 30 million yuan of the money, in the form of mandatory administration of fund, for the construction of a certain base, going beyond the scope of the use of fund as prescribed in the statute of the council
3. The way the audit addressed the problems and its proposals
In accordance with the provisions of the state laws and regulations, the CNAO issued the audit report and audit decisions in a timely manner. In regard to the collection of sponsoring fund in holding of large-scale conferences, the CNAO requested that in the future application be submitted to the Ministry of Finance for special fund or the NDRC consult the Ministry of Finance for a solution. For the issue that some individual projects were not executed according to the plan, it was requested to urge the departments concerned to expedite their execution. With regard to the issuing of grade-A certificate to unqualified unit, the relevant department was instructed to increase the registered capital in accordance with the regulations and draw lessons from the problem. As to the disposal of state-owned assets without approval, it was requested to report to the Bureau of Government Offices Administration of the State Council for approval. For the problem of withholding and diverting construction fund and using it for bonus distribution, the department concerned is required to return the money to the original channel. Regarding the unauthorized use of reserves, application and approval were required for the use. For the withholding of compensation fund for housing demolition and relocation, it was required that the unit concerned be instructed to return the fund. As to the problems of not reporting and handing in income tax of enterprise in time and paying less than due land use right leasing fees, it was requested that the departments concerned promptly report to and hand in tax to the taxation agency, or go through the formalities for exemption from the land use right leasing fees in good time. The membership dues used in construction project should be returned.
In view of the discovered problems, the CNAO recommended that the NDRC further improve the financial management regimes within the commission, step up monitoring and examination and constantly enhance the effect of fund use. Moreover, the NDRC should sort out and overhaul the various kinds of entities and set up monitoring and management mechanisms to ensure the safety and intactness of the state-owned assets. The NDRC should also boost its standardized management and supervision of societies and associations, forbidding them from gaining interest by means of their powers and influence.
4. The status of the problems found in the audit
Prior to the audit, the NDRC conducted a self-examination and corrected the problems found in it. The NDRC attached great importance to the problems discovered in this audit and convened numerous meetings to discuss ways and measures for their rectification. With regard to the collection of sponsoring fund from enterprises for the holding of large-scale conferences and exhibitions, the NDRC stated that in the future it would apply for related funding and, strictly abiding by the rules of the state, would not collect any fund from the enterprises. For individual projects which were not executed according to the plan, the NDRC was in the process of pushing forward their execution. As to the issuing of grade-A certificate for engineering consultation to an unqualified unit, the China Engineering Consultation Association was instructed to hand in 4 million yuan of registered capital to make the relevant company qualified. As to the unauthorized disposal of fixed assets, formalities were gone through for the disposal of dilapidated equipment in accordance with the rules. For the withholding and diverting of construction fund in violation of the regulations, the State Council was asked for instructions on the special issue of payment of loan principal and interest for petroleum bases. Together with the Ministry of Finance, the NDRC stepped up the formulation of measures of rewarding in project construction to correct the distribution of bonuses by means of diverting construction fund. The reserves used without approval was returned to the original channel by the relevant department in adjusting the related account books. For the withholding of the compensation fund for housing demolition and relocation, the department concerned already returned the fund. As to the problem of not reporting on and handing in enterprise income tax in time and handing in less land use right leasing fees, the departments concerned already reported on the tax and were in the process of going through the formalities for exempting the land use right leasing fees. For the donation of membership dues to project construction, the department in question actively rectified and would soon recover all the mandated fund.
Moreover, the CNAO sent a separate letter of audit recommendations on a few problems of non-standardized management found in the audit and the NDRC rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the State Information Center
(Announced on September 14, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, from October 2006 to March 2007, the National Audit Office of China (CNAO) conducted an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the State Information Center (Information Center for short) and a random audit of three of its subsidiary departments.
1. Background
The Information Center is a tier-1 budgetary department of central government finance. Its budget is composed of that of the center itself, not including those of the affiliated public institutions which are responsible for their own revenues and expenditures.
The audit findings indicated that the budgetary revenues and expenditures of the Information Center in 2006 basically conformed to the state laws and regulations on budget and finance. Its accounting practices were generally in line with the provisions of the Accounting Law, related accounting norms and regimes. The center set up and improved an internal control system, earnestly rectified the problems found in the audits of the previous years. However, the audit discovered some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) Leasing out the Information Building without approval and obtaining 43.4999 million yuan of income
In 1996, the former National Planning Commission approved the construction by the Information Center of the Information Building with an investment of 328 million yuan for use in scientific research. After the project was completed in 2000, the center entrusted the property company under it to lease it out. By the end of 2006, it had obtained a total income of 43.4999 million yuan.
(2) The net surplus of 1.078 million yuan of capital construction projects was not handed in to the national treasury.
By the end of 2006, the net surplus of the capital construction projects of the center stood at 1.54 million yuan and the center did not hand in its 70%, 1.078 million yuan, to the national treasury.
(3) Applying for 9.3109 million yuan more of fund for payment of the principal and interest of phase-2 loans in Japanese yen.
From 1998 to 2006, the Information Center received from central government finance accumulatively 79.826 million yuan of fund for the payment of the principal and interest of phase-2 loans in Japanese yen. In fact, it paid 70.5151 million yuan with a balance of 9.3109 million yuan.
(4) Using 4.0465 million yuan of surplus of the projects without permission
From 2005 to 2006, the Information Center used the surplus fund of the capital construction projects for paying 4.0465 million yuan for the construction and installment of the cadres training base under it.
(5) Without going through the formalities for the change in property rights, using the housing property valued at 6.836 million yuan for starting up a company
In 1993, the Information Center took office and apartment buildings, built and purchased with financial fund and valued at 6.836 million yuan, as registered capital and started up China Guoxin Information Co. By the end of 2006, the property rights of the above housing properties still belonged to the center, yet the external investment was not entered in the account books of the center.
(6) The property rights of the housing property purchased with 4.0275 million yuan of budget fund were registered under the name of a subsidiary company.
From 1990 to 1991, the Information Center purchased housing property with 4.0275 million yuan of budget fund and the property rights of the housing was registered under the name of Zhuhai International Commercial Data Co. Ltd., a tier-3 subsidiary totally owned by the center.
(7) 2.2555 million yuan of assets of the affiliated China Information Association was not included in the account books of the association for calculation.
By the end of 2006, the US$280,000 (equivalent to 2.1869 million yuan) balance in the membership dues account of the Asia PKI Forum Alliance of the China Information Association and the 68,600 yuan assets in the account books of the Narberth Industrial and Commercial Administrative and Research Center on its suspension of business were not included in the account books of the association for calculation.
(8) Some leading cadres concerned of the Information Center were appointed legal persons of subordinate units against the rules.
By the end of 2006, 4 deputy directors of the Information Center were appointed concurrently legal persons of 10 units of the 13 tier-2 units affiliated to the center.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued, in a timely manner, the audit report and audit decisions in compliance with the provisions of the state laws and regulations. In regard to the leasing out of the Information Building without permission, it was requested that the formalities of application and approval should be gone through and that the revenue of rent should be managed through the ¡°two separate channels for revenue and expenditure respectively¡±. The related net surpluses should be handed in promptly. The surplus fund for the payment of the principal and interest of the phase-2 loans in Japanese yen should be used in the payment in the future. For the use of project surpluses, application and approval in accordance with the regulations were required. For the problems of using housing property for starting up a company without changing the property rights ownership and not recording the investment, registration of property rights of housing purchased with budget fund under the name of an affiliated company, not including assets of the China Information Association in the account books of the association for calculation, and deputy directors of the Information Center holding concurrently the posts of legal persons of the affiliated tier-2 units, the relevant departments were required to change the registration according to the real situation, register the investment and assets in the accounts. And the relevant leading cadres should resign from the posts in the enterprises.
In view of the discovered problems, the CNAO recommended that the Information Center step up its management and monitoring of the investment of its subsidiary enterprises, clean up the assets of the center taken by these enterprises and collect corresponding charges in accordance with the rules. The center was required to strictly apply for the project budgets rationally according to the rules, identify the project expenditure targets, be aware of the implementation pace of the projects and strive to enhance the effect of fund use.
4. The status of the problems found in the audit
The Information Center conducted a self-examination prior to the audit and rectified the problems found in it. The center attached great importance to the problems discovered in the audit and convened numerous meetings to work out measures for rectification. Currently, the center is going through the formalities for the status change of the Information Building from non-business building to a commercial one. It would hand in the net surplus after the final account is drafted on the completion of the project. This year the center suspended the application for fund for the payment of the principal and interest of phase-2 loans in Japanese yen and intended to pay the principal and interest with the accumulated surplus. It actively rectified the problem concerning the property rights of assets of the affiliated companies, underwent the formalities for changing their registration to straighten out the relationship in the investment. It is going through the formalities for changing the legal persons of three companies concerned. In addition, the other 7 companies will change their legal persons after receiving instructions from their superior departments.
Moreover, the CNAO sent a letter of recommendations in regard to some problems of not standardized management found in the audit. The Information Center has accordingly rectified.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Education
(Announced on September 14, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, from December 2006 to March 2007 the National Audit Office of China (CNAO) performed an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Education and a random audit of 9 of its affiliated units.
1. Background
The Ministry of Education is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 103 tier-2 departments and project-undertaking units.
The audit findings signaled that the budgetary revenues and expenditures of the Ministry of Education in 2006 basically conformed to the stipulations of the related state laws and regulations on budget and finance. Its accounting practices generally accorded with the provisions of the Accounting Law, relevant accounting norms and regimes. The ministry earnestly rectified the problems discovered in the audits of the previous years, further improved its internal control system and enhanced the financial supervision of the institutions of higher learning directly under its jurisdiction. But the audit discovered some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) At the beginning of the year no detailed information was available on the specific units and projects for 5.951 billion yuan of budget fund.
In the 2006 budget of the Ministry of Education, at the beginning of the year, no detailed information was available on the specific units and projects for 5.951 billion yuan of budget fund. Of the sum, 4.5 billion yuan was for the Education Revival Action Plan in the budget, 1.24 billion yuan for the special project of repairs and purchases of universities, middle and primary schools, 182 million yuan for the Publicity and Culture Development Foundation and 29 million yuan for Three Projects of Science and Technology.
(2) Affiliated China University of Geosciences (Beijing) adjusted 3.8 million yuan in project budget on is own without approval.
From 2002 to 2004, the university, in the name of 80 million yuan of capital construction loan for the three projects of school environment renovation, construction of infrastructure and the construction of No. 17 student apartment building, applied for and obtained 3.8 million yuan of subsidy fund for paying loan interest from central government finance. In fact, however, the university did not borrow the loan and the above 3.8 million yuan of subsidy fund was used for other construction projects of the university.
(3) The execution of a budget project of affiliated Beijing Language and Culture University was slow, leading to 9.149 million yuan of financial fund being idle for many years.
In 2002, the university, in the name of loans for capital construction in the reconstruction of the canteen of overseas students, applied for and obtained 4.5 million yuan of subsidy fund for loan interest from central government finance. At the time of the audit, the project in question remained in the phase of assessment of the design without the start of the construction and loans. The above appropriated fund from central government finance remained idle for more than 4 years.
In 2003, the university, in the name of the loan for the capital construction in putting up overseas student apartment buildings, applied for and obtained 5 million yuan of subsidy fund for paying loan interest from central government finance. In fact, the university obtained the loan only in 2006. By January 2007, the project had paid 351,000 yuan of loan interest with the balance of subsidy fund for loan interest being 4.649 million yuan which remained idle for more than three years.
(4) The budget for interest subsidy of loans for assistance to students of the affiliated National Student Assistance Administrative Center was not accurate, leading to 168 million yuan of surplus of financial fund.
In working out the budget of interest subsidy of loans for assistance to students of institutions of higher learning affiliated to ministries of the central government, the center did not take account of the surplus fund of the previous years and the budget of fund for loan interest subsidy surpassed the actual need of the year, leading to big sum of surplus. At the end of 2006, 289 million yuan of surplus in the student loan interest subsidies appeared in the account books of the center. After deducting the unpaid trans-semester risk compensation and bank loan interest subsidy, the accumulated surplus fund reached 168 million yuan.
(5) Beijing University of Posts and Telecommunications affiliated to it, without going through the formalities of identification of capital construction project and requisition of land, decided on its own to build the Hongfu premises and made the investment of 147 million yuan.
In 2002, the university, without the examination and approval process for identification of capital construction project and land requisition, decided on its own to build, in Zhenggezhuang village, Qijia township, Changping district, Beijing, the Hongfu campus. In 2003, it substituted leasing for requisition and occupied 300 mu (1 acre equals 6 mu) of collective land for construction of the village and started the construction. At present, projects including the administrative office building and teaching building have been completed with 44,626 square meters of building area and an investment of 147 million yuan.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued in a timely manner the audit report and audit decisions in compliance with the stipulations of the state laws and regulations. With regard to the problem of no available detailed information on the specific units and projects in the budget at the beginning of the year, it was required to consult the Ministry of Finance and take prompt measures to standardize the drafting and management of budgets. For the problem of the China University of Geosciences (Beijing) adjusting on its own without approval project budgets, the university was requested to recover the fund and the money would be rearranged for use after submitting application to and obtaining the approval of the Ministry of Finance. As to the problem of slow pace of the execution of budget project and the financial fund being idle for many years, it was required to urge the university to accelerate the execution of the project and enhance the effect of the use of financial fund. In regard to the inaccurate budget drafted for interest subsidy for student assistance loans and the resulting surplus of financial fund of the National Student Assistance Management Center, it was asked that the surplus fund would be first taken into consideration in drafting the annual budgets in future, that funding requirement should be calculated accurately and that the accuracy of the drafted budgets should be enhanced. As to the problem that Beijing University of Posts and Telecommunications decided on its own to build the Hongfu campus, the matter was referred to the Ministry of Land and Resources and the Ministry of Education for further handling.
In view of the problems found in the audit, the CNAO recommended that the Ministry of Education boost the coordination between the departments and bureaus of the ministry and project-undertaking units, step up communications and consultations with the Ministry of Finance and do a good job in identifying and examining projects. The ministry should enhance the checking of project budgets, scientifically and accurately work out budgets to avoid huge fund surplus because of inaccurate budgets. The ministry should strengthen the management of capital construction of the institutions of higher learning and urge the subdidiary units to strictly abide by the capital construction procedures.
4. The status of the problems found in the audit
Prior to the audit, the Ministry of Education conducted a self-examination and rectified the problems found in it. The ministry attached great importance to the problems discovered in this audit and convened numerous meetings to specially discuss measures of rectification and their implementation. In regard to the problem of no available detailed information on the units and projects in the budget early in the year, the ministry consulted the Ministry of Finance for a number of times and completed the detailing of the budget for this year and appropriated the fund to the project-undertaking units before July. As to the problem of China University of Geosciences (Beijing) adjusting project budget on its own without approval, the project fund was taken back in June 2007 and used through re-arrangement in accordance with the procedure of budget management. For Beijing Language and Culture University¡¯s problem of slow pace of the execution of project which led to the surplus financial fund being idle for many years, the university was requested to implement the project in strict accordance with the budget and accelerate the execution of the project. At present, the projects of the university including the overseas student apartment building were under construction and 626,000 yuan of loan interest was already paid. For the problem that the inaccurate budget of interest subsidies for student assistance loans of the National Student Assistance Management Center led to huge surplus of financial fund, the Ministry of Education decided to conduct research with other departments to put forward rational ways for improvement to narrow the discrepancies between the plan and the actual implementation. With regard to Beijing University of Posts and Telecommunications making the decision, without going through the formalities of identifying capital construction project and land requisition, to build the Hongfu campus, the leadership of the university was sharply criticized, requested to earnestly discuss a plan for rectification and rectify as soon as possible and go through the necessary formalities of examination and approval. The ministry stated that in the future it would further enhance the monitoring and management of the capital construction projects and investment of the institutions of higher learning, urge the subsidiary departments to strictly abide by the capital construction procedures and prevent the recurrence of such problems.
Moreover, the CNAO sent a separate letter of recommendations on a few problems of non-standardized management and the Ministry of Education already rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Science and Technology
(Announced on September 14, 2007)
In compliance with the provisions of the Audit Law of the People¡¯s Republic of China, from November 2006 to March 2007, the CNAO performed an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Science and Technology and a random audit of 5 of its subsidiary departments.
