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
