Article 1    This Standard is formulated in accordance with the Basic  Government Auditing Standards of  the People's Republic of China for the purpose of standardizing the preparation and review of audit reports and ensure the quality of audit.

Article 2    The term "audit reports" mentioned herein refers to written documents about the conduct of audit and audit results, which are prepared by audit teams at the completion of their audit assignments and submitted to the audit institutions dispatching the audit teams (hereinafter referred to as the dispatching audit institutions).

Article 3    Audit reports shall be produced at the completion of audit conducted by audit teams on audit items about which audit notifications have been issued.

Article 4    An audit report shall include the following basic elements:
(1) Title;
(2) Major receiving body;
(3) Contents of the audit report;
(4) Signature of the audit team leader;
(5) Date of reporting.

Article 5    The title of an audit report shall include the name of the audited body as well as major content and timing of the audit item.

Article 6    The major receiving body of the audit report is the dispatching audit institution.

Article 7    The audit report shall mainly include the following specific contents:
(1) Scope, content, approach and timing of audit;
(2) Basic situation of the audited body such as its financial affiliation and its revenues and expenditures;
(3) Information related to the conduct of audit, such as facts related to the audit item, disclosure of revenues and expenditures that comply with relevant state stipulations as well as adoption of audit approaches and explanation of relevant situations;
(4) Opinions of audit evaluation, such as summarized statement about the audited revenues and expenditures and their related documents, evaluation of the accountability of the audited body in combination with the priorities determined by the audit programs and centering around the truthfulness, compliance and effectiveness of the revenues and expenditures;
(5) Determination of the nature of acts of revenues and expenditures in violation of state stipulations as well as recommendations for imposing sanctions and penalties against such acts and the basis thereof.

Article 8    The audit team shall draft its audit report by summarizing its audit working papers and other relevant materials together with integrated analysis, classification, sorting out and verification of such papers and materials.

Article 9    The audit report shall be characterized by complete content,  accurate statement, reasonable structure, clear layout and standardized wording.

Article 10   Auditors shall be responsible for the truthfulness of the audit working papers prepared by them while the audit team leader shall be responsible for the truthfulness of the audit report produced by the team.

Article 11    The audit report shall be discussed among the audit team, finalized by the team leader and sent to the audited body in time and according to relevant stipulations to solicit the latter's opinion thereof.

Article 12    The audited body shall, within 10 days of receiving the audit report, produce its opinion in writing.  Relevant amendments and adjustments to the audit report shall be made where the audit team deems it necessary to do so.

Article 13    Where within 10 days of receiving the audit report, the audited body produces no opinion in writing, it may be interpreted that the audited body has no disagreement with the audit report.

Article 14    The audit team shall submit to the dispatching audit institution the audit report together with the written opinion of the audited body.

Where the audited body produces no written opinion, the audit team shall explain the reasons thereof and report them to the dispatching audit institution.

Article 15     The dispatching audit institution shall establish a layered internal review system for audit reports.  Where audit reports involve significant audit items or require review for other reasons, the dispatching audit institution may appoint its review organization or full-time reviewers to undertake such review on the basis of review work completed by its professional audit departments.

Article 16     The dispatching audit institution shall review and finalize the audit report and the audited body's feedback opinion about the audit report submitted by the audit team, produce its audit opinion or make its audit decision according to the law.

Audit reports concerning general audit items shall be reviewed and finalized by competent leaders of the dispatching audit institution while audit reports involving material audit items shall be submitted for review and finalization to professional audit meetings held by the dispatching audit institution.

Article 17   The dispatching audit institution shall mainly review and finalize the following contents of the audit report:
(1) Whether facts related to the audit item are clear;
(2) Whether the audited body has produced correct opinions concerning the audit report or whether the review organization or reviewers have raised correct opinions of review;
(3) Whether opinions of audit evaluation are appropriate;
(4) Whether determination of the nature of violations and recommendations for imposing sanctions and penalties are appropriate and in compliance with relevant laws and regulations.

Article 18   The authority to interpret this Standard rests with the CNAO.

Article 19    This Standard shall come into effect as of January 1, 1997.