Article 1    These Provisions are formulated in accordance with Article 29 of the Audit Law of the People's Republic of China for the purpose of strengthening and standardizing instruction and supervision provided for internal audit by audit institutions and reinforcing internal management of various departments and units.

Article 2    Audit institutions shall instruct and supervise internal audit of various departments of the State Council, departments of the local people's governments, state banking institutions, enterprises and undertakings as well as other units stipulated by laws and regulations.

Article 3    Audit institutions above the level of municipalities directly controlled by provincial governments, districts and autonomous states as well as county audit institutions meeting required conditions shall establish corresponding functional organizations or appoint full-time or part-time personnel to take charge of internal audit instruction and supervision.

Article 4    The CNAO shall instruct and supervise internal audit over the whole country; local audit institutions at various levels shall instruct and supervise internal audit within their respective localities and jurisdiction; audit offices despatched to various departments shall exercise leadership over internal audit of their respective departments and shall instruct and supervise internal audit within their respective departmental systems.

Article 5    Audit institutions shall instruct and supervise internal audit in various manners corresponding to actual situations of various departments, industries, enterprises and undertakings.

Article 6     Audit institutions shall instruct and supervise internal audit within their jurisdiction in the following manners:
(1) To draft regulations on internal audit and formulate internal audit standards and other rules and regulations on internal audit;
(2) To research for and formulate plans and measures for reinforcing internal audit and organize the implementation thereof;
(3) To instruct and supervise the establishment and completion of internal audit systems as well as conduct of internal audit by relevant departments and units in accordance with relevant stipulations;
(4) To supervise and examine the quality of internal audit of departments, enterprises and undertakings;
(5) To summarize and popularize experience in internal audit, publicize internal audit achievements and commend units and individuals that have made distinctive contributions to internal audit.

Article 7    Audit institutions shall strengthen their link with internal audit organizations through communication and exchange of information and by adopting opinions and recommendations put forward by the latter.

Article 8     In the course of audit, audit institutions shall review and evaluate the performance of internal audit of the audited bodies and shall decide, on the basis of such review and evaluation, the extent to which the results of internal audit will be utilized.

Article 9    Where it is found in the course of audit that the internal audit systems of the audited bodies are weak and incomplete, audit institutions shall produce opinions and recommendations for the establishment and completion of internal audit systems and improvement of internal audit.    

Article 10    Instruction and supervision provided for internal audit by audit institutions shall be regarded as an item of the latter's annual performance benchmarking.

Article 11    Audit institutions at higher levels may commend those audit institutions at lower levels which have made distinctive achievements in instructing and supervising internal audit.

Article 12    Audit institutions shall require internal audit organizations to submit,  in time and according to relevant stipulations, materials related to their performance and achievements of internal audit while audit institutions at lower levels shall submit to audit institutions at higher levels, in time and according to relevant stipulations, materials related to the performance and achievements of internal audit within their respective localities.

Article 13    Where internal auditors complain to audit institutions of being revenged, the audit institutions shall make timely reports on such complaints to competent departments, units or audit institutions at higher levels in order that the relevant problems could be solved and that the internal auditors could perform their normal duties under protection.

Article 14    Audit institutions shall strengthen their management and instruction of the China Internal Audit Society (hereinafter referred to as the CIAS) and its various chapters so as to help coordinate and solve relevant problems, supervise the CIAS and its various chapters to conduct their work according to their articles of association and promote their compliance with state laws and regulations.

Article 15    Audit institutions shall instruct the CIAS and its various chapters to carry out theoretical research on internal audit, organize training for internal auditors, improve political and professional quality of the internal auditors and upgrade standards of professional ethics among the internal auditors.

Article 16  The authority to interpret these Provisions rests with the CNAO.

Article 17    These Provisions shall come into effect as of January 1, 1997.