1. Background
The Ministry of Science and Technology is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and 14 tier-2 budgetary units.
The audit findings signaled that the budgetary revenues and expenditures of the ministry in 2006 basically conformed to the stipulations of the state laws and regulations on budget and finance. Its accounting practices were generally in line with provisions of the Accounting Law, relevant accounting norms and regimes. Its internal control regime was comparatively adequate and was enforced effectively. The ministry earnestly rectified the problems discovered in the audits of the previous years and formulated and amended the administrative methods for standardizing the topic fund for the national scientific and technological plan. However, the audit found some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) 9.1801 million yuan of working fund of the Planning Office of the Ministry of Science and Technology was not included in the account of the ministry for calculation in a unified way.
Form 2003 to 2006, that office transferred 9.1801 million yuan of working fund from the Accounting Division of the General Office of the ministry to the current account of the Beijing Sanhuan Experts Apartment Building. The sum of fund was not calculated in a unified manner in the finance of the ministry.
(2) The Scientific and Technological Development and Planning Department of the ministry spent 352,000 yuan in the expanded scope of expenditure.
From 2003 to 2006, this department transferred, in the name of ¡°meeting expenses¡±, 352,000 yuan of administrative fund from the Financial Division of the General Office of the ministry to the current account of the Beijing Sanhuan Experts Apartment Building and used 303,500 yuan on relevant activities in the department.
(3) The China Biotechnological Development Center of the ministry extended the expenditure scope of subject research project and spent 1.4603 million yuan.
In 2006, the center disbursed 1.4603 million yuan of the expenses for the purchase of data management system equipment, which should be taken from other fund of the center, out of the fund for 3 subject research projects including nano-biology development strategy and data analysis and research.
(4) The main problems of the China Rural Technological Development Center of the ministry:
In 2003, the center applied for 2 million yuan budget fund for the subject research project ¡°the development of the technological platform of the rural scientific and technological service system¡±. By the end of 2006, the center had disbursed a total of 1.039 million yuan of expenses out of the project which had nothing to do with the research project.
In 2004, the center applied for 7.8 million yuan of budget for ¡°agricultural resources management and application demonstration¡± subject research project. By the end of 2005, the center allocated 1.8 million yuan of the above budget fund to 4 other subject research projects.
The center disbursed 1.6445 million yuan of staff bonuses and holiday allowances out of some subject research projects. Of the sum, 675,000 yuan was disbursed in 2006.
In 2005, the center applied for 800,000 yuan of budget fund for Sino-Australian animal husbandry, crops and oceanic biology technological cooperation. In December 2005 and February 2006, the center, in accordance with the requirement of the Ministry of Science and Technology, changed the content and undertaking unit of the subject project and appropriated respectively 100,000 yuan to Lanzhou University and 50,000 yuan to the Guangdong Academy of Agricultural Sciences, with the two units having nothing to do with the original project.
The center applied for the subject research project ¡°the development of technological platform of rural scientific and technological service system¡± whose budget was 2 million yuan, but the drafting of the budget was divorced from reality, leading to a huge surplus. Upon the completion of the project in April 2006, after deducting the expenditure not belonging to the project, the expenditure stood at only 54,000 yuan with a surplus of 1.946 million yuan, representing 97% of the total fund of the project.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued in a timely manner the audit report and audit decisions in accordance with the provisions of the state laws and regulations. In regard to the problem that the working fund of the Planning Office of the Ministry of Science and Technology was not calculated in the account books of the ministry, it was requested that an all-round checking be undertaken on all the revenues and expenditures of fund since the inception of the office and include the fund of the office in the unified calculation of the ministry. For the transfer by the Development and Planning Department of the ministry of fund in the name of ¡°meeting expenses¡± and use of the fund for expenses for activities in the department, it was requested to instruct the department to rectify and adjust the relevant accounts. As to the expansion of expenditure scope of subject research projects, it was demanded that the center concerned be instructed to recover the fund and adjust the related accounts. With regard to the drawing up of budget which was divorced from reality and too big surpluses, it was required that the examination of the budgets of affiliated departments and monitoring and management of project execution be stepped up and that the surplus fund be taken back.
In view of the problems discovered in the audit, the CNAO recommended that the Ministry of Science and Technology enhance its management of special scientific and technological fund and scientific and technological subjects and standardize the working out of budgets for scientific and technological subject research projects. The ministry should further boost financial management and, cleaning up all the internal surpluses, promptly arrange their use. The ministry should set up an adequate scientific and technological subject projects bank, truthfully and integrally draft project budgets to give play to the effect of the use of scientific and technological fund.
4. The status of the problems found in the audit
Prior to the audit, the Ministry of Science and Technology initiated a self-examination and rectified the problems found in it. The ministry attached great importance to the problems found in this audit and convened numerous special meetings to discuss measures of rectification. The ministry already earnestly sorted out the working fund of the Planning Office of the ministry and included the working fund into the unified financial calculation of the ministry. The ministry instructed the Development and Planning Department to rectify the problem of expanding expenditure scope in violation of the rules and adjust the related accounts. The General Office, Financial Department and Supervision Bureau jointly sorted out the ¡°meeting expenses¡± of the various departments. For the expansion of expenditure scope in the subject research projects, the center concerned was instructed to recover the related fund and adjust the relevant accounts. With regard to the budget of subject research project being divorced from reality and too big surpluses, all the surplus fund was recovered. In order to further strengthen the management and monitoring of scientific and technological fund, the Ministry of Science and Technology formulated the Interim Method of Management of National Scientific and Technological Plans and Special Fund.
Moreover, the CNAO sent a separate letter of recommendations in regard to some problems of non-standardized management found in the audit. The Ministry of Science and Technology rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of the
Commission of Science, Technology and Industry for National Defense
(Announced on September 14, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, from December 2006 to February 2007, the National Audit Office of China (CNAO) performed an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Commission of Science, Technology and Industry for National Defense (CSTIND) and a random audit of 10 of its affiliated departments.
1. Background
The CSTIND is a tier-1 budgetary department of central government finance. Its budget is composed of that of the commission itself and those of 17 tier-2 budgetary units.
The audit findings showed that the budgetary revenues and expenditures of CSTIND in 2006 conformed basically to the provisions of the state laws and regulations on budget and finance. Its accounting practices generally accorded with the stipulations of the Accounting Law, related accounting norms and regimes. Its internal control regime was relatively adequate and it earnestly rectified the problems discovered in the audits of previous years and carried out 100% of the audit decisions. But the audit found some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) 2.1407 million yuan was spent beyond the budget scope.
In 2006, the CSTIND disbursed 2.1407 million yuan of expenditure, not covered by the budget of the project, out of the fund for the remodeling of the meeting room of the office building of the commission.
(2) Over-calculation of 4.2165 million yuan of expenditure.
In 2006, the CSTIND did not disburse according to the real situation and over-calculated 4.2165 million yuan of expenditure in the remodeling of the meeting room of the office building of the commission.
(3) A certain center affiliated to the commission spent 2.3164 million yuan above the budget and spent 103,000 yuan by expanding the scope of expenditure.
In 2006, a certain center affiliated to the CSTIND, using the fund rolled over from the previous year, spent 2.3164 million yuan above the budget and disbursed 103,000 yuan for staff¡¯s lunch out of project fund.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued the audit report and audit decisions in a timely manner in compliance with the stipulations of the state laws and regulations. In regard to expenses beyond the scope of the budget, it was requested that in the future the budget be implemented strictly. As to the over-calculation of project expenditure and expanding the expenditure scope, it was required to strictly implement the budget in the future. As to over-calculation of project expenditure and expanding the expenditure scope, it was requested to adjust the related accounts.
In view of the problems discovered in the audit, the CNAO recommended that the CSTIND faithfully implement the budget, strictly control expenditure, disburse expenses according to the actual spending and further step up the professional training of the financial and accounting staff and the financial monitoring of the newly-set up tier-2 budgetary units to constantly raise the level of financial management.
4. The status of the problems found in the audit
Prior to the audit, the CSTIND launched a self-examination and rectified the problems found in it. The CSTIND attached great importance to the problems discovered in the audit and informed the leading cadres of the departments and bureaus and all the units in Beijing of the audit findings. The commission required all the subordinate departments and units to conscientiously implement the audit opinions and rectify within the set time limit. On the issue of expenditure beyond the scope of the budget, the CSTIND expressed the determination to strictly implement the budget in the future. The problem of over-calculation of project expenditure was solved through adjusting accounts. For the expenditure above the budget and expenses beyond the prescribed scope by a certain affiliated center, the center adjusted account books and expressed the intention to strictly implement the budget in the future.
Moreover, the CNAO sent a separate letter of recommendations on some problems of non-standardized management and the CSTIND already rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Public Security
(Announced on September 14, 2007)
In compliance with the provisions of the Audit Law of the People¡¯s Republic of China, from January to March 2007, the National Audit Office of China (CNAO) conducted an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Public Security and a random audit of 3 of its affiliated units.
1. Background
The Ministry of Public Security is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 32 tier-2 budgetary units.
The audit findings indicated that in 2006 the budgetary revenues and expenditures of the Ministry of Public Security basically conformed to the stipulations of the state laws and regulations on budget and finance. Its accounting practices generally accorded with the provisions of the Accounting Law, relevant accounting norms and regimes. The ministry strictly observed the management rule of ¡°two separate channels for revenue and expenditure¡±, handed in various financial charges in their totality and in time and further improved financial management and internal control system. However, the audit discovered some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) Approval of 8.86 million yuan of budgetary fund for its affiliated units without approval of the Ministry of Finance
In 2006, the Ministry of Public Security approved 8.86 million yuan of budgetary fund for 3 tier-2 budgetary units, but the fund was not included in the 2006 budget of the ministry approved by the Ministry of Finance.
(2) Appropriation of 3.69 million yuan of off-budget fund to a non-budgetary unit
From 2005 to 2006, the ministry appropriated a total of 3.69 million yuan of off-budget fund from public security operating fund to the China Police Association, a non-budgetary unit.
(3) Diversion of 2.6 million yuan of capital construction fund and using it for starting up a unit with independent budget.
In December 2001, the ministry diverted 2.6 million yuan of capital construction fund of the Population Data System and used it for starting up the National ID Card Inquiry Service Center.
(4) Affiliated units did not clean up and return commercial insurance in accordance with the rules and continued buying it.
In November 1997, the No. 1 Research Institute of the ministry bought supplementary pension for retired workers and current staff. By the end of 2006, the institute had accumulatively spent 55.3701 million yuan of insurance premiums out of the special fund¡ªstaff benefit fund. Of the sum, 1.4701 million yuan was spent in 2006.
From 1997 to 1999, the Printing Office of the ministry bought commercial insurance for its staff and spent 3.8108 million yuan from its surplus.
The above insurance belonged to those which should be cleaned up and returned.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO promptly issued the audit report and audit decisions in accordance with the provisions of the state laws and regulations. In regard to the problem of approving budget fund of the attached units without the approval of the Ministry of Finance, it was required that the implementation should be done strictly in compliance with the budget approved by the Ministry of Finance and the budget should not be adjusted willfully without permission. As to the problems of appropriation of off-budget fund to non-budgetary units and diversion of capital construction fund for use in starting up a unit with independent budget, it was requested to recover the fund and return it to the original channel. The commercial insurance bought by the No. 1 Research Institute of the ministry and the Printing Office of the ministry were to be cleaned up and returned in accordance with the regulations.
4. The status of the problems found in the audit
Prior to the audit, the Ministry of Public Security launched a self-examination and rectified the problems found in it. The ministry set big store by the problems discovered in the audit. With regard to the approval of budgetary fund of affiliated units without the approval of the Ministry of Finance, the ministry stated that it would implement in accordance with the rules and similar cases would not recur. As to the problem of appropriation of off-budget fund to non-budgetary units and diversion of capital construction fund, the ministry issued a document requiring the recovery of the fund. For the problem that the No. 1 Research Institute of the ministry did not clean up and return commercial insurance and continued to buy it, the institute stopped paying premiums out of the staff benefit fund and actively studied a method of cleaning up and returning the insurance. The commercial insurance bought by the Printing Office of the ministry was already cleaned up and returned on June 22.
Moreover, the CNAO sent a separate letter of recommendations in regard to the few problems of non-standardized management and the ministry rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Civil Affairs
(Announced on September 14, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, from September 2006 to March 2007, the National Audit Office of China (CNAO) conducted an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Civil Affairs and a random audit of 7 of its affiliated units.
1. Background
The Ministry of Civil Affairs is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 13 tier-2 budgetary units.
The audit findings showed that in 2006 the budgetary revenues and expenditures of the Ministry of Civil Affairs basically conformed to the stipulations of the state laws and regulations on budget and finance. Its accounting practices generally accorded with the provisions of the Accounting Law, related accounting norms and regimes. The ministry set up a relatively adequate internal control system which was effectively enforced and earnestly rectified the problems discovered in the audits of the previous years. But the audit found some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) The affiliated Association for the Aged applied for 4.1 million yuan in 2006 budget in the name of internal organs.
In 2006, the China Association for the Aged, taking its internal units of the Department of Rights and Interests, Liaison Department, Comprehensive Department and International Department as project-undertaking units, applied for 4.1 million yuan of project budget.
(2) After 5.5 million yuan of budget fund of the affiliated China Association for the Aged was compulsorily transferred by the court, the item was kept on the current account for a long time.
The Northeast Guanghua Investment Co., which was affiliated to the former National Committee for China Aged Issues (predecessor of the China Association for the Aged) defaulted on loans. In 1999, the court handed down the sentence that the China Association for the Aged should bear the civil responsibility for the non-allocation of the registered capital. As a result, 5.5 million yuan of budget fund of the association was transferred from its account. This sum remained on account for a long time.
(3) The Prosthesis Institute of the Ministry of Civil Affairs did not register the property rights of state-owned assets for its 700, 000 yuan of investment outside.
In November 2002, the Prosthesis Institute of the Ministry of Civil Affairs invested 700,000 yuan as part of the registered capital of a certain company (accounting for 18.4% of the total registered capital of the company). There was never property right registration of state-owned assets for this investment of the institute.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued the audit report and audit decisions in a timely manner in compliance with the stipulations of the state laws and regulations. In regard to the China Association for the Aged applying for budget in the name of internal organs, it was required that such cases would not recur in the future. As for the budget fund of the China Association for the Aged remaining for a long time on account after it was compulsorily transferred by the court, it was requested that the problem be solved as soon as possible after the responsibility is identified in accordance with the regulations of the state. The Prosthesis Institute of the Ministry of Civil Affairs was requested to go through the relevant formalities for registering the property rights of state assets for its investment outside.
In view of the problems found in the audit, the CNAO recommended that the Ministry of Civil Affairs further step up internal management and enhance the financial supervision of the subordinate departments.
4. The status of the problems found in the audit
Prior to the audit, the Ministry of Civil Affairs conducted a self-examination and rectified the problems found in it. The ministry urged the departments concerned to take measures to really correct and earnestly rectify the problems found in the audit. With regard to the problem of the China Association for the Aged applying for budget in the name of internal organs, it was agreed that in drafting future budgets, it would apply in a unified way for budget in the name of the Office of the National Aged Work Committee. As for the budget fund of the China Association for the Aged being compulsorily transferred by the court and still remaining on account for a long time, during the assets checking of this year, the association went through the examination and approval formalities for the cancellation of the fund in compliance with the stipulations of the Interim Method for Checking the Assets of Administrative Public Institutions of the Ministry of Finance. For the failure to register the property rights of state assets of the Prosthesis Institute of the Ministry of Civil Affairs, the institute already withdrew the investment fund.
Moreover, the CNAO sent a separate letter of recommendations in regard to a few problems of non-standardized management and the Ministry of Civil Affairs rectified them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Justice
(Announced on September 14, 2007)
In compliance with the provisions of the Audit Law of the People¡¯s Republic of China, from November 2006 to February 2007, the National Audit Office of China (CNAO) performed an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Justice and a random audit of 6 of its affiliated units.
1. Background
The Ministry of Justice is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 11 tier-2 budgetary units.
