Article 1    These Practice Directions are formulated in accordance with Article 27 of the Audit Law of the People's Republic of China for the purpose of standardizing special audit investigations conducted by audit institutions, timely providing governments at various levels with information about operation of the economy and promoting macroscopic readjustment.

Article 2     The term "special audit investigations" mentioned herein refers to activities of special investigation carried out by audit institutions according to the law and with the use of various audit approaches into relevant localities, departments and units in terms of particular issues that are related to revenues and expenditures of public finance.

Article 3    Audit institutions shall organize one or several special audit investigation teams to conduct special audit investigations.

Special audit investigation teams shall report to the audit institutions that dispatch them (hereinafter referred to as the dispatching audit institutions).

Article 4    While carrying out special audit investigations according to the audit jurisdiction of their competent dispatching audit institutions, auditors shall abide by relevant laws and regulations.

Article 5     To conduct special audit investigations, auditors shall be practical and realistic,  truthfully present issues at investigation, make fair and objective evaluation and draw conclusions in conformity with relevant facts.

Article 6      In conducting special audit investigations, auditors shall safeguard state secrets and trade secrets of the investigated bodies in accordance with the law.  

Article 7      Subjects of special audit investigations are particular issues of various localities, departments and units that are related to revenues and expenditures of public finance.

Article 8    Audit institutions may conduct special audit investigations into the following items:
(1) Implementation of laws, regulations and policies related to revenues and expenditures of public finance;
(2) Economic activities particular to various industries or trades;
(3) Collection, allocation and utilization of major special funds;    
(4) Special items selected by audit institutions;
(5)Other items for investigation which are assigned by people's governments at the corresponding levels and audit institutions at higher levels.

Article 9    Audit institutions may include special audit investigations in their annual audit plans.

Article 10    Special audit investigation teams shall formulate programs for their audit investigations, the main contents of which shall include objectives, contents, scopes, procedures, timing, approaches and division of duties of particular audit investigations.

Article 11    To conduct special audit investigations, audit institutions shall notify the investigated bodies in advance.  At their arrival at the investigated localities, departments and units, special audit investigation teams shall produce written notifications for such investigations.  The investigated localities, departments and units shall cooperate with the special audit investigation teams according to the latter's requirements such as honest presentation about relevant situations and provision of relevant information and documents.  They shall not reject or obstruct such investigations.

Article 12    Audit institutions shall prepare audit investigation reports on such investigations.

Article 13    Where items of special audit investigation are determined by audit institutions at higher levels, audit institutions at lower levels shall arrange investigations focusing upon the above-mentioned items and shall report level by level results of the investigations to audit institutions at higher levels.

Article 14    Where in the course of investigation, acts of revenues and expenditures of the investigated bodies are found in violation of state stipulations and requiring the  imposition of sanctions or penalties, audit institutions shall conduct audit according to their statutory duties and relevant audit procedures and thereafter meter out measures of sanction or penalty in accordance with the law.  

Article 15    In the course of investigation, special audit investigation teams may adopt audit approaches and other means to obtain relevant documents of the investigated bodies.

For on-spot investigations, special audit teams may adopt such means as universal investigation, priority investigation and holding informal discussions.  

Article 16    Special audit investigation teams shall analyze, judge and select their collection of information about the investigated bodies and compile them into working papers of special audit investigations.

Information about the investigated bodies that are collected by the special audit investigation teams shall satisfy the requirements of objectivity, relevance, sufficiency and compliance.

Article 17    At the completion of their investigations, special audit investigation teams shall produce reports on such investigations.  The reports should objectively and truthfully reflect the investigations and make presentations with accurate, succinct and understandable wording.

Article 18    Reports on special audit investigations shall reflect overall situation and major problems of the investigated bodies illustrated with both integrated statistics and typical examples.  In general such reports shall include the following items:
(1) Explanations for the special audit investigations;
(2) Basic information of the investigated items;
(3) Existing problems and analysis of the underlying reasons;
(4) Conclusions of investigation and recommendations for improvement;
(5) Other issues to be reported.

Article 19    Where special audit investigations are based on the results of  performing relevant audit assignments, audit institutions shall integrate information reflected in the audit reports with results of the investigations so as to produce reports on special audit investigation.

Article 20     Opinions may be solicited either orally or in writing from the investigated bodies about the reports on special audit investigations.

Article 21      At the completion of their preparation of reports on special audit investigations,  special audit investigation teams shall report to their dispatching audit institutions.  The latter shall report results of such investigations according to the nature of the investigated items and information from the investigations to the people's governments at the corresponding levels and audit institutions at the next higher levels.

Audit institution may, according to various circumstances, decide whether or not to notify the investigated bodies of the results of special audit investigations.

Article 22     Audit institutions shall file items of special audit investigations and manage such files according to relevant stipulations.

Article 23    The authority to interpret these Practice Directions rests with the CNAO.

Article 24    These Practice Directions shall come into effect as of January 1, 1997.