A Study On The Effects Of Audit Control Over Economic Power

In order to build and perfect socialist democratic politics system and market economy system, it is necessary to bring power under control. Audit is playing an important role to restrict and supervise the economic power. However, the contradiction between the infinite expanse of the practical need of audit control over economic power and its lack of relevant theories hinders the further improvement of the effects of audit control. Therefore, this dissertation attempts to solve the problem in a theoretical way.The dissertation is composed of six chapters besides the Preface.In Chapter One, the author firstly gives the definition of major concepts involved. In general, power refers to a special right which an organization or an individual uses to control other people, organizations or things by virtue of some given superiority. When it goes specifically to economic power, it means the right to possess, dominate and manage the material wealth. In reality, however, all the economic power is embodied in one word"power". Audit control over economic power actually refers to the restriction and supervision over those who possess that power so as to prevent them from power corruption. There are two processes involved when audit carries out its control over economic power: the first process is the audit examination. In this process, the effect of audit control is mainly addressed by the amount of illegal money that has been discovered and should be corrected through auditing; the second process is a correction process directed at the amount of illegal money discovered through auditing. In this process, the effect of audit control is mainly evaluated by such indexes as corrected type, the amount of corrected money and corrected rate. Accountability is the counterpart of economic power. If accountability can be viewed as the internal impetus that spurs audit to play its part and bring the economic power under control, then the implementation of the relevant laws and regulations, the demands of checking power corruption by the state, government and the public, together with the practical need of building socialist democracy can be regarded as the external impetus of audit control over economic power.Chapter Two explores public economic powers and factors that influence the effects of audit control over public economic power. The author points out that the public accountability is the counterpart of public economic power. Public accountability consists of five levels of obligations, that is, economic policy accountability, economic project accountability, economic performance accountability, economic process management accountability and economic fidelity accountability while public economic power has such corresponding powers as tax collection, budget implementation, use of funds, government purchase, management and decision-making of state owned enterprises, financial assets operation, securities management and infrastructure bidding. However, public economic power is not unlimited. As long as the user goes beyond the boundary, the power will be dissimilated. The root of power dissimilation lies in the system defects after separating the administration from the ownership, the avarice of humanity and lack of supervision. Thus, reinforcing audit control in the power control system becomes necessary. Factors and ways that influence effects of audit control over public economic power lie in the following aspects: Firstly, independence of state audit. The more independent the state audit is, the better the effects of audit control over power will be. Secondly, power of state audit. the more the audited institutions are involved in a period, the worse effects of audit control over power will be; the more intensified the auditor exercises audit power, the better the effects of audit control over power will be; the more severe the punishment is, the stronger the deterrent power to the audited institutions will be.Thirdly, state auditors. the higher the quality of auditors is, the better the effects of audit control over power will be; what's more, the more the auditors are, the less work each auditor will undertake, so, the effects of audit control will be better.Lastly, the level of the economic development. The higher the level of the economic development is, the better the effects of audit control will be.Chapter Three is the analysis of effects of audit control over itemized public economic power. Through empirical research, it is discovered that effects of state audit control over itemized public economic power are much better and more obvious. Firstly, the empirical evidence concerning effects of audit control over tax collection reveals that where there is a higher degree of voluntary tax payment or where the economic development level is higher, the effects of audit control over tax payment is better. Secondly, according to the empirical evidence concerning effects of audit control over budget implementation, the less independent the audit is, the worse the effects of audit control over budget implementation will be. Thirdly, the case study of the funds for Guangdong—Hainan railway construction shows that effects can be much better if audit control over the use of construction funds is employed. This mainly results from the higher degree of independence that audit institutions and auditors maintain in audit activities, the more intensified implementation of audit work and the more severe economic punishment carried out by audit institutions.Chapter Four analyzes effects of audit control over public economic powers as a whole. Through empirical analysis, it is discovered that the effects of state audit control over public economic power are very good. Furthermore, the empirical tests that are related to the relevant factors that influence audit effects demonstrate the following points: (1)the more tasks the audit has, the worse the effects of audit control will be; (2)the more intensified the audit implementation is, the better the effects of audit control will be; (3)the more severe the audit economic punishment is, the better the effects of audit control will be while the more severe the law or discipline punishment is, the worse the effects of audit control will be; (4)the more information the audit institutions release, the better the effects of audit control will be; (5)audit institutions directly under CNAO do better than local audit institutions in terms of audit control over public economic power because they can maintain a higher degree of independence than local audit institutions in the process of auditing; and (6)where the economy is more developed, the effects of audit control will be better.Chapter Five is about the establishment and improvement of the audit control mechanism over public economic power.To further enhance the effects of audit control over public economic power, a comprehensive audit control mechanism with"using power to control power"at the core,"using right to control power"and"using morality to control power"as basic points must be established and improved. In order to set up and perfect the audit control mechanism with"using power to control power"at the core, efforts must be made in the following aspects: firstly, reinforcement mechanisms over state audit powers must be established and perfected. Secondly, security mechanism over the state audit powers with administrative and vertical audit mode must be established and improved to enhance the national audit independence.In Chapter Six, the author summarizes the main conclusions made in the dissertation and points out its limitations and directions of the later study. What's more, there are some innovations in the dissertation. They are as follows:Firstly, the dissertation gives a preliminary account of audit control over economic power by making use of the concept of accountability. The author thinks that accountability, as the counterpart of economic power, is the internal impetus that spurs audit to play a role in bringing economic power under control. Secondly, by using the method of empirical research, the author has done a tentative test on the effects of audit control over public economic power and has got some valuable empirical evidences, which is the main characteristics and great contribution of the dissertation. However, it is so difficult to get the relevant data in the field of state audit that there are only few documents that have done the archival research on state audit. Through unremitting efforts of nearly three months, the author has succeeded in consulting a large number of relevant documents such as China Audit Almanac(2000-2005), China Tax Almanac (2000-2005), China Statistics Almanac(2000-2005) and Announcement of Audit Findings (2003-2007) released by CNAO, collecting and sorting out the data needed by the empirical research, and thus has formed a database to meet the need of empirical research in the field of state audit.