The audit findings showed that the budgetary revenues and expenditures of the Ministry of Justice in 2006 conformed basically to the stipulations of the state laws and regulations on budget and finance. Its accounting practices were generally in line with the provisions of the Accounting Law, relevant accounting norms and regimes. The ministry had a relatively adequate internal control system, enforced it generally effectively and rectified the problems found in the audits of the previous years. But the audit discovered some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) 4.4522 million yuan of foreign affairs expenditure was disbursed above the budget.
In 2006 the Ministry of Justice spent 4.4522 million yuan in foreign affairs above the budget. Of the sum, the ministry diverted 900,000 yuan from the fund of projects which were not implemented and used 3.5522 million yuan of surplus from the previous years (including 2.3 million yuan of the expenses for overseas trips at the end of 2005 which was disbursed in 2006).
(2) Fraudulently entering the expenditure of 1.25 million yuan of judiciary operating expenses
In 2006 the ministry disbursed 1.25 million yuan of training expenses for minority ethnic groups, translation expenses for minority ethnicities and subsidies for equipment for law popularization, which should have been but were not appropriated, out of fund for judiciary operations.
(3) 217 million yuan of fixed assets was not included in the accounts of the ministry for calculation.
From 1986 to 1988, the ministry successively built in Beijing fixed assets worth 217 million yuan including Yuedu Hotel and other facilities, but it did not include these assets in the financial accounts for calculation as required by law.
(4) Disposal of assets of the Yantai Legal Training Center worth 10.67 million yuan without examination and approval
From 1992 to 1995, the ministry and the Judiciary Bureau of Yantai jointly built the Yantai Legal Training Center of the Ministry of Justice. By 1999, the ministry had accumulatively invested 10.67 million yuan. In July 2005, the ministry, without the examination and approval of the state-owned assets administrative department, signed an agreement with the government of Yantai to transfer with compensation the training center to the latter at the price of 3.4547 million yuan.
(5) Its subsidiary Judiciary Assistance and Exchange Center under-calculated 1.434 million yuan of profit.
The Judiciary Assistance and Exchange Center put some revenues and expenditures in foreign affairs services in the current account for calculation and under-calculated 1.295 million yuan of profit of the years before 2006 and 139,000 yuan of profit in 2006.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued the audit report and audit decisions in good time in accordance with the provisions of the state laws and regulations. In regard to the problem of disbursing expenses of foreign affairs above the budget, it was requested to strictly implement the budget and, in case of necessary adjustment of the budget, to submit the adjustment to and obtain the approval of the Ministry of Finance before implementation. For the problem of fraudulently disbursing expenses out of the judiciary operating fund, it was required to adjust the accounts based on facts in accordance with the regulations. As to some fixed assets not included in the accounts of the ministry for calculation, the department concerned was asked to handle the left-over matters expeditiously and put the assets in the financial accounts for calculation as required by law. Regarding the disposal of the assets of the Yantai Legal Training Center without examination and approval, it was required to report to the Bureau of Government Offices Administration of the State Council and go through the formalities of application and approval. With regard to the under-calculation of profit by the Judiciary Assistance and Exchange Center, the center was requested to adjust the related accounts and hand in the corresponding tax.
In view of the above problems, the CNAO recommended that the Ministry of Justice earnestly step up financial management, study and resolve problems left over from history and block up the loopholes in the financial and assets management.
4. The status of the problems found in the audit
Prior to the audit, the Ministry of Justice initiated a self-examination and rectified the problems found in it. The ministry attached great importance to the problems discovered in this audit and actively rectified them. During the audit, the ministry put 116 million yuan, part of the assets, in the financial accounts of the ministry. As for the fraudulently disbursed judiciary operating expenses, the relevant accounts were adjusted according to the rules. Regarding the fixed assets of Yuedu Hotel not being included in accounts for calculation, the department concerned actively went through the relevant formalities. With regard to the disposal of the assets of the Yantai Legal Training Center without authorization, numerous consultations were conducted with the Bureau of Government Offices Administration of the State Council and the related formalities were ongoing. For the under-calculation of profit by the Judiciary Assistance and Exchange Center, the accounts were adjusted according to the requirement and the corresponding tax was handed in.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Finance
(Announced on September 14, 2007)
In compliance with the provisions of the Audit Law of the People¡¯s Republic of China, from April to May 2007, the National Audit Office of China (CNAO) conducted an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Finance and a random audit of 12 of its affiliated units.
1. Background
The Ministry of Finance is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 52 tier-2 budgetary units.
The audit findings showed that the budgetary revenues and expenditures of the Ministry of Finance in 2006 basically conformed to the stipulations of the state laws and regulations on budget and finance. Its accounting practices generally accorded with the stipulations of the Accounting Law, the relevant accounting norms and regimes. But the audit found some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) 157 million yuan of surplus project fund was not checked for the record according to the rules.
By the end of 2006, a total of 157 million yuan of surplus fund of the ministry itself and some affiliated departments had not been checked for the record in accordance with the requirement. The sum included 110 million yuan of surplus project fund of 84 projects of the ministry itself, 39.0045 million yuan of accumulated project surplus of the Information and Network Center of the Ministry of Finance and the Accountant Qualifications Appraisal Center and 17.405 million yuan of surplus of the agricultural comprehensive development project of the National Agricultural Comprehensive Development Office.
(2) The ministry did not arrange in an all-round way project budgets and approved loose budgets, leading to 1.7406 million yuan of new surplus.
In 2006, under the circumstances where 12 projects had 103 million yuan surplus from the previous year including the special project of government procurement and national treasury management system development of the Department of National Treasury, the ministry still increased 17.5 million yuan of appropriations for these projects. That year the real expenditure stood at 15.7594 million yuan with the newly increased surplus 1.7406 million yuan at the end of the year.
(3) 132 million yuan of current fund was not cleaned up in a timely manner.
By the end of 2006, 132 million yuan of surplus from the previous years had been kept on the current account of the ministry itself for a long time without timely cleaning up.
(4) 2.0916 million yuan of public expenses was doubly disbursed.
In 2006, the departmental budget approved by the ministry included 2.0916 million yuan of public expenses for the 28 authorized administrative staff of the National Agricultural Comprehensive Development Office. But the budget of the National Agricultural Comprehensive Development Office approved by the ministry included 2.0916 million yuan of public expenses of the same 28 authorized administrative staff, leading to double disbursement of these public expenses.
(5) The Logistics Service Center of the Ministry of Finance diverted 18.2475 million yuan of capital construction fund and lent the money to its subsidiary enterprise.
In December 2003, the Logistics Service Center of the Ministry of Finance diverted 18.2475 million yuan of capital construction fund and lent the money to Debao Real Estate Development Co. Ltd. for payment of land use right leasing fees and delay charges of the fees of Yuexin Building.
(6) Its affiliated China Assets Evaluation Association disbursed 16.9178 million yuan of project expenditure out of the basic expenses.
In 2006, the Ministry of Finance approved the 13.7485 million yuan budget of project expenditure of the China Assets Evaluation Association. The real expenditure of the project was 17.0148 million yuan. But in the final account of 2006, only 97,000 yuan was included as the expenditure of the project with the remaining 16.9178 million yuan totally disbursed as basic expenses.
(7) Its affiliated China National Debt Association made the investment of 11.0031 million yuan through purchasing funds.
In 2006, the China National Debt Association, without the approval of the department in charge, used 11.0031 million yuan of the surplus from previous years of association fund and sponsoring training courses for investment and purchased South Bixian Fund, Zhongxin Bixian Win-win Fund and Everbright Sunshine No2 Fund.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued promptly the audit report and audit decisions in compliance with the provisions of the state laws and regulations. In regard to the surplus project fund not being checked for the record, it was required that the fund be checked for the record in accordance with the requirement and that active measures be taken to digest the surplus fund during the drafting of the budget to boost the effectiveness of fund use. It was requested that the current fund not yet cleaned up be cleaned up in a timely manner according to the rules. For the double disbursement of public expenses, it was urged that in future years, the funding of the National Agricultural Comprehensive Development Office be included in the departmental budget of the Ministry of Finance for unified management. As to the problem that the Logistics Service Center of the Ministry of Finance diverted capital construction fund and lent it to its affiliated enterprise, the center was requested to return the fund to the original channel. For the problem of subsidiary China Assets Evaluation Association disbursing project expenditure out of basic expenses, it was required to adjust account. With regard to the purchase, without permission, of funds as investment by the China National Debt Association, the association was requested to submit the matter for approval as investment outside.
In view of the above problems, the CNAO recommended that the Ministry of Finance accelerate the reform of fixing the authorized staff and sum of fund in the departmental budgets, enhance the accuracy and scientific nature of drafted budgets and step up the management of the subordinate enterprises of the Administrative Service Center of the Ministry of Finance to ensure the maintenance and increase of the value of state-owned assets.
4. The status of the problems found in the audit
The Ministry of Finance requested all its affiliated departments to earnestly study the problems found in this audit and rectify them in an all-round way. For the problem of relatively big surplus arising from surplus project fund ad approval of loose budgets, the Ministry of Finance would analyze the reasons through the departmental budgets of the year in combination with their implementation and urge the relevant undertaking departments and bureaus to implement the budgets in accordance with the required pace. At the same time, in drafting the departmental budget of 2008, the ministry would strive to digest more surplus fund. The budget of project expenditure from financial fund for 2008 was cut back by 10%. As to the current fund which was not cleaned up, the ministry already invited social intermediary services to help with the cleaning up and disposal of current fund in compliance with the requirement in assets checking and reported to the higher-ups its opinions on the disposal of the assets. After approval the ministry would handle the accounts accordingly. With regard to the National Agricultural Comprehensive Development Office double disbursing public expenses, in 2008 the ministry would include the public expenses of the authorized administrative staff of the office into the departmental budget for unified management. For the Logistics Service Center diverting capital construction project fund and lending it to an affiliated enterprise, the service center would instruct Debao Real Estate Development Co. Ltd. to return the money according to the plan. Regarding the problem that the subsidiary China Assets Evaluation Association disbursed project expenditure out of basic expenses, the ministry would urge the association to rectify and ensure that it would prevent such problem from happening again. With regard to the affiliated China National Debt Association making investment through purchasing funds without permission, the ministry would instruct the association to standardize the procedures of applying for and approval and checking for the record in strict compliance with the concrete requirements of the Interim Method of Management of State-owned Assets of the Public Institutions and the Financial Rules of the Public Institutions.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Labor and Social Security
(Announced on September 14, 2007)
In compliance with the provisions of the Audit Law of the People¡¯s Republic of China, from December 2006 to March 2007, the National Audit Office of China (CNAO) conducted an audit of the implementation of the 2006 budget and other financial revenues and expenditures of the Ministry of Labor and Social Security and a random audit of 15 of its affiliated units.
1. Background
The Ministry of Labor and Social Security is a tier-1 budgetary department of central government finance. Its budget is composed of that of the ministry itself and those of 18 tier-2 budgetary units.
The audit findings signaled that the budgetary revenues and expenditures of the Ministry of Labor and Social Security in 2006 conformed basically to the provisions of the state laws and regulations on budge and finance. Its accounting practices accorded generally with the stipulations of the Accounting Law, the relevant accounting norms and regimes. Its internal control system was relatively adequate. But the audit discovered some problems which needed to be corrected and improved.
2. The main problems found in the audit
(1) The ministry, without going through budgetary transfer as required, included a non-budgetary unit in budget management and obtained 14.3131 million yuan of fund from central government finance.
In March 2000, the China Professional Training Guiding Teachers Advanced Studies Center and the Tianjin Advanced Professional Technological Training Center, two units formerly under the jurisdiction of the Ministry of Labor and Social Security, were transferred under the jurisdiction of Tianjin Municipality in accordance with the Circular on the Opinions on the Implementation of Adjustment of the Management System and Layout Structure of Schools Affiliated to the Departments (Units) of the State Council ( No. Guobanfa [2000] 11). In 2002, in the approval of the authorized staff of public institutions of the Ministry of Labor and Social Security by the Office of the Central Staffing Committee (zhongyang bianban fuzi No. [2002] 46), the above two centers were not included in the public institutions of the ministry. However, until 2006, the ministry still administered the two centers as fully-budgeted units and included their financial revenues and expenditures in the budgets of the labor and social security departments. From 2003 to 2006, the ministry allocated to them a total of 14.3131 million yuan of financial fund (all being basic expenses).
(2) Its subordinate unit violated the rules in preparing the budget and included 526,100 yuan of expenditure of a non-budgetary unit in the departmental budget.
In 2006, the budgetary expenditures for changing office housing and renovation included 282,200 yuan of rent of office housing of the China Social Security magazine and office housing rent 111,200 yuan of the China Social Insurance Society (the total of the two items being 393,400 yuan). The budgetary expenditures of the Chinese Academy of Labor Sciences included 132,700 yuan of staff wages expenditure of the China Labor Society. The China Social Security magazine, the China Social Insurance Society and the China Labor Society are non-budgetary units.
(3) The Professional Skills Appraisal Center of the Ministry of Labor and Social Security transferred 3.6579 million yuan of revenue to its affiliated company.
In 2006, Beijing APTECH Beida Jade Bird Information Technology Co. Ltd. paid to the above center 3.6579 million yuan of charges for software engineer qualifications attestation. Of the sum, 3.03 million yuan was remitted to the Beijing Huajian Data Service Center attached to the center and the fund was entered into the account as revenue from commodity sales. 627,900 yuan was remitted to the China Employment Training Technological Guiding Center which entered the item in the account as public service revenue. By the time of the audit, 1.8506 million yuan of the above appraisal charges was spent and it was mainly used for distribution of labor charges, staff wages and social insurance premiums. The Professional Skills Appraisal Center did not include this charge in the departmental budget, nor did the center put it in the legitimate account for calculation.
(4) 3.7956 million yuan of project fund of the affiliated Chinese Academy of Labor and Social Security Sciences was not executed according to the budget.
From 2004 to 2006, the Ministry of Labor and Social Security approved a total of 5.5 million yuan of project expenditure budget for the external renovation of the scientific research building of the academy and appropriated budget fund 5.5 million yuan. In these three years, the accumulated expenditures reached 1.8627 million yuan of which 1.7044 million yuan was the expenditures of the project (accounting for 30% of the budget total) and other expenditures stood at 158,300 yuan. The remaining 3.7956 million yuan was not implemented.
(5) The Administrative Service Center of the Ministry of Labor and Social Security, without the examination and approval of the department in charge, canceled after verification 1.3844 million yuan of housing assets.
In 2006, due to the broadening project of Hepingli Middle Street, the commercial houses of the center along the street were to be demolished. In December 2006, without the examination and approval of the superior department in charge, the center canceled after verification this commercial housing at the original value of 1.3844 million yuan in fixed assets and fixed-assets fund.
3. The way the audit addressed the problems and its proposals
In view of the above problems, the CNAO issued promptly the audit report and audit decisions in compliance with the provisions of the state laws and regulations. In regard to the problem that the China Professional Training Guiding Teachers Advanced Studies Center and the Tianjin Advanced Professional Technological Training Center did not fulfill the budget transfers, they were requested to fulfill the budget transfers as soon as possible with the relevant departments and draw up and submit departmental budgets in strict accordance with the requirements of the Budget Law. For the problems of violation of the rules in preparing budget, putting expenditures of a non-budgetary unit in the departmental budget and transfer of revenue to an affiliated company by the appraisal center, the departments concerned were required to return the fund to the original channels. As to the failure to execute the project fund according to the budget, it was requested to implement the project in compliance with the budget as soon as possible. Regarding the Administrative Service Center canceling housing assets without the examination and approval of the superior department in charge, the center was asked to go through the examination and approval formalities.
In view of the problems discovered in the audit, the CNAO recommended that the Ministry of Labor and Social Security further enhance and improve the drafting of the departmental budgets, use the fund in strict accordance with the projects and purposes approved in the budget and not change on its own the project content and expand the scope of fund use. The ministry should step up the management of the budgets and finance of its affiliated tier-2 budgetary units and further raise the levels of departmental budgets and financial management.
