Research On Financial Audit Institution Of China

As an important tool of supervision, government audit is both an essential part of national governance and an important way of public administration. In the field of economy, it plays a part in monitoring and evaluating economic operation, observing and reflecting the operation risk, maintaining the run of the national economy in a healthy way. In the field of politics, it plays a part in promoting democracy and legality, restraining the exercise of power, optimizing political environments. Financial audit is one of the essential functions and in the core position in the system of government audit. As a branch of the system of government audit in the field of public finance, the institution of financial audit consists of the activity of financial audit, the rules and regulations restricting and standardizing financial audit and the organization structure. It plays the roles of standardizing relationships and guiding behavior.This paper takes the reasons of development of the financial audit system as the starting point, describing the connotation, constitute factors, features, functions, framework, theory foundation and systematic changes systematically, with a view to drawing some specific and connective conclusions. On this basis, some research work is carried out in the correlation of financial audit and other monitoring mechanisms in public finance, as well as the external system factors, internal mechanisms, and institutional rules restricting the effect of the financial audit system as a whole. Then this paper explores the ideas and measures of optimizing the system of financial supervision and perfecting the reform of the financial audit based on national governance. There are six chapters in this paper as follows.Chapter 1, introduction. This part proposes the purpose and the significance of the subject, major research objectives, the logic thoughts and methods, as well as the main innovative views of the paper. It gives a brief introduction and comment on the major views of the basic connotation, functions, objectives, contents and focus of the financial audit in the foreign and domestic literature.Chapter 2, the system of financial audit:the analysis of category. The system of financial audit is a system consists of financial audit activity, rules and organization structure. It is an organic whole with mutual connection and restriction. This part gives the definition of the system of financial audit, and describes such systematic factors as audit subject, object, basis, objective, procedure briefly. Based on this, formulate five characteristics of the system of financial audit:the authority of the audit subject, the diversity of audit object, the publicity of audit objective, the stability of structure, and the level of the system. In the respects of objective effect and ability of the system, the functions of the system of financial audit are summarizes as the following four aspects:safeguard, normalization, coordination, and balance. In the respects of audit contents and the systematic factors, the system of financial audit is divided into five subsystems as follows: objective system, rules system, contents system, organization system and methodology system. These basically can cover the most contents of the system of financial audit.Chapter 3, the basic theory research on the system of financial audit. Firstly, this part expounds the outer motivation of the origin and development of the financial audit system——theory on democracy and legality. It is the inherent publicity of public finance that determines its nature as important decision item as a part of national governance, as well as the democracy that it must have when make decision on public finance. The system of financial audit is the by-product of democratic finance, whereas democracy and legality is the outer motivation that gives birth to the system of financial audit. At the same time, the display of the function of the system of financial audit depends on the development level of democracy and legality, which determines the course and direction of the financial audit. Secondly, this part discusses the inner motivation of the origin and development of the financial audit system——Power balance theory. As a means of the check and balance of powers, as well as a kind of important independent power of counterbalance in the power junctions, financial audit was the result of vertical decentralization in an autarchy society, and was an extension and specialization of the power of supervision from the representative institutions in the horizontal decentralization in a democracy. Finally this part derives the basis of the origin and development of the financial audit system——public money, public authority and public accountability. The allocation of public authority and public money involves layered and vertical principal-agent relation. The principal-agent relation among the public, representative institutions and government is level decomposition of public power and public money, as well as public accountability. The principal need to understand and monitor the use of public power, the effectiveness of the use of public money, and the performance of the public accountability, which objectively requires independent system of financial audit.Chapter 4, comparison and reference of the system of financial audit between China and aboard. The system of financial audit arises from the establishment of accountability on public finance. With the development of social politics and economy, the public accountability as well as the model of national public administration, the system of financial audit appears different features and contents, and evolves four models including legislative model, judicative model, independent model and administrative model. The system of financial audit in China has undergone a shift from imperial power to civil rights, with the maintenance of the centralized bureaucracy run through it. This part, takes Britain, France, Germany and Korea for example, introduces the changes of the four models of financial audit respectively. It also studies the development of financial supervision in ancient China, taking the financial supervision as the key link, the government official supervision as the longitude line, and both the combination of accounting and audit and the internal financial audit as the latitude line. At the same time, this part gives brief introduction on the modern audit system built according to the thought of Sun Yat Sen under the reign of the Nationalist Government, as well as the development of the system of financial audit from'the combination of accounting and audit' to 'the separation of accounting and audit' the Central Soviet Area. This part puts stress on the development of current system of financial audit in China. On the basis of this, it compares independence and authority of different systems of financial audit, and comes up with the major factors which influence the shift of the system of financial audit:political institution, social ideology, economic foundation and public accountability. This part points out the characteristics of China's socialist administrative financial audit system as follows:financial audit is one of the major function of government audit, but not the whole government audit; the objects of financial audit include not only things but also person; two reports system is one of the basic rules of financial audit in China Chapter 5, correlation analysis on the system of financial audit and financial supervision in China. In a broad sense, the financial supervision is a integrated system, it is composed of many supervision systems which have interdependence and relative independence. As an important monitoring tool to the system of government administration, financial audit has close relationship with other tools of supervision, and it can not run effectively without the support, coordination and complement. Firstly, this part introduces the combined supreme supervision of the Municipal People's Congress, financial supervision system, which sets party supervision, administration supervision including audit, and social supervision as one. Secondly, this part gives systematic analysis on the correlation between financial audit and other forms of supervision. Finally, it points out the institution defect exists in the current system of financial supervision, and gives some suggestions to improve it.Chapter 6, the reform and perfection of the system of financial audit in China. Firstly, this part discusses three key factors which enable the system of financial audit run effectively:the science of the system itself, the existence of the legal basis guarantee the run of the system, and the coordination of the shift of the system with objective laws of the social economy. Based on this, the part analyzes the contradictions and problems in current system of financial audit:firstly, although it accords with our country national condition in the certain period, the administrative dual management system has the weakness of the decrease of audit independence, dissimilation of the accountability relationship, and the separation of the higher and lower auditing bodies, which brings forth negative impact on the authority, unity, seriousness and effectiveness of the system of financial audit; secondly, there are such problems as incompleteness of audit scope, separation of organization, lag of the methods and technology, and low level of audit results in the current system of financial audit; thirdly, the part analyzes the defects of the financial performance audit from the aspects of institution arrangement, these defects include unclear audit scope, indefinite audit objectives, the lack of the selection of audit criteria, the lag in construction of regulation, and the complete system have not yet formed. In the end of this part, the author puts forwards the countermeasures and suggestions on the reform and perfecting the system of financial audit. The first suggestion is to carry out administrative audit model of unity between supervision and audit which is in line with Chinese political system and administrative management mode, with a view to integrating the supervision resources, improving the supervision efficiency, and enhancing the independent and authority of audit within the framework of the Constitution. The second suggestion is to widen the audit scope, optimize the organization, and promote the method and technology and audit results on the principle of exposing problems, standardizing management, promoting reform, improving performance, and maintaining security. The third suggestion is to speed the construction of legal system of performance audit, clear the objectives of performance audit, define the scope of the performance audit, select the evaluation criteria in a scientific way, and perfect the system of evaluation indicators, as well as to fully implement the appraisal system of financial performance audit with a four-in-one pattern of the performance of public financial money, the efficiency of the government sectors, the effectiveness of the public policy, and efficiency of the macroeconomic operation. The author also suggests to promote the reform of both the budget management system and financial management system, the establishment of the performance management and administrative accountability system, as well as the overall improvement of the resulting the administrative effectiveness and the efficiency of the macroeconomic policy.