4. The status of the problems found in the audit
The Ministry of Labor and Social Security launched a self-examination prior to the audit and rectified the problems found in it. The ministry attached great importance to the problems discovered in the audit and initiated earnest rectification by the affiliated departments in good time. The China Social Insurance Management Center signed a supplementary agreement with the property company to let the China Social Security magazine hand in directly the rent of office housing. The magazine already handed in 282,200 yuan of rent of office housing for 2006. The appraisal center adjusted the relevant accounts in regard to the revenue transferred to the affiliated company and returned the money to the original channel. The Chinese Academy of Labor and Social Security Sciences made a plan for the overall renovation project of the scientific research building. The Administrative Service Center went through the examination and approval procedures for canceling after verification housing assets. As for the problems of budget transfer not according to the rules and putting non-budgetary unit into budgetary management, the ministry got into touch with the Ministry of Finance to coordinate with the latter in fulfilling the budget transfers.
Moreover, the CNAO sent a separate letter of recommendations in regard to some problems of non-standardized management and the ministry¡¯s rectification was ongoing.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Land and Resources
(Announced on September 15, 2007)
In conformity with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) carried out audit of the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Land and Resources (MOLAR), and carried out random check on 7 ministry- affiliated units from February to March 2007.
1. Background
The MOLAR is a first-degree budgetary unit of the central finance, and the ministry¡¯s budget is composed of the budgets of the ministry itself and 51 second-degree budgetary entities.
The audit findings indicated that the MOLAR¡¯s budgetary revenue and expenditure in 2006 were by and large in line with the provisions of the state laws as well as the budgetary, financial and economic rules and regulations. Its fiscal handling was basically in conformity with the accounting law, relevant accounting criteria and the accounting system. Its in-house control system had become increasingly sound alongside the enhanced budget management and financial supervision. The problems found by the CNAO in previous years had been resolved in a serious manner. And the level of departmental financial management was further upgraded. However, the audit did find a number of problems that merited rectification and improvement.
2. The main problems found in the audit
(1) An amount of 6.75 million yuan was arranged beyond the scale of funding earmarked for the project of conducting nation-wide land and resources survey.
In 2006 the MOLAR filed applications for five projects on top of the funding scale of the nation-wide land and resources survey and was funded 6.75 million yuan. As of the end of 2006, there were still 3.7131 million yuan left unspent.
(2) The project fund to the amount of 1.4113 million yuan was misappropriated causing the waste of 283.3 thousand yuan of financial fund.
From October 2004 to December 2006 the MOLAR misappropriated the budgetary funding for the project of system-building for monitoring and supervision of the protection of basic cultivated land amounting to 1.4113 million yuan and spent it on the examination and approval of plan in the development zone of the law enforcement supervision bureau. The examination of the related rental found that the bureau overpaid 283.3 thousand yuan during its renting of the house pertaining to a certain Beijing-based office for over two years, which was an act of money squandering.
(3) The ministry-affiliated unit filed for the ministry¡¯s project budget amounting to 500 thousand yuan and took care of the money on behalf of the ministry.
In 2006 the China Land and Minerals Legal Affairs Center applied for the budgetary fund of 500 thousand yuan for the project of amending the mineral resources law that should have been the responsibility of the ministry itself. The fund was actually controlled by the ministry¡¯s internal organ¡ªthe office of leading group for the amendment of the Land Management Law and the Mineral Resources Law. And in 2006, it spent 282.2 thousand yuan, and of which 139.7 thousand yuan were conference expenses that had nothing to do with the project.
(4) The ministry compound landscaping project was carried out in disregard of the rules and regulations.
In 2006 the MOLAR carried out landscaping renovation in the east sector of the ministry compound without authorization. As of the time of audit, 1.4 million yuan from the previous years¡¯ balances had been spent, and the entire undertaking has yet to be completed. In the course of the project, there were cases of artificial shortening of the bidding document delivery deadline, participation of the unit carrying out the landscaping in the bid and tender, lack of expertise on the part of the bid appraisers as well as the amount of money paid in excess of the bid-winning price of 260 thousand yuan.
(5) The 12 million yuan project budget of its affiliated Geo-mechanical Institute of the Chinese Academy of Geological Sciences was not itemized.
From 2004 to 2006, the project of survey and evaluation of strategically selected regions of oil and gas resources costing 12 million yuan of budgetary fund filed by the Institute was not itemized, and had no outlays listed.
(6) The ministry-affiliated Development & Research Center of the China Geological Survey embezzled 500 thousand yuan of ear-marked fund for building a training center.
In 2005 the Center diverted 500 thousand yuan pertaining to the project of the nation-wide land and resources survey for the building of an IT network in its training center in Shisanling.
(7) Part of the units affiliated with the former Ministry of Geology and Mineral Resources and the MOLAR made unauthorized deposit and retention of 2.119 million yuan in the name of conference expenses
As of the end of 2001, part of the units affiliated with the former Ministry of Geology and Mineral Resources and the MOLAR had deposited and retained 1.9823 million yuan of balance without authorization in the name of conference expenses in the Shisanling training center of the Development & Research Center of the China Geological Survey, and from 2001 to 2006 another 136.7 thousand yuan were deposited. The expenses totaled 642.4 thousand yuan. The balance at the end of 2006 was 1.4766 million yuan.
(8) The technical equipment ¡°field army¡± worth 534.5 thousand yuan of the MOLAR affiliated China Institute of Geo-Environmental Monitoring was left idle.
In September 2005 the Institute spent 534.5 thousand yuan from the ear-marked fund for equipments used by the technical force ¡°field army¡± to purchase three drilling machines. Despite the fact that they had not been used by the time the audit was conducted, a two-year contract on renting the sites for installing the machines costing 152.7 thousand yuan in rental was signed, and 123.6 thousand had been paid for the rent.
3. The way the audit addressed the problems and its proposals
With regard to the above problems, the CNAO has timely produced its audit report and handed down its audit decision pursuant to the provisions of the state law as well as rules and regulations. It demanded the MOLAR to return the balance at the end of 2006 with regard to the budget arranged on top of the fund employment scale of the project of nation-wide land and resources survey so as to re-arrange the project, and to report to the finance ministry for approval. As for the misappropriation of project funding and the waste thus caused, the unit in question was asked to return the misappropriated funding to the original source of funding, and steps should be taken for further fact-finding so as to hold people concerned accountable. As regards the issue of applying for the project budget and keep it on behalf of the MOLAR by the affiliated unit, the MOLAR was asked to recover the project fund and include it in the ministry¡¯s budget for unified management. With reference to the non-statutory landscaping of the ministry compound, the MOLAR was asked to make amends by going through the relevant procedures. When it came to the misappropriation of project fund for building the training center IT network, the unit in question was asked to transfer the fixed asset already in place to its higher authorities. As for the unauthorized deposit and retention of the money by part of the affiliated units of the former Ministry of Geology and Mineral Resources and the MOLAR, the units concerned were asked to hand over the funds to the central finance.
With regard to the problems found in the audit, the CNAO proposes that the MOLAR should really enhance its expenditure management, have a sound system for authorizing conferences. And furthermore, the ministry should reinforce its monitoring and inspection of the firms run by its affiliates so as to make sure that the state-owned assets keep their value and appreciate in value.
4. The status of the problems found in the audit
The MOLAR had conducted its self-examination prior to the audit, and corrected the anomalies thus found. The MOLAR has attached great importance to the problems found in the audit: it has convened special meetings to study the problems, and asked the units concerned to correct, identify those responsible and address the issues. As regards the arrangement of budget on top of the fund employment scale of the project of nation-wide land and resources survey, the MOLAR has taken steps to stop the employment of the project fund, and is in the process of re-formulating the budget for approval in line with the requirements of the project budget management. With regard to the diversion of project fund and the waste thus caused, measures are being taken to re-arrange the accounting in question, and return the diverted project money to the original source of funding. As regards the problem of applying for and keeping the project budget by the affiliated unit on behalf of the ministry, consultations are under way with the Ministry of Finance in order to work out a procedure for recovery of the money. As for the non-statutory landscaping of the ministry compound, the MOLAR is making amends for due formalities. With regard to the diversion of project money to build a training center IT network, the Development & Research Center of the China Geological Survey has put the fixed asset under a unified management. With reference to the unauthorized deposit and retention of money, the balance form the conference expenses kept at the Shisanling training center was taken back in a timely manner and returned to the central finance, and three persons held accountable have been disciplined by the party and government. And other persons have been admonished in conversation with them. Also, the Interim Procedures of the Ministry of Land and Resources for Managing the Ministry¡¯s Conference Expenses have been formulated.
In addition, the CNAO has sent a letter containing the audit proposals regarding a few substandard management practices found in the audit, the MOLAR is acting on them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Railways
(Announced on September 15, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) carried out audit of the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Railways, and conducted random check on 30 affiliated units from December 2006 to March 2007.
1. Background
The Ministry of Railways (MOR) is a first-degree budgetary entity of the central finance, and the ministry¡¯s budget consists of the budgets of the ministry itself and 54 second-degree budget entities.
The audit findings indicated that the budgetary expenditure of the Ministry of Railways in 2006 were basically in line with the state provisions regarding budget as well as financial and economic rules and regulations, and its accounting practice was in the main in compliance with the accounting law, relevant accounting criteria and accounting system. It had devised procedures for financial management system and cost accounting in railway profession, strengthened the basic fiscal work, and was able to correct the anomalies found in previous audits. However, the audit did find some problems that warranted attention and improvement.
2. Main problems found in the audit
(1) It overpaid 27.41 million yuan as a result of arbitrary upgrade of the standard for project budget. From 2003 to 2006, the ministry-affiliated Economic Planning Research Institute (EPRI) was entrusted by the MOR to evaluate the survey and designs of major and medium-sized railway projects, and it employed the previous criteria in paying 39.83 million yuan of evaluation fee from the railway construction fund, which was 24.71 million yuan more than the government indicative price. That money was used as budgetary expenditure by the Institute.
(2) It collected 15.1782 million yuan of fees in disregard of the rules and regulations.
In 2006 the MOR, without obtaining a permit for charging fees, charged enterprises 2¡ë of the building cost of new rolling stocks for every new rolling stock and old ones (for maintenance purpose) that used the operational railway lines, and it charged 6¡ë of the rolling stock test and repair fee for each one that needed check for acceptance. As a result, the MOR collected 15.1782 million yuan as its business service earnings.
(3) Main problems found in the MOR-affiliated Information Technology Center
I. In 1996, the Center-affiliated Engineering Information Co Ltd opened a foreign currency bank account in HK in order to develop overseas electronics buying and sales business. This activity was not indicated in the book and became off-the-book asset. As of the end of 2006, such asset amounted to US$ 1.4721 million, which was equivalent to RMB 11.4824 million yuan.
II. From 1994 to 2006 the same Center formed a group company limited and opened more than 100 subsidiaries (branches), and the director of the Center was made chairman of the board of directors of the group company and the subsidiaries (branches). It took advantage of those subsidiaries to conduct relevant transactions in railway project construction, which increased the project outlays by 161 million yuan.
III. From 1995 to 1999 the Center and its affiliates¡ªa certain computer engineering company limited and other units moved the firm¡¯s funds off the book by means of fictive invoices and overpaid goods prices (the MOR¡¯s internal audit had confirmed there were 136 million yuan of the off-the-book fund). As the persons in question kept to themselves the data and failed to provide information about such a fund during the audit, the CNAO has referred this issue to the department concerned for further investigation.
IV. The Center-affiliated company falsified a VAT invoice amounting to 41.4623 million yuan. The former Center director and others have been suspected of committing serious economic offenses; they have been referred to the department concerned for further investigation pursuant to law.
V. In 2006 the Center applied for budgetary expenditure for 188 staff (73 staff more than the actual number), and this resulted in over-application and spending of 1.6179 million yuan in financial subsidy.
(4) The MOR-affiliated Economic Planning Research Institute over-applied for 2.9117 million yuan in financial subsidy.
In 2002 the MOR incorporated without authorization the MOR Engineering Design Evaluation Center and the Standard Office of the Specialty Design Institute¡ªthe two self-financed units in the financially subsidized MO¡¯s Economic Planning Research Institute. In 2006 the Institute applied for financial subsidy of 73 staff of the two self-financed units and spent 2.9117 million yuan.
(5) The MOR-affiliated China Academy of Railway Science built its office building in excess of the cost estimate by 8.73 million yuan.
From 2003 to 2005, approved by the MOR, the China Academy of Railway Science erected the Environment Control Center building whose cost estimate amounted to 29.98 million yuan. In the course of the construction, the Academy increased the investment in the name of the secondary renovation using the money from self-raised fund, which exceeded the cost estimate by 8.73 million yuan.
3. The way the audit addressed the problems and its proposals
With regard to the above problems, the CNAO has, pursuant to the state law, rules and regulations produced an audit report in a timely manner and handed down an audit decision. As for the overpayment resulting from arbitrary upgrade of project budget standard, the MOR was asked to recover the overpaid portion and returned it to the original source of funding. As regards the non-statutory fee charging, it was requested to report to the Ministry of Finance and the National Development and Reform Commission for approval, and make amends for obtaining a fee-charging permit. Regarding the MOR Information Center, it was requested that the company affiliated with the Center enter into account the off-the-book fund, sort out the problems relating to the increased outlays for railway projects using the relevant transactions, take further steps to locate the whereabouts of the Center-affiliated enterprise¡¯s funding data of the off-the-book fund, and hold persons concerned accountable. In connection with the over-application of the financial subsidies, the MOR was requested to ensure the true nature of the budget. As for the cost overrun of the building of the China Academy of Railway Science, it was requested to strictly control the cost estimate.
With reference to the problems found in the audit, the CNAO proposes that the MOR should further improve the railway construction management system, take practical steps to enhance the management of the project bank, budgetary management and bid and tender management. It should have a close look at the projects funded by the railway construction fund, and control the scale and standard of the project budgetary outlays. It further proposes that that the MOR should keep a watchful eye on the financial problems of its affiliated units, perfect the in-house control, prompt those units to apply for budgetary fund in accordance with the fixed staff size and fixed quota, and ensure the safety and integrity of the state-owned assets.
4. The status of the problems found in the audit
The MOR had conducted its self-examination before the audit, and corrected some of the problems found in its self-examination. The MOR has given high priority to the problems found in the audit, taken active steps to improve the situation. With the exception of the Information Center¡¯s overseas non-currency asset whose clean-up is still underway, the audit decision has been implemented in whole. As for the over-appropriation of financial fund as a result of the upgrade of project budget standard, the full amount of money has been recovered and returned to its original source of funding. Regarding the non-statutory fee-charging, the department concerned has been advised to stop the practice, and is asked to obtain a permit for fee-charging in accordance with the approval given by the Ministry of Finance and the National Development and Reform Commission. In conjunction with the Information Center¡¯s increase in railway project expenses taking advantage of the relevant transactions and the affiliate¡¯s off-the-book accounts, the MOR has cleaned up the mess, taken further steps for investigation and punishment, and at the same time referred to the department concerned the problem of falsifying VAT invoices on the part of the Center¡¯s affiliate for investigation. As for the cost overrun for the office building of the China Academy of Railway Science, steps to correct the situation have been taken. In addition, The MOR has devoted efforts to enhance the system-building, and has devised procedures for controlling the construction cost, fund and budget management, thus perfecting the in-house control.
Besides, the CNAO has sent a letter containing proposals to the MOR regarding some mismanagement problems, and the MOR has acted on them accordingly.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Information Industry
(Announced on September 15, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit office of China (CNAO) carried out audit of the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Information Industry (MII), and conducted random check on 18 affiliated units from September 2006 to March 2007.
1. Background
The Ministry of Information Industry is a first-degree budgetary unit of the central finance, and the ministry¡¯s budget is composed of the budgets of the ministry itself and 59 second-degree budgetary entities and project implementation units.
The audit findings indicated that the MII¡¯s 2006 budgetary revenue and expenditure were basically in line with the state budgetary, financial and economic rules and regulations, and the accounting practice was in compliance with the accounting law, relevant accounting criteria and accounting system, However, the audit did find some problems that called for attention and improvement.
2. Main problems found in the audit
(1) The 1.827 billion yuan of budgetary appropriation of the MII were not implemented.
For reasons of a subsequent increase of budget, at the end of 2006, the MII had 1.827 billion yuan of budgetary fund left idle, causing the surplus of fund, of which 23.3444 million yuan were surplus from the basic expenditure, and 1.804 billion yuan were surplus from the project expenditure.
(2) The MII¡¯s special fund of 3.4 million yuan was left in the care of the MII-affiliated unit.
On December 28th, 2005, the MII gave its 3.4 million yuan ear-marked for wide application of tax control register to the affiliated Second Service Center to take care. In 2006, it spent 1.7612 million yuan, of which 1.5376 million yuan were appropriated to the China Electronic Standardization Institute, and the reimbursement of traveling expenses amounted to 223.6 thousand yuan. As of the end of 2006 there were 1.6388 million yuan left unspent.
(3) Part of the MII¡¯s provincial-level Communication Administrations¡¯ funds of 432 million yuan was not included in the MII budget.
In the draft budget 2006 of the MII, the 432 million yuan of fund pertaining to the 25 affiliated provincial-level Communication Administrations were not included, of which 13.8733 million yuan were money from the finance, 92.1674 million yuan were capital construction fund, 213 million yuan were transferred from telecom firms when the administrations were formed, 41.5201 million yuan were income from office rentals, and 70.7215 million yuan were interest earnings and other funds.
(4) Part of the revenues from the affiliated telecom industry¡¯s Guiding Centers for Vocational Ability Identification and Telecom Engineering Quality Control Centers amounting to 61.9032 million yuan were not included in the MII budget.
In 2006 the income from 30 MII- affiliated telecom industry¡¯s Guiding Centers for Vocational Identification totaling 29.5166 million yuan and 32.3866 million yuan from 30 telecom Engineering Quality Control Centers were also not included in the MII budget for management.
(5) Part of the earnings from office rentals of the Communication Administrations totaling 10.9589 million yuan were not included in the budget.
In 2006, the Shanghai Communication Administration¡¯s earnings from rented office building amounting to 6.7261 million yuan and the Jiangsu provincial Communication Administration¡¯s earnings from rented office building totaling 4.2328 million yuan were also not included in the budget.
(6) Part of the affiliated Communication Administrations failed to collect 2.5196 million yuan of telecom network code resource employment fees due to them.
As of the end of 2006, part of the MII-affiliated Communication Administrations failed to collect 2.5196 million yuan of telecom network code resource employment fees due to them.
(7) The MII-affiliated Second Service Center¡¯s Beijing Sanda Economic and Technology Center diverted 8.1352 million yuan of the project fund for staff expenses.
From 2003 onward, the MII-affiliated Second Service Center¡¯s Beijing Sanda Economic and Technology Center has listed staff expenditure in the ongoing project of Software and Integrated Circuit Platform of the Electronics Information Industry Fund in disregard of the contract terms, and by the end of 2006, it had listed 8.1352 million yuan, of which 1.9569 million yuan were listed in 2006.
(8) Part of the provincial-level Communication Administrations purchased or built oversize office buildings.
I. In 2005 the Fujian provincial Communication Administration applied to the MII for investment of 49.30 million yuan to construct a 9400 sq. m. comprehensive business building on top of its already available office building of 6650.8 sq. m. Upon approval it revised upward in February 2006 the building space to 15000 sq. m. whose total cost was 77.99 million yuan. As of the time for audit, the Administration had paid construction expenses totaling 20 million yuan.
II. In 2004 the Ningxia Hui Autonomous Region Communication Administration applied to the Region¡¯s Development and Reform Commission for building a 10000 sq. m. office building costing 28 million yuan in addition to the already available office building with a floor space of 4058.91 sq. m., and got the approval. In March 2006 the Administration revised downward its building space to 6000 sq. m.
(9) The MII-affiliated Telecom Research Institute turned the non-operational asset of 47.42 million yuan into operational one in disregard of the law.
In January 2003 the Institute turned the 47.42 million yuan worth equipments in use into operational asset, and invested the money in its affiliate¡ªa whole-funded enterprise.
3. The way the audit addressed the problems and its proposals
The CNAO has prepared an audit report and handed down an audit decision regarding the above problems pursuant to the state law, rules and regulations in a timely manner. With regard to the failure to implement part of the ministry budget, the MII was requested to strictly enforce the budget. As regards the transfer of the ministry¡¯s budget money to the affiliate for care, the MII was asked to correct the situation. As for the failure of part of the affiliates to include their funds and earnings in the MII budget, the units concerned were asked to include them in full in the budget. When it came to the failure to collect the employment fees for the telecom network code resource, the units concerned were asked to collect them. With reference to the diversion of the project budget, the unit in question was asked to return the money to the original source of funding. Concerning the oversize construction of office buildings by part of the provincial-level Communication Administrations, these units were asked to clean up the mess, and hold those in question accountable. As for the turning of the non-operational assets into operational ones in disregard of the law, the unit was asked to correct the anomaly.
With regard to the problems identified by the auditors, the CNAO has proposed that the MII should further enhance its budgetary management, upgrade the cost effectiveness of the funds employed, tighten the control over capital construction projects and take stock of the construction of oversize office buildings.
4. The status of the problems found in the audit
The MII had conducted its self-examination before the audit, and corrected part of the problems found in the self-examination. With regard to the problems found in the audit, the MII has given intense attention to them, and taken active steps to clean up. The Shanghai Communication Administration and Jiangsu provincial Communication Administration have both included the full amount of office building rental earnings and other incomes in the MII¡¯s 2007 budget. The money diverted by the Beijing Sanda Economic and Technology Center has been returned to the original source of funding. The MII has sent urgent letters demanding that provincial Communication Administrations should include the incomes of their own units and the affiliates in the MII¡¯s budget, and collect and hand in the employment fees for the telecom network code resource in time and in full. As regards the oversize construction of office buildings by the provincial-level Communication Administrations, special meetings have been called to demand that all the non-statutory building activities should be stopped without hesitation, and the MII has formulated and issued the Notice regarding the Clean-up of the Office Building in Fujian Provincial Communication Administration and the Notice regarding the Clean-up of the Office Building in Ningxia, and called on all the provincial-level Communication Administrations to take stock of and correct the situation in office buildings already available and those under construction.
In addition, the CNAO has sent a letter containing proposals on a few management irregularities found in the audit, and the MII has acted on them accordingly.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Water Resources
(Announced on September 15, 2007)
In conformity with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) conducted audit of the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Water Resources (MWR), and conducted random check on ten of its affiliates from December 2006 to March 2007.
1. Background
The Ministry of Water Resources is a first-degree budgetary entity of the central finance, and its budget is composed of the budgets of the ministry itself and 28 second-degree entities.
The audit findings indicated that the MWR¡¯s 2006 budgetary revenue and expenditure basically tallied with the state budgetary, financial and economic rules and regulations, and its accounting practice was largely in line with the accounting law, relevant accounting criteria and accounting system. Its internal control was relatively sound, and was able to solve the problems found in previous audits. However, the audit did find some problems that called for attention and improvement.
2. Main problems found in the audit
(1) The 230 million yuan budgetary expense for capital construction projects were not broken down to specific units or projects.
The MWR failed to break down the 230 million yuan of its 2006 budget for capital construction projects to specific units and projects, or 8.83% of the budget for capital construction project expenditure.
(2) Part of the projects failed to strictly follow the capital construction procedures in arranging the fund amounting to 48.15 million yuan.
I. The preliminary designs of three projects including the project of Equipment for Testing the High-Precision Water Conservancy Machines and System for Test and Control proposed by the China Water Conservancy and Hydro-power Science Institute were not approved until July 2005, but the Ministry of Water Resources disbursed the project investment totaling 22.55 million yuan from 2002 to 2004 separately.
II. The preliminary designs of the two projects including the project of the Building of the Platform for Comprehensive Application of MWR eGovernment by the MWR¡¯s Water Conservancy Information Institute was approved in 2005, but the MWR had handed down the project plans whose investment totaled 25.60 million yuan in 2002 and 2004 respectively.
(3) The MWR disbursed financial input amounting to 8.06 million yuan to non-budgetary units.
In 2005 and 2006, the MWR appropriated 8.06 million yuan of financial input to its self-financed affiliate¡ªMWR Rural Hydro-power and Electrification Development Bureau.
(4) Part of the units enlarged project expenditure scale by 3.0793 million yuan.
I. In 2006 part of the China Research Institutes for Water Conservancy and Hydro-Power Science withdrew and were allocated 1.3668 million yuan of wage-nature expenses from 12 thematic projects, and withdrew and were allocated 465.4 thousand yuan for the same purpose from five thematic projects including the project of The Evolution of the Yellow River Estuary and Taming and the Optimal Allocation of Water Resources against the Setting of New ¨Cemerging Silt sponsored by the National Science and Nature Foundation.
II. In 2006 the MWR¡¯s Development Research Center disbursed 420.6 thousand yuan of the MWR labor fees and consultancy fees form the projects of its administrative institutions including the China¡¯s Water Resources Development Situation Analysis and Prognosis.
III. In 2006 the MWR¡¯s Head Station for Management of Water Conservancy Construction listed in its project of the Special Plan for Securing the Safety of and Reinforcing the Dilapidated and Risky Reservoirs 500 thousand yuan for the item of Interim Rules for Technical Screening of the Reinforced Engineering Works on the Insecure Reservoirs.
IV. In 2006 the MWR¡¯s Office for Construction of Engineering Projects of the National Command System for Fighting Flood and Drought listed in its project budget for the command system for fighting flood and drought engineering works 326.5 thousand yuan for purchase of cars, digital cameras and other equipments.
(5) Part of the affiliates¡¯ balances from capital construction projects to the amount of 2.7454 million yuan were not turned in to the central finance.
I. As of the end of 2005, the 20-plus projects of the MWR¡¯s Development Research Center (2.7454 million yuan) including The Eleventh Five Year-Plan for Development of the Nationwide Water Resources implemented with the pre-construction working expenses for capital construction had been checked for acceptance, and 2.4872 million yuan of the balances from those projects amounting to 3.5532 million yuan should have been handed in to the higher authorities, yet it failed to do so.
II. In 2006 the project of China¡¯s Research Institute for Water Conservancy and Hydro-power Science¨C¨Cthe Strategic Study of SciTech Development of Water Conservancy arranged with the pre-construction working expenses of the capital construction was already checked for acceptance, and the project had a balance of 368.9 thousand yuan. As per rules, 258.2 thousand yuan should have been submitted to the higher authorities, but the unit concerned failed to do so.
(6) The MWR¡¯s Development Bureau for Migrants from Reservoir Area falsified the project expenses totaling 1.4952 million yuan, which led to the dichotomy between the book and the reality.
In 2005 the Bureau signed a contract to entrust the theme topic on the policy study on the post- migration support for the reservoir area migrants to its Zhongshui Migration Development Center, and listed the 2.24 million of theme topic budget as expenses in its final accounts. As of the end of 2006 the Bureau disbursed 1.568 million yuan to the Center (the Center actually spent 744.8 thousand yuan on retaining experts and research). The above practice resulted in the dichotomy between the book and the reality (1.4952 million yuan)
(7) Part of the capital construction projects fared rather slow, and the balances from them amounted to 68.0193 million yuan.
I. As of the end of 2006 only three of the 32 capital construction projects of the MWR¡¯s Water Conservancy and Hydro-power Planning and Design Institute approved by the MWR had been completed, and the balances totaled 35.3361 million yuan, or 63% of the total amount of their investment.
II. As of the end of 2006 the five MWR-approved capital construction projects of the China¡¯s Research Institute for Water Conservancy and Hydro-power Science whose total investment amounted to 63.33 million yuan actually spent 44.5166 million yuan, and had balances totaling 18.8134 million yuan, or 29.71% of the total amount of investment.
III. As of the end of 2006 the project of building the Platform for Comprehensive Application of MWR eGovernment by the MWR¡¯s Information Center whose investment of 29.40 million yuan was approved by the MWR actually spent 15.5302 million yuan, and had a balance of 13.8698 million yuan, or 47.17% of the total amount of investment.
(8) The off-the-book asset amounting to 40.70 million yuan of the MWR¡¯s Development Research Center were not included in the financial management.
In December 2005, the Center sold to a certain company the office building located at the Liupukang for a negotiated price of 35 million yuan, which had never been entered in the book. And in January 2006 when the Center bought the houses in Tianlun Beili whose total housing expenses and other expenses amounted to 37.06 million yuan, it used 31.36 million yuan of the sold building¡¯s earnings to pay for part of the expenses, and the remaining 5.7 million yuan were paid from the rental obtained by the developer-affiliated company leasing houses on the Center¡¯s behalf. As of the time of audit, the asset formed as a result of selling building and rental income to the amount of 40.7 million yuan were not placed under the control of the finance.
3. The way the audit addressed the problems and its proposals
In connection with the above problems, the CNAO has prepared an audit report and handed down an audit decision in accordance with the state law, rules and regulations in a timely manner. As for the failure of itemization of the budgets for capital construction projects, the unit concerned was asked to carry out the itemization. As regards part of the projects that failed to follow the procedures for capital construction projects, it was asked to comply with the basic procedures for construction pursuant to relevant regulations. With regard to the appropriations of financial inputs to non-budgetary entities, it was asked to consult the Ministry of Finance and other relevant departments to sort out the budget channel of the Rural Hydro-power and Electrification Development Bureau. In conjunction with the increase in expense scale, the units in question were asked to return the money to its original source of funding. As regards the balances of part of the capital construction projects, the units concerned were asked to return them to the central finance. As for the falsified project expenses that led to the discord between book and reality, the unit concerned was asked to alter the book entry. As regards the slow progress of part of the capital construction projects, the units in question were asked to speed up the projects. As for the off-the-book assets, the units concerned were asked to include them in financial management, and submit the real estate ownership data to the Government Offices Administration of the State Council for record.
The CNAO has proposed to the MWR in connection with the problems found in the audit that the MWR should itemize its capital construction project investment plans and budgets, fine-tune its project management, take practical steps to apply the project plans and budgets to specific projects and units, speed up the progress of capital construction projects, and bring out the cost-effectiveness of financial funds.
4. The status of the problems found in the audit
The MWR had conducted its self-examination prior to the audit, and corrected the anomalies thus found. In connection with the problems found in this audit, the MWR attached great importance to them, called on all units to carefully study and identify the causes, take practical and effective steps to carry out the rectification. At present, the problems pinpointed in the audit report and audit decision have basically been worked out. As for the failure to itemize the capital construction project budget expenses and failure of part of the projects to observe the procedures for capital construction as well as falsification of expense items that led to the dichotomy between book and reality, steps have been taken to make a radical clean-up, and corrective measures have been devised. As regards the appropriation of financial funding to non-budgetary entity, consultations have been under way with the finance ministry and other relevant departments to resolve the budget channel of the bureau in question. As for the increase in project expenses by part of affiliated units, the money has been returned to its original source of funding. With regard to the balances from the capital construction project funding of part of the units, they have been transferred to the central finance. With reference to the off-the-book asset of the MWR¡¯s Development Research Center, the office building has been valuated according to the contract, the money has been entered in the book and a preliminary office building ownership certificate has been obtained. The Center expressed its readiness to complete the other formalities at the earliest date.
In addition, the CNAO has sent a letter containing the proposals on a few irregularities in management; the MWR has acted on them accordingly.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Agriculture
(Announced on September 15, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) carried out audit of the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Agriculture (MOA), and conducted random check on ten affiliated units from December 2006 to March 2007.
1. Background
The Ministry of Agriculture (MOA) is a first-degree budgetary unit of the central finance, and its budget is composed of the budgets of the ministry itself and 50 second-degree budgetary entities.
The audit findings indicated that the MOA¡¯s 2006 budgetary revenue and expenditure were basically in line with the state budgetary, financial and economic rules and regulations. Its accounting practice was basically in conformity with the accounting law, relevant accounting criteria and relevant accounting system. Its internal control was relatively sound, and was able to conscientiously correct the anomalies found in the previous audits. Its implementation rate of the audit decision was 100%. However, the audit did find some problems that called for correction and improvement.
2. Main problems found in the audit
(1) It appropriated 500 thousand yuan of financial fund to non-budgetary entities.
In 2006 the MOA made a direct financial input to the amount of 500 thousand yuan to Beijing Haicunliang Data Technology Co Ltd for the project undertaken by its affiliated General Station for National Husbandry Veterinarians¡ªthe application and research of data concerning forecast, advanced warning and command in the event of major outbreak of animal epidemic and diseases. The company was one with 70% of the shares owned by natural persons. And it included the money in its income.
(2) It arranged capital construction project costing 136 million yuan in disregard of the procedures for such construction.
From 2002 to 2006 the MOA handed down the project investment plans including the project concerning the set-up of a lab for material preparation of test standard for nation-wide milk cows¡¯ production capability without prior approval of the project¡¯s initial design and cost estimate, and for this purpose it handed out 136 million yuan.
(3) Part of the MOA-affiliated units increased their project expenses by 3.4513 million yuan.
From 2005 to 2006 the Sub-center for the Husbandry Products Certification of the MOA¡¯s Farm Produce Quality Safety Center listed 3.4513 million yuan of staff expenditure and public expenditure in the administrative institution projects concerning chemical-free farm produce quality certification, monitoring and prevention of animal epidemic as well as agricultural information service.
(4) Part of the MOA affiliates shifted the special financial fund to the amount of 2.5156 million yuan.
From 2003 to 2005 the MOA¡¯s Husbandry Products Center under the name of expenses for testing the consequences during the stopping of veterinary medicines and random check expenses shifted the 1.865 million yuan intended for its outlays for monitoring and testing the safety of green farm produces and other projects to the Beijing State-owned Agriculture, Industry and Trade Development Center of the General Station for National Husbandry Veterinarians. As of the end of 2006 all the money were spent on the wages , traveling expenses and other fields of the Husbandry Products Center and the Beijing State-owned Agriculture, Industry and Trade Development Center.
In 2006 the MOA¡¯s Human Resources Development Center made an advanced payment of 251 thousand yuan for 2007-2008 server¡¯s trusteeship service fee under the item of the project of advanced warning of agricultural information and the 2007 technical development fee for the matching platform for demand and supply of agricultural talents.
In 2006 the MOA¡¯s Information Center made an advanced payment of 399.6 thousand yuan to the 2007 expenses for technical service and data bank development fee in the framework of the project concerning the maintenance expenses for command and dispatch of the MOA¡¯s satellite system etc.
(5) Main problems in the MOA-affiliated General Station for National Husbandry Veterinarians.
I. Misappropriation of project¡¯s financial fund amounting to 1.4752 million yuan.
In June 2002 the General Station paid the ear-marked financial fund of 1.4752 million yuan intended for prevention and monitoring of animals¡¯ epidemic to the Beijing Haicunliang Data Technology Co Ltd for development of management software, of which 20.6 thousand yuan were used to pay for the conference expenses, and 302 thousand yuan were spent on development of software for China¡¯s oil enterprise information portal by the Microsoft (China) Co Ltd.
II. Slow progress of part of the projects, which resulted in the 137 million yuan of balances.
In 2006 the MOA approved 21 administrative institution projects of that Station amounting to 36.23 million yuan of the financial budget, and there were a balance of 5.3269 million yuan carried forward from the previous year. As of the end of 2006, those projects spent 28.0126 million yuan, and had a balance of 13.5443 million yuan, which accounted for 37.38% of the budget in that year.
As of the end of 2006 the MOA handed down 238 million yuan of the central-financed budget to the Station¡¯s nine capital construction projects including the monitoring information system for the grassland, and 114 million yuan were spent, which meant a balance of 124 million yuan, or 52% of the central finance appropriation.
III. The turning of 4.2478 million yuan of non-operational asset into operational one without approval and evaluation.
From 2001 to 2006 the Station leased its germ-free lab, cold storage house, instruments and equipments (worth 1.7188 million yuan) to the Beijing Shiji Yuanheng Animal Epidemic Prevention Technology Co Ltd for business sake without approval and assessment. The company paid rentals amounting to 685 thousand yuan to the Station in the form of technical cooperation fee and experiment assistance fee etc.
From 2004 to 2006 the Station took the form of signing a Product Agency Agreement whereby it assigned the Beijing Shiji Yuanheng Animal Epidemic Prevention Technology Co Ltd to sell its seven diagnostic reagents kits as well as dog-oriented drugs researched and produced with the budget expenses for six theme topics including the key projects to be addressed during the country¡¯s tenth Five-Year Plan period and the Plan 863 as well as the Station¡¯s own funding. From 2004 to 2006, the company (including its subsidiaries) had received the above-mentioned products worth 2.529 million yuan, given back 2.123 million to the Station in the form of technical service fee, and still owed 406 thousand yuan.
IV. Failure to carry out the mandatory government purchase with 2.412 million yuan intended for the network development and maintenance and other projects.
From 2004 to 2005 the Station paid to the Beijing Haicunliang Data Technology Co Ltd project development and maintenance fees amounting to 2.412 million yuan for such projects as the IT-based management software for animal epidemic, and all these project implementations had not been subject to the mandatory government purchase.
(6) The MOA-affiliated China¡¯s Green Food Development Center collected fees amounting to 39.5393 million yuan in disregard of the rules.
In 2006 the China¡¯s Green Food Development Center collected fees for certification of chemical-free food and logo employment totaling 39.5393 million yuan by means of an expired fee-collecting permit and an outdated fee-collecting standard, of which 20.7979 million yuan were collected using the expired permit.
3. The way the audit addressed the problems and its proposals
With regard to the above problems the CNAO has prepared an audit report and handed down an audit decision in a timely manner in conformity with the state law, rules and regulations. As for the fund appropriations to non-budgetary entities, the relevant entity was asked to turn in the money to the central finance. As regards the handing down of the capital construction plans in disregard of the procedures for capital construction and the appropriation of construction funds, the unit concerned was asked to address the problem, draw lessons and avoid the recurrence of similar problems in future. As for the increase in project expenses and shifting and diversion of financial funds for projects, the unit concerned was asked to return the money to the original source of funding. With regard to the illicit fee-collection, the unit in question was asked to report the fee-collecting standard to the National Development and Reform Commission for approval and go through the formalities for subjecting the permit to examination, and stop fee-collection pending a new permit. In connection with the slow progress of projects, the relevant unit was asked to speed up the project construction. With reference to the turning of operational asset into operational one without approval and assessment, the unit concerned was asked to get approval from the department-in-charge, and rule out the possibility of similar practice happening again.
The CNAO has proposed with regard to the problems found in the audit that the MOA should further enhance its project management, strictly observe the state regulations in applying for and using the funds, speed up the progress of project construction, bring into full play the cost-effectiveness of the financial input, tighten the management and supervision of its affiliated units, and keep a watchful eye on the attempt of administrative institutions to turn non-operational asset into operational one.
4. The status of the problems found in the audit
The MOA had conducted its self-examination before the audit and corrected some problems thus identified. As regards those problems identified in the audit, the MOA has paid great attention to them, taken active steps, called on relevant units to take this opportunity to meticulously correct those anomalies, enhance and perfect in-control system, and further standardize its financial management. Currently, the problems reflected in the audit report and audit decision have been worked out in full. The money paid to the non-budgetary units has been handed over to the central finance as requested by the audit. As for the handing down of project investment plans in violation of the procedures for capital construction, they have been addressed as per rules and regulations, and rectification steps have been taken too. As for the increase in project investment, shift and diversion of the projects¡¯ financial funds, they have been returned to the original source of funding in full. In connection with the illicit fee collection, the unit concerned has stopped the practice, and is in the process of obtaining a new fee-collection standard and undergoing permit examination. In conjunction with the turning of non-operational asset into operational one and the slow progress of project construction, they have been dealt with and correctional measures have been taken. While correcting specific problems, the MOA has perfected relevant systems bearing in mind the problems.
In addition, the CNAO has sent a letter containing proposals on a few erratic management practices; the MOA has acted on them accordingly.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Commerce
(Announced on September 15, 2007)
In conformity with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) carried out audit on the 2006 Budget enforcement and the financial revenue and expenditure of the Ministry of Commerce (MOC), and conducted random check on three MOC-affiliated units from November 2006 to March 2007.
1. Background
The MOC is a first-degree budgetary unit of the central finance; its budget is composed of the budgets of the ministry itself and four second-degree budgetary entities.
The audit findings indicated that the MOC¡¯s 2006 budgetary revenue and expenditure were basically in line with the provisions of the state budgetary, financial and economic rules and regulations, and its accounting practice was in compliance with the accounting law, relevant accounting criteria and related accounting system. It was able to conscientiously correct the anomalies identified in previous audits. However, the audit did find some problems calling for correction and improvement.
2. Main problems found in the audit
(1) Part of the houses and buildings were not entered into the book for cost accounting.
As of the end of 2006 the MOC had 53,450 square meters of houses and buildings off- the- book for cost accounting and reflection, of which four were office buildings, 58 were dispersed residential houses and 25 were bungalows and courtyards.
(2) The construction of economic affordable houses had no preliminary designs and cost estimates.
The MOC¡¯s economic affordable housing construction had a floor space of 47,608.9 square meters, and the MOC planned to invest 154 million yuan. This project started its construction in December 2002 without preliminary designs and cost estimates, and by May 2005 it was completed and people started moving into the 249 disposable apartments.
(3) Main problems of the MOC¡¯s Office Service Bureau.
I. Unauthorized alteration of the purpose of construction projects.
Due to the need for restructure of the Wangfujing Street, the MOC had to rebuild its staff¡¯s apartment building in No.19 of the Jinyu Hutong off the Wangfujing Street. In the course of the reconstruction, the MOC entrusted its affiliate¡ªthe Beijing Xinheng¡¯an Economic and Trade Co Ltd to turn that apartment building into an all-purpose building with a floor space of 7172 square meters without the due process of approval. So far, the main body of that building has been completed. And the company in the capacity of the landlord signed a contract putting out to lease the building to a certain commercial institution from Shanghai in early 2006.
II. Unauthorized deposit and retention of the compensation money for house demolition and other earnings.
From 2001 onward the Office Service Bureau deposited and retained the compensation money for house demolition and other earnings totaling 10.67 million yuan. And as of the end of 2006 there were still 1.51 million left unspent besides the expenses disbursed on some projects.
III. The MOC gave part of the residential houses to its affiliated company for business purpose without authorization, and these houses were leased to the Bureau¡¯s staff at a low cost. The Bureau took these earnings as its income.
From 2003 onward, the Bureau gave 45 MOC¡¯s dispersed residential houses and 47 Bureau-owned flats to the Beijing Xinheng¡¯an Co Ltd for lease without approval , and those renting the housing were largely the Bureau¡¯s staff (they had had the unit-allocated housing already). And the rental was merely half of the market price. From 2003 to 2006, the Bureau got 2.8367 million yuan in rental and they were entered into the book of the company as its own income.
IV. The Beijing Xinheng¡¯an Co Ltd took the house demolition compensation money as its own income.
The company took the compensation money from the demolition of two MOC-owned houses totaling 2.57 million yuan in 2001 and 2003 as its own income and entered them in the book.
3. The way the audit addressed the problems and its proposals
The CNAO has timely prepared an audit report and handed down an audit decision in conformity with the state law, rules and regulations in connection with the above problems. As regards the failure to enter part of the houses into the book for cost accounting, the MOC was asked to enter the assets into the book according to the actual costs at an earliest possible date. As for the absence of preliminary designs and cost estimates for the economic affordable housing, the MOC Office Service Bureau was asked to commit the affiliated department and unit to strictly follow the procedures, and avoid the repetition of similar cases. In connection with the MOC¡¯s Office Service Bureau¡¯s failure to get approval before altering the purpose of the construction project, the Bureau was asked to make amends for due formalities as soon as possible, and include its earnings from the housing estates in the budget for unified management. With regard to the unauthorized deposit and retention of the compensation for house demolition on the part of the Office Service Bureau, the Bureau was asked to recover the balances and include them in the budget for unified management. In connection with the Bureau¡¯s affiliate to lease house owned by the MOC at a low cost and include the money thus made in its own book, the Bureau was asked to strictly follow the rules and regulations concerning the management of state-owned assets, recover the rental income, and place it in the MOC housing fund. With reference to the practice of the Beijing Xinheng¡¯an Economic and Trade Co Ltd to include the compensation money from house demolition in its own income, the company was asked to return the money and include in the budget for unified management.
The CNAO has further proposed regarding the problems found in the audit that the MOC should take stock of its housing estates, have a clear picture of its properties, set up an account book for its real estates, make a full and accurate cost accounting of its housing situation so as to reflect the status of its real estates, devise rules and regulations concerning the purposes and disposal of those estates. Furthermore, the MOC was asked to tighten the control over the financial affairs of its key second-degree budgetary entities so as to ensure the correct implementation of the budget and the integrity of state-owned assets.
4. The status of the problems found in the audit
The MOC had conducted its self-examination prior to the audit and corrected the errors identified in its self-examination. The MOC has paid intense attention to the problems identified in the audit, lost no time in taking rectification measures and made the rectification as a clear commitment. So far the audit decision has basically been enforced. As regards the flawed cost accounting, steps have been taken to take a stock of the assets, reported the outcome to the Ministry of Finance so that adjustments can be made on the book as per the opinion of the Ministry. With regard to the unauthorized alteration of the purpose of construction projects, the Office Service Bureau was asked to make amends for due approval procedure, and include the rental income in the MOC budget for unified management. As regards the unauthorized deposit and retention of the compensation money from house demolition, the Office Service Bureau was committed to carry out rectification, cancel the account and submit the balances in full to the MOC. As regards the treatment of the house demolition compensation money by the MOC affiliates as their own incomes, the units concerned were committed to return the money to the MOC.
In addition, the CNAO has delivered a special letter containing proposals on a few irregularities in management, and the MOC has acted on them.
Audit Findings of the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the Ministry of Culture
(Announced on September 15, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) audited the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Culture and carried out random check on ten affiliated units from January to March 2007.
1. Background
The Ministry of Culture is a first-degree budgetary unit of the central finance, and its budget is composed of the budgets of the ministry itself and 31 second-degree budgetary entities.
The audit findings indicated the Ministry of Culture¡¯s budgetary revenue and expenditure in 2006 were basically in conformity with the state budgetary, financial and economic rules and regulations, and its accounting practice largely tallied with the accounting law, relevant accounting criteria and accounting system. The ministry¡¯s budget and financial management were further enhanced, and the relevant systems were set up and made sounder. However, the audit did find some problems that called for correction and improvement.
2. Main problems found in the audit
(1) It increased the ear-marked project expenses by 997.9 thousand yuan.
In 2006 the ministry listed its departments¡¯ transportation fees, conference expenses and computer purchase expenses amounting to 997.9 thousand yuan in the earmarked funds for the best repertoire performances by artists of government departments and grass-root singsongs and seniors¡¯ activities.
(2) The ministry¡¯s Gongwangfu management center diverted the ear-marked fund amounting to 25 million yuan.
In December 2005 the center diverted the ear-marked expenses for maintenance and conservation of the Gongwangfu to the amount of 25 million yuan and spent the money on purchase of the No.24 courtyard house in the Liuyin Street as its office.
3. The way the audit addressed the problems and its proposals
With regard to the above problems, the CNAO has timely prepared an audit report and handed down an audit decision pursuant to the provisions of the state law, rules and regulations. In connection with the increases in spending of ear-marked project funding and diversion of ear-marked expenses fund on the part of the Gongwangfu management center, the ministry was asked to readjust its accounting book and return the money to the original sources of funding.
The CNAO has proposed with regard to the problems found in the audit that the Ministry of Culture should further raise its awareness of the mandatory use of ear-marked funds on specific purposes, better its ear-marked fund management, enhance its supervision and management so as to ensure the specific purposes of ear-marked funds.
4. The status of the problems found in the audit
The Ministry of Culture had conducted its self-examination prior to the audit, and corrected the problems thus identified. As regards the problems found in this audit, the ministry has attached great importance to them, called on the relevant departments, bureaus and units to carefully implement the audit decision, and keep a watchful eye on the rectification. In connection with the increase in ear-marked expenses of the project fund, the items in the book have been readjusted, and the fund has been returned to the original channel. As for the diversion of ear-marked fund by the Gongwangfu management center, a plan has been made to return the money, namely, it will return the money in installments within the year. The first payment of 2 million yuan was made on July 5th, 2007.
In addition, the CNAO has sent a letter containing proposals on a few irregularities in management found in the audit, the Ministry of Culture has acted on them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial revenue and Expenditure of
the Ministry of Health
(Announced on September 15, 2007)
In conformity with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) conducted audit of the 2006 budget enforcement and other financial revenue and expenditure of the Ministry of Health (MOH), and conducted random check on eight ministry-affiliated units from December 2006 to March 2007.
1. Background
The Ministry of Health is a first-degree budgetary unit of the central finance, and its budget is composed of the budgets of the ministry itself and 57 second-degree budgetary entities.
The audit findings indicated that the 2006 budgetary revenue and expenditure of the Ministry of Health were basically in line with the provisions of the state budgetary, financial and economic rules and regulations. Its accounting practice was in the main in accordance with the accounting law, relevant accounting criteria and accounting system. Also, it was able to correct the anomalies found in previous audits, and the audit decision was implemented 100%. Its budget management level was upgraded. However, the audit did find some problems that warranted correction and improvement.
2. Main problems found in the audit
(1) Part of the budget money in departments and bureaus totaling 18.0277 million yuan failed to be included in the ministry¡¯s unified cost accounting.
From 2000 to 2006, various grants, theme topic research expenses amounting to 18.0277 million yuan entrusted to the ministry-affiliated units to take care by the SciTech Education Department and others were not included in the unified management at the ministry-level. As of the end of 2006, there were still 1.9824 million of balances.
(2) The 29.5189 million yuan of ID printing expenses failed to observe the government purchase rules.
In 2006 among the ID printing expenses paid from the special financial expenditure of the Ministry of Health, there were 29.5189 million yuan that failed to place under bid and tender according to the relevant provisions regarding government purchase.
(3) Part of the units collected fees amounting to 37.5415 million yuan without authorization.
From 2000 to 2006 the MOH¨Caffiliated National Continuing Medical Education Committee, Institute for Hospital Management and other units collected 37.5415 million yuan of certificate production cost without the approval of the National Development and Reform Commission and the Ministry of Finance.
(4) Part of the completed capital construction projects of the affiliated units failed to timely come up with final accounts as required by the rules and regulations, and the amount of money involved was 466 million yuan.
As of the end of 2006 the ward and other buildings of the Tumor Hospital affiliated with the China Academy of Medical Science had been completed and put into operation. The actual investment totaled 466 million yuan, but the unit concerned failed to go through the formalities of project completion as required by the rules and regulations.
(5) The education and training project finance was rather mismanaged, and part of the affiliates gave their projects to other units under the name of cooperation, and collected management fees for that purpose.
A random check on 72 education and training projects of the seven units affiliated with or managed by the MOH found that 43 projects pertaining to six units (accounting for 59.7% of the checked projects) failed to include their revenues and expenditures in the units¡¯ cost accountings. Units such as the Hospital Management Institute transferred their education and training projects to other units to undertake, and in 2006 alone they collected 838.4 thousand yuan of management fee and cooperation fee.
3. The way the audit addressed the problems and its proposals
The CNAO has timely prepared an audit report and handed down an audit decision in accordance with the provisions of the state law, rules and regulations. The MOH departments and offices concerned were asked to include some of their budget expenditures in the ministry¡¯s budget, and recover the balances. The units that failed to include the production cost of certificates in the government purchase were asked to correct the anomaly in future. As for the unauthorized collection of fees, the unit was asked to go through the formalities for approval as required by the rules and regulations. As for the failure of the unit concerned to conduct final accounts of the completed capital construction project, the unit was asked to make amends for final accounts. In connection with the mismanagement of education and training projects, the units concerned were asked to include the projects in the cost accounting of the units undertaking the projects and they were forbidden to profit from such projects.
The CNAO has proposed with regard to the problems found in the audit that the MOH should improve the education and training management mechanism, set up a sound financial management system, and enhance the project monitoring and management. Furthermore, the MOF should tighten the control over the fee collection of its affiliates, and uproot the illicit practice in fee collection. The MOH was also asked to strengthen the financial management, and include various budget expenses in the cost accounting of the unit.
4. The status of the problems found in the audit
The MOH had conducted its self-examination prior to the audit and corrected the anomalies thus found. The MOH has attached great importance to the problems found in the audit. In the course of the audit, the MOH had on several occasions listened to the briefings on audit, and called on units concerned to come up with rectification measures regarding the problems found in the audit, and sort out the problems one by one. At present, it is including the balances from the expenses of the theme topics entrusted to the affiliated units in the ministry¡¯s budget for unified management. As for the failure of the unit concerned to subject the printing cost of certificates to government purchase¡ªa perennial problem despite correction for years, the unit was asked to take steps to tighten the fee-collection management, and uproot such practice. And consultations are under way with relevant departments to further regulate the fee-collection. The unit in question was asked to go through the formalities for the final accounts of the completed project in time as scheduled. In the meantime, six sets of rules and regulations have been in place concerning the enhanced budget management, the tightening of control over balances resulting from financial appropriations, and strengthening of the in-house control of medical institutions¡¯ accounting in order to toughen the monitoring and supervision of the affiliated units.
In addition, the CNAO has sent a letter containing proposals on a few substandard management problems; the MOH has acted on them accordingly.
Audit Findings on the 2006 Financial Revenue and Expenditure of
the People¡¯s Bank of China
(Announced on September 15, 2007)
In accordance with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) carried out audit of the 2006 budget enforcement and other financial revenues and expenditure of the People¡¯s Bank of China (hereinafter referred to as ¡°the Bank¡±) and carried out random check on 15 firms and institutions directly affiliated with the Bank and 14 branch offices and sub-branches from October 2006 to January 2007.
1. Background
The People¡¯s Bank of China is a first-degree budgetary entity of the central finance, and its budget is composed of the budgets of the Head Office of the Bank, the Shanghai Headquarters, nine branch offices (the Shanghai Branch Office shares the premises with the Shanghai Headquarters), two Business Management Departments, 20 provincial cities¡¯ central sub-branches and five deputy provincial level cities¡¯ central sub-branches. The Bank enforces an independent budgetary management system; all its financial revenue and expenditure are included in the central finance budget as net amount of the revenue and expenditure after approval by the Ministry of Finance.
The audit findings indicated that the Bank¡¯s 2006 budgetary revenue and expenditure were basically in line with the provisions of the state budgetary, financial and economic rules and regulations, and its accounting practice was largely in conformity with the accounting law and relevant accounting criteria and accounting system. The Bank¡¯s budgetary and financial management was further strengthened. However, the audit did find some problems that called for attention and improvement.
2. Main problems found in the audit
(1) The wage outlays in the Bank¡¯s Nanjing Branch Office made a dent on other expenses with its 21.2845 million yuan.
In 2006, the Bank¡¯s Nanjing Branch Office and its three affiliated sub-branches listed the allowances and bonuses distributed to the staff amounting to 17.3577 million yuan in its PTT service expenses and traveling expenses , and the Branch Office itself distributed 3.9268 million yuan of job responsibility award in its overhead expenses.
(2) The Bank¡¯s Xi¡¯an Branch Office diverted 85.9842 million yuan of office building construction fund.
As of the end of 2006 the Bank¡¯s Xi¡¯an Branch Office had a balance of 120 million yuan of funding appropriated to it by the Head Office of the Bank for office building construction, of which 78.04 million yuan were embezzled by that Branch office to build staff housing, and 7.9442 million yuan were used to distribute interior decoration subsidies to the staff.
(3) The Huarong Tower deposited and retained 144 million yuan off-the-book.
From 1997 onward the Huarong Tower affiliated to the Bank¡¯s Office Service Center deposited and retained 144 million yuan of management fee and rentals off- the- book, of which 42.5898 million yuan were used as payment for property management fee, and 30.4975 million yuan were spent on giving out staff subsidies.
3. The way the audit addressed the problems and its proposals
The CNAO has timely given its audit report and handed down its audit decision on the above problems in accordance with the state law, rules and regulations. As regards the dent on the other expenses made by the expenses on wage and illicit distribution of extra-budgetary staff allowances, the unit was asked to consult the department concerned about the appropriate finding of a solution to a legal channel whereby the wage expenses can be taken from other expenses, and completely correct the practice of illicit extra-budgetary distribution of allowances and rewards. As for the problem of the Bank¡¯s Xi¡¯an Branch Office embezzling the fund for office building, the unit concerned was asked to straighten things up across the board. In connection with the off-the-book fund of the Huarong Tower, the unit was asked to readjust the accounting entries, and recover the unauthorized deposited and retained money.
The CNAO has proposed with regard to the problems found in the audit that the Bank need to enhance its cost accounting and management of the wage expenses and purchase and construction of fixed assets, carefully clean out the items concerning illicit allowances and subsidies, further regulate its income distribution discipline, continuously strengthen the financial management of the affiliated firms and institutions, have a sound supervisory and evaluation mechanism, and better its in-house control rules and regulations.
4. The status of the problems found in the audit
The Bank had conducted its self-examination before the audit, and corrected the erratic practices thus found. As regards the problems found in this audit, the Bank has given great attention to them, and taken effective measures to set them right. First, serious steps have been taken to take stock of and correct the wrong practice in wage management, communicate in time with the Ministry of Finance, clean out and regulate the illicit distribution of allowances and subsidies in strict conformity with the unified state arrangement and policy. Second, it has revised the relevant accounting system, added special accounting items, so as to have a correct cost accounting and reflection of the balances from the projects, and improved the cost accounting system of the expenses for purchase and construction of fixed assets. Third, study has been made to toughen the financial management of Bank-affiliated firms and institutions, set up special management organs, and established a sound day-to day supervisory mechanism. Fourth, Proposals on Further Strengthening the People¡¯s Bank¡¯s Accounting and Financial Work and other measures have been devised to press forward a comprehensive management financial system, have a dynamic control over budgetary enforcement and regulate the financial and accounting behaviors at various levels of branch offices and sub-branches.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the State-owned Assets Supervision and
Administration Commission of the State Council
(Announced on September 15, 2007)
In conformity with the provisions of the Audit Law of the People¡¯s Republic of China, the National Audit Office of China (CNAO) carried out audit of the 2006 budget enforcement and other financial revenue and expenditure of the State-owned Assets Supervision and Administration Commission of the State Council (hereinafter referred to as ¡°the Commission¡±) and conducted random check on 11 Commission-affiliated units from December 2006 to March 2007.
1. Background
The Commission is a first-degree budgetary entity, and its budget is composed of the budgets of the Commission and 42 second-degree budgetary entities.
The audit findings indicated that the Commission¡¯s 2006 budgetary revenue and expenditure were basically in line with the provisions of the state budgetary, financial and economic rules and regulations, and its accounting practice was largely in keeping with the accounting law and relevant accounting criteria and accounting system. Its in-house control was relatively sound and was carried out satisfactorily. It could actively correct the mistakes found in previous audits, and implement the audit proposals. It had further clearly defined and elaborated on the financial supervisory responsibilities of the affiliated units at various levels, and set up a sound management system. However, the audit did find some problems that called for correction and improvement.
2. Main problems found in the audit
(1) It took undue possession of the project fund amounting to 51.9032 million yuan.
From 2004 to 2006 the Commission level (including the Supervisory Committee) took undue possession of the project fund amounting to 51.9032 million yuan. To be specific, it listed the audit expenses on the final accounts of central enterprises to the amount of 47.022 million yuan in the special item relating to the working expenditure for audit of the economic responsibilities of the central enterprises¡¯ responsible personnel, and listed in the special item concerning the working expenses for statistics appraisal and property stock-taking and capital verification the overseas travel expenses of the statistics appraisal bureau staff and the training expenses for audit of the economic responsibilities to the amount of 1.0686 million yuan. And in the assignments expenses it listed 3.8126 million yuan of audit outlay, printing fees and property management fees.
(2) It failed to approve the applications of departments for budget expenses in time.
The ministry of Finance had already approved the Commission¡¯s 2006 budget on April 1st, 2006, but the Commission had not given its approval to the budget applications of affiliated units until August 3rd, 2006.
(3) Without going through the formalities for budget shift, the Commission arranged subsidies in its own budget and actually gave them to the grass-root commissions totaling 3.4349 million yuan.
From 2005 to 2006, the Commission arranged in its special item concerning the outlay on the statistics appraisal, property stock-taking and capital verification 8 million yuan for the disadvantageous regions¡¯ computer operation and maintenance of data entry points. Despite the fact that the actual outlays were 3.4349 million yuan, it failed to go through the budget shift formalities.
(4) It failed to abide by the mandatory public tender.
In 2006, while implementing the special item concerning the working expenditure for audit of the economic responsibilities of the central enterprises¡¯ responsible personnel, the Commission failed to carry out mandatory public tender. Rather, it entrusted relevant accounting firms based on the name list recommended by some related firms to carry out audit of five central enterprises. These five projects cost 14.05 million yuan of audit expenses, meaning each project had to pay over 1.2 million yuan for the audit (As per the provisions, if the one-off amount to be paid for any single or bulk government purchase or the one-time enlisted service reaches more than 1.2 million yuan, the public tender is mandatory). As of the end of 2006, the Commission had paid 7.625 million yuan.
(5) The unspent project balances of 30.3961 million yuan were carried forward for two years running instead of being included in the budget to be spent on other purposes.
The former central enterprises working committee was abolished in 2003 and its account was taken over by the Commission. The Commission¡¯s ten administrative institution projects including the expenses for committee formation had an unspent balance of 30.3961 million yuan, and they were carried over continuously till the end of 2006 instead of getting included in the budget for other purposes.
(6) The Commission failed to surrender in time the full amount of fines and confiscation proceeds according to rules and regulations.
The Commissions¡¯ disciplinary inspection committee and the disciplinary inspection group of the former State Economic and Trade Commission collected fines and confiscation proceeds amounting to RMB 10.4795 million yuan and US$ 11.9 thousand as well as HK$ 2000 from 1999 to 2004. As of the end of 2006, the Commission still failed to surrender the above amount to the higher authorities.
(7) The Commission-affiliated Commercial SciTech Quality Center made false application for 1.4 million yuan of capital construction project investment and shifted and diverted the state construction fund amounting to 1.5066 million yuan.
The Commission-affiliated Commercial SciTech Quality Center made a false feasibility study without any expertise on food safety test and professional personnel, and by way of the China¡¯s Commerce Union and the Commission the Center applied to the National Development and Reform Commission for the funding of 2004-2005 capital construction project of Test Service Information Network for Safe Food Marketing, and got its approval. The entire project needed 1.4 million yuan of investment, of which 1.2 million yuan came from the central budget. As of the end of 2006, the project had come by 1.2 million yuan of financial funding and spent 1.0381 million yuan, of which 906.6 thousand yuan were diverted to other purposes. Besides, from 2005 to 2006, the Center by way of a fictive contract shifted 600 thousand yuan scheduled for the construction of the project of the commercial professional skills evaluation network system to the Beijing Jiada Century Digital SciTech Co Ltd and the Beijing Yuchuangjie Consultancy Co Ltd.
(8) The Commission-affiliated China Textile Industry Association had given 800 thousand yuan for administrative institutional project in disregard of the rules and regulations.
In December 2006, the Commission gave an additional budget expense of 800 thousand yuan to the China Textile Industry Association as working expenses of government-entrusted assignments to the professional association. Because of the late authorization of that budget money, that special funding was not able to be disbursed in that year. In order to avoid the possibility of that funding being cancelled at the end of the year, the Association transferred the entire amount of the money to its affiliated unit. It gave out 200 thousand yuan that should have been used by the unit itself and the 300 thousand yuan to the Association ¨Caffiliated Economic Research Center for China¡¯s Textile Goods that had yet to identify the project implementation unit for conducting industrial policy research. In the absence of a contract or an agreement on information delivery, the Commission gave 300 thousand yuan to the China¡¯s Textile Information Center.
(9) The Commission-affiliated Non-Ferrous Industry Talents Center and other units flouted the rules concerning the fee-collection by administrative institutions.
From 2004 to 2006 the Commission-affiliated Non-ferrous Industry Talent Center and the Commercial SciTech Quality Center collected fees for custody of personnel files amounting to 1.1057 million yuan respectively and the measurement certification fee of 57 thousand yuan, all without fee-collection permit.
From 2004 t0 2006, the Commission-affiliated Head Station for Non-ferrous Industry Engineering Quality Control turned the engineering quality control fees to the amount of 8.9181 million yuan into business operational service fees without authorization, and used the after-tax proceeds.
In 2006 the Commission-affiliated Resources Cadre Training Center collected tuition fees amounting to 2.0017 million yuan, and failed to surrender the money to the higher authorities.
3. The way the audit addressed the problems and its proposals
The CNAO has pursuant to the state law as well as rules and regulations timely drawn up an audit report and handed down an audit decision regarding the problems found in the audit. As for the misappropriation of the project fund, failure to reply to the department budget requests in time and the transfer of funds to the localities¡¯ Commissions as subsidies without going through the formalities for budget transfer as required , failure to subject its enlisted audit service to public tender as well as the carrying over of the unspent project balances for two years running, the Commission was asked to strictly follow the relevant state rules in future , and avoid the repetition of similar problems. As regards the failure to surrender the full amount of fines and confiscation proceeds, the Commission was asked to hand them to the finance. In connection with the false application for capital construction projects and diversion of the state construction funds, the Commission was asked to recover the money involved, surrender the funds obtained from the false projects to the finance, and to hold persons concerned accountable. With reference to the illicit appropriation of funds to the administrative institution projects, the unit concerned was asked to return the fund to the original source of funding, and readjust the accounting book. As for the non-statutory fee-collection, the unit concerned was asked to stop doing so, make amends for obtaining a fee-collection permit, return the collected fees to the units or persons in question as required, and surrender the remaining amount to the finance with the exception of the confiscated proceeds. As regards the illicit turning of administrative institutional fee-collection into business operational service ones, the unit concerned was asked to report the matter to the Ministry of Finance, and surrender the amount of money. As for the failure to hand in the tuition fees to the finance, the unit concerned was asked to hand in the proceeds.
The CNAO has proposed regarding the problems found in the audit that the Commission should enhance the examination and approval of departments¡¯ basic construction projects, keep a watchful eye on the project implementation and the spending of project funds, tighten its management of administrative institutional fee-collection in affiliated units, and work out the Commission¡¯s specific management methods.
4. The status of the problems found in the audit
The Commission had conducted its self-examination prior to this audit, and corrected the problems thus identified. In connection with the problems found in this audit, the Commission has attached great importance to them, asked the departments concerned to devise measures for rectification, and set a time-frame for doing so. At present, the Commission has surrendered the full amount of fines and confiscation proceeds to the higher authorities. The Commercial SciTech Quality Center is taking steps to recover the diverted construction fund, and meted out administrative penalties to persons held accountable. The Center has also been asked to return to the units concerned fees collected in disregard of the rules as required, and the non-returnable money should be handed over to the finance. The China Textile Industry Association has recovered in full the project fund appropriated illicitly to its affiliates, and readjusted its accounting items. As for the unauthorized turning of the administrative institutional fee-collection into business operational service ones on the part of the Head Station for Non-ferrous Industry Engineering Quality Control, the Commission has written to the Ministry of Finance to the extent that it will pay back the amount of money as required by the ministry. As regards other problems, they are being addressed.
In addition, the CNAO has sent a special letter containing proposals concerning a few mismanagement problems. The Commission has acted on them.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of the General
Administration of Customs
(Announced on September 15, 2007)
According to the rules and regulations prescribed in the Audit Act of the People¡¯s Republic of China, the National Audit Office of China (CNAO) audited from December 2006 to February 2007 the General Administration of Customs¡¯ budget execution and other financial revenues and expenditures in 2006 and sampling-audited its 5 subordinate units. Meanwhile, it also audited how 18 customs directly under the General Administration of Customs executed their budgets from January 2005 to December 2006.
1. Background
The General Administration of Customs is a first-grade budgetary unit of central finance and its departmental budget consists of its own budget and that of 49 second-grade budgetary units.
It is made clear in the audit findings that the administration¡¯s budgetary revenues and expenditures in 2006 conform on the whole to the stipulations prescribed in China¡¯s budgetary and financial statutes, that accounting settlement conforms in the main to the stipulations prescribed in the Accounting Act, relevant accounting norms and accounting systems, that reform of both departmental budget and system of centralized payment by the national treasury has been encouraged in an active way, that financial administration and internal control system are relatively sound, that the problems found in the course of the previous years¡¯ audit can be corrected in earnest and that rate of executing audit decisions has reached 100%. However, some problems that need correcting and improving have been found in the course of audit.
2. The main problems found in the audit
(1) The Budget funds that have been misappropriated amount to RMB 65 million.
In 2006, the General Administration of Customs squeezed from the basic expenditure of administration funds RMB 65 million that should be listed as project expenses covered by administration funds as funds to maintain and refurbish its office building in order to pay for the second¡ªphase maintenance and refurbishment project of its east-wing building, equipment purchased for its comprehensive building, as well as supplementary, tree-planting and subsidiary projects.
In the course of constructing its comprehensive building, this administration went so far as to change functions, upgrade the construction standard and enlarge the accommodation space of this building.
(2) The place rent payment of RMB 9.6512 million that was got by the management company of Xinhai Mansion on the behalf of the administration had yet to be recalled.
The General Administration of Customs entrusted the management company of Xinhai Mansion (whose holding is under control of the administration¡¯s service bureau) with management of its comprehensive building. By the auditing period, the former had not recalled the aforesaid payment totaling RMB 9.6512 million the latter got in 2005 and 2006 on its behalf (of the total payment, RMB 574100 was got in 2005 and RMB 9.0771million in 2006).
(3) Substandard were the 18 affiliated customs¡¯ budget-compiling procedures and incomplete were the contents of the budgets thus compiled and reported.
In 2005 and 2006, the 18 customs compiled and reported their ¡°first¡± budgets only according to the requirements of the General Administration of Customs rather than doing so at their own different grades according to compiling procedures of departmental budget. After receiving the control figures assigned by the Ministry of Finance, this administration compiled ¡°second¡± budgets of these customs on their behalf. As the administration failed to make these customs compile and report complete budgets of revenues and expenditures according to their actual conditions, the contents of their budgets thus compiled and reported were incomplete and some of their funds failed to be brought under budget management. In the two years, other revenues these customs failed to bring under budget management totaled RMB 190 million, of which RMB 82.5489 million was not brought under budget management in 2006.
(4) Substandard was the management of some of these customs¡¯ projects and low-efficient was their use of funds.
I. These customs presumptuously changed the ways of using separate item funds or broadened the scope of using these funds without securing approval concerned. 65 projects of 10 customs like Chengdu Customs were involved in the aforesaid malpractice with their problem funds reaching RMB 32.8087 million. In 2004 and 2005, for instance, Hengyang Customs subordinate to Changsha Customs charged RMB 1.7059 million¡ªprojects funds for the previous years to its account of capital construction without securing the approval from the General Administration of Customs to pay for capital construction of its new office building.
II. Untrue were the contents of some projects already reported. 4 projects of 3 customs including Hangzhou Customs were involved in this malpractice with their problems funds totaling RMB 1.928 million. in 2005, for instance, As the outdoor illumination project in front of its new building was completed in conjunction of the capital construction project of this building in 2002, but in 2005, Hangzhou Customs reported this project again in the name of ¡°lighting project of the new building¡± and got project funds of RMB 500.000 to supplement its self-collected funds for capital construction.
III. Due to long-term accounts transfer of some projects whose accounts were already settled, their balance of funds was excessive and use of funds was inefficient. By the end of 2006, the balance of 18 customs¡¯ project funds accumulated over the previous years reached RMB 589 million, amounting to 108.7% of the total sum of their budgets given a written reply to these projects by the General Administration of Customs, covering 1137 projects.
It was also found in the course of audit that there existed the following problems in some of these customs: substandard was management of capital construction; salary subsidies were paid to their staff by these customs by violating rules and regulations concerned; some of their subordinate organizations got operational proceeds by making use of customs powers and their procedures for purchasing equipment and materials were abnormal.
3. The way the audit addressed the problems and its proposals
According to the stipulations prescribed in the state¡¯s laws and statutes, the CNAO has issued an audit report on the aforesaid problems and assigned a letter of audit decision without delay. Regarding 1¡ªII (problem concerning misappropriation of budget funds), standard management and strict budgetary control are called for. Regarding 1¡ªII (problems cropping up in the course of the comprehensive building¡¯s construction), standardizing management of capital construction according to the state relevant rules and regulations is called for in order to put scope of capital construction under strict control. Regarding 2-II, the aforesaid payment must be recalled so as to bring it under budget management. Regarding 3¡ªII, improvement of procedures for compiling and reporting budgets is called for in order to bring other revenues under budget management. Regarding 4¡ªII, specification of budget-compiling is called for in order to improve the system of managing project banks of separate item funds, supervision and check of these customs¡¯ use of funds.
The CNAO has made the following suggestions about the problems found in the course of its audit: it should further study and improve the ways of managing budget compilation and report in the customs sector so as to specify budget-compiling of various customs organizations, improve the system of managing project banks of separate item funds, establish the system to track, assess and evaluate performances that can perfect budget of project expenditures; internal supervision and administration should be strengthened and attached importance to and supervision and examination of financial management should be improved so as to make subordinate organizations abide by financial statutes and improve standard of internal management.
4. The status of the problems found in the audit
Prior to the aforesaid audit, the General Administration of Customs has launched its self-examination and corrected the problems found in this course. It also attached great importance to the problems found in the course of audit, analyzed every problem, worked out measures to correct these problems, made clear the time limit for correcting them and called on all the organizations to correct their respective problems. Regarding 1¡ªII (problems concerning misappropriation of budget funds), it is made clear that budget control will be strictly enforced and that project expenses will not be covered by basic expenditures. Regarding 1¡ªII (problems cropping up in the course of the comprehensive building¡¯s construction), revision of Ways to Manage Customs¡¯ Capital Construction is being studied, and it is made clear that capital construction conduct will be standardized according to the state¡¯s relevant rules and regulations so as to put scope of capital construction strictly under control and draw lessons to prevent recurrence of similar problems. Regarding 2¡ªII, the remaining rent payment after deduction of relevant tax and expenses has been recalled and brought under budget management. Regarding 3¡ªII, the 18 customs are demanded to bring the total amount of their revenues and expenditures under budget management as of 2007 and compile complete budgets of their annual revenues and expenditures. Regarding 4¡ªII, project funds of these customs are thoroughly being cleared up, work concerning performance assessment and evaluation of major project expenditures will be started as soon as possible and it is made clear that examining and approving procedures of reporting projects and changing project contents will be further standardized and that supervision and management of project budget execution of these customs will be improved.
While straightening up revising various financial systems, the General Administration has recently held seminars on the topic of financial outfit for cadres at director-general level and organized training courses for heads in charge of financial affairs in the customs¡¯ setup. It hosted a national working meeting on customs¡¯ financial outfit and worked out the document Decision on Doing a Good Job of Customs Financial Outfit in the New Situation Made by the Leading Party Group of the General Administration of Customs, urging the customs¡¯ setup to carry out the decision in order to improve in an all¡ªround way its financial management standard.
Besides, the CNAO has issued letters of audit suggestion about a few problems of substandard management the General Administration of Customs later corrected and improved.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of the State
Administration of Taxation
(Announced on September 15, 2007)
According to the rules and regulations prescribed in the Audit Act of the People¡¯s Republic of China, the National Audit Office of China (CNAO) audited the State Administration of Taxation (shortened as the Administration of Taxation hereafter) from December 2006 to February 2007 in budget execution and other financial revenues and expenditures in 2006 and sampling-audited its 6 subordinate units.
1. Background
The Administration of Taxation is a first-grade budgetary unit of central finance and its departmental budget consists of its own budget and that of 45 second-grade budgetary units.
It is made clear in the audit findings that the Administration of Taxation budgetary revenues and expenditures in 2006 conform on the whole to the stipulations prescribed in the state¡¯s budgetary and financial statutes, that its accounting sanctions conform by and large to the stipulations prescribed in the Accounting Act, relevant accounting norms and systems, that relatively sound system of internal control has been established and that the problems found in the course of the previous years¡¯ audit can be corrected and improved in earnest. However, some problems that need correcting and improving have been found in the course of audit.
2. The main problems found in the audit
(1) Open funds of RMB 82.5436 million have yet to be cleared up in time.
By the end of 2006, the office of the Administration of Taxation failed to clear up ¡°temporary payment¡± of RMB 15.5187 million (of which RMB 12.8387 million remained in account for more than 3 years) and ¡°temporary deposit¡± of RMB 6.8158 million (of which RMB 1.9492 million was deposited for over 3 years) without delay. It also failed to clear up ¡°temporary payment¡± of RMB 60.2091 million (of which RMB 21.8698 million remained in account for over 6 years) without delay.
(2) RMB 4.8989 million spent as extra payment by enlarging expenditure scope
In 2006, the Administration of Taxation paid out of its public funds RMB 3.60 million as ¡°spiritual civilization award¡± for its functionaries and recuperation expenditure for its staff and their families, RMB 1.009 million as expenses for compiling, going-over and translating Bulletin of the Administration of Taxation, and RMB 280.900 as expenses for planning and script going-over the documentary film Ma Bing¡¯s Lecture on Taxation.
(3) Untrue was the account of fixed assets of RMB 17.7339 million.
By the end of 2006, the Administration of Taxation scrapped RMB 13.2394 million of electronic equipment and failed to put this sum to account. It failed also to charge to its account of fixed assets RMB 4.03 million of topic research funds Research and Development of E-Government Key Technology spent on purchasing instruments and equipment. Chinese Association of Certified Tax Agents under the Administration of Taxation failed to put to its account of fixed assets two cars worth RMB 464.500 bought and got as the payment of a debt in 2005 and 2006.
(4) Administration Center of Certified Tax Agents under the Administration of Taxation overspent its budget by RMB 850.000.
In 2006, failing to report to and secure approval from the Administration of Taxation a supplement budget, this center overspent its budget by RMB 850.000.
3. The way the audit addressed the problems and its proposals
According to the stipulations prescribed in the state¡¯s laws and statutes, the CNAO has issued an audit report on the aforesaid problems and assigned a letter of audit decision without delay. Regarding 1¡ªII, a prompt clear-up of open funds is called for. Regarding 2¡ªII, expenditure of funds must be enforced within the prescribed scope. Regarding 3¡ªII, untrue accounts of fixed assets must be corrected and put to account. Regarding 4¡ªII, budget execution must be strictly implemented.
The CNAO has made the following suggestions about the problems found in the course of audit: the Administration of Taxation should further upgrade scientific and standardized level of its departmental budget, standardize the basic work of its subordinate units¡¯ financial accounting, improve administration of fund expenditure and fixed assets and enhance supervisory and administrative responsibilities of its financial departments.
4. The status of the problems found in the audit
Prior to this audit, the Administration of Taxation launched its own examination and worked out correction measures. It made a detailed analysis of all the problems found in the course of audit and tried hard to correct these problems. Regarding 1¡ªII, with RMB 37.567 million already cleared up, other remaining funds are being cleared up. Regarding 2¡ªII, it is made clear that ¡°relevant expenses will not be spent as listed items as of 2007. Regarding 3¡ªII, measures have been taken: fixed assets which were purchased but failed to be put to account have been charged to new accounts according to requirements concerned; as for the assets that have been scrapped, a thorough check of fixed assets has been launched in conjunction with the work of assets clearing-up and check--findings have been reported to the Ministry of Finance so that accounts concerned will be readjusted after securing a written reply from the ministry. Regarding 4¡ªII, it is decided that affairs taken by the financial management of this center will be taken over by the Administration of Taxation as of 2007.
Audit Findings on the 2006 Budget Enforcement and
Other Financial Revenue and Expenditure of
the State Administration of Industry and Commerce
(Announced on September 15, 2007)
According to the rules and regulations prescribed in the Audit Act of the People¡¯s Republic of China, the Natioanl Audit Office of China (CNAO) audited the budget execution and other financial revenues and expenditures in 2006 of the State Administration of Industry and Commerce and sampling-audited its 9 subordinate units from December 2006 to April 2007.
1. Background
The State Administration of Industry and Commerce is a first-grade budgetary unit of central finance and its departmental budget consists of its own budget and that of 11 second-grade budgetary units.
It is made c
