A Study On The Governance Function Of Government Audit

In the past few years, governance failure has become a serious problem that plagues the government. As one of crucial elements of government’s governance system, government auditing has two functions, one of which is that, as an important tool for governance, it evaluates and verifies local government activities, reveals illegal activities, and provides the local community with objective opinions and basis for understanding government’s utilization of public resources; the second function is that, by effective implementation of auditing, it could indirectly deter and urge government departments to become more useful, improving the governance efficiency. Government auditing’s positive impact to local governance has becoming a hot topic, especially since the publication of Auditor-general Liu Jia yi’s well-known speech "Government auditing must play an important role in country governance". Academia has set off a zest of research and government audit and governance.Similar to the relationship between audit and corporate governance, the relationship between government audit and governance should be exited as a dialectical unity. On one hand, good governance can provide protection for the implementation of government audit; on the other hand the good government audit can in turn promote the effect of governance. Therefore, in order to fully utilize the function of government audit, and comprehensively improve the effectiveness of governance, it is necessary to do a thorough, systematic and in-depth analysis for the relationship between the Government Audit and Local Governance.To this end, this paper studies the governance function of government audit from a local government’s perspective. It also explores its theoretical roots and practical need, while studying the principle of government auditing’s role in the governance of local government. This paper develops an in-depth analysis on mode of action to achieve the path, and investigates the status quo of Chinese government audit in government governance through an empirical test. For the concern of how to further improve the level of government audit to fully utilize its governance, the paper provides favorable recommendations. This paper is divided into seven chapters, respectively, from the perspective of theoretical analysis and empirical research on government audit and governance of local government carried out a more systematic, in-depth study.The main content of each chapter are as follows:Chapter1:Introduction. The research questions are raised by the frequent failures of local government governance, as well as the hot discussion of the function of government audit. In this chapter, I defined the government auditing, local governance, and the governance function of government auditing; explained this paper’s main content, research methods and research ideas framework.Chapter2:Literature Review. I summarized three major relevant research fields in both domestic and international literatures:(1) government auditing,(2) from the perspective of governance to explore the field of auditing,(3) from the research aspect of government audit. I introduced academic research on the expansion of audit function aspects and its application in the national economic security, embodiment of power monitoring etc. In government governance aspect, I focused on international organization, practitioners and academia’s different understanding of the concepts and the definitions of "governance","government governance","local government governance", as well as their research on the construction of the theoretical structure of local government governance, the choice of governance model and governance performance’s evaluation. From a governance point of view on government auditing’s research aspect, besides introducing government performance evaluation and economic responsibility auditing focusing on the research in government governance’s auditing types, it also summarized the thesis about the role of government auditing in governance and the functions in China and abroad.Chapter3:Government audit governance function’s theoretical analysis. This chapter provided a theoretical framework for this paper’s research topic, respectively from the perspective of auditing functional expansion of accountability theory, organizational theory and governance theory. It analyzed the objective theoretical basis of the governance function of government audit, and then investigated the government governance failures in political economy’s theoretical basis and its direct cause. It stated the need of the governance function of government audit, and that the relationship between auditing and corporation governance leads to a dialectical relationship between government auditing and the local government governance. At the end, I analyzed the major cause for negative impact on government audit governance function, and summarized the basic principles of how government audit governance function can be achieved.Chapter4:The realization of the governance function of government auditing in the perspective of local government.This chapter mainly discussed how government audit’s governance function can be achieved. It explores the basic content of the governance function of government auditing for local government, and indicated three basic paths to achieve it.Chapter5:Emperical Study. In order to do an empirical analysis of the current condition on government auditing governance function, I collected information and data from China auditing annual report and China statistics annual report in the years2003through2008. The result shows that, currently, China government auditing has some positive impact on local government governance. However, merely relying on the expanding of government auditing subjects and publishing public auditing reports, and giving not emphasis on the quality of audit cannot help improving the government governance’s effectiveness.Chapter6:Suggestions. Five suggestions of achieving government audit’s governance function have been made in the chapter.Chapter7:Conclusion. This chapter summarized my points in comparison of previous research literature, and discusses the existing limitations and future research prospect.This paper’s has three main innovations:First, it systematically established a relatively more comprehensive basic theory of structural system for government audit governance function and how to achieve the effectiveness of the function. This theoretic structural system consists of the concepts of the governance function of government audit and its theoretical basis, the reasons of how government audit can be effective for local government governance, the detail steps on how government audit can be fully utilize, the basic paths for achieving government audit governance, the major causes for negative impact on the use of government audit governance etc, and it also provided a more complete theoretical basis for future research prospect.Second, by using experience and statistics, the paper analyzed and verified the effectiveness of China local government audit in governance. Although there are series of issues including the existing regional differences, government audit still has some positive impact on the effectiveness of local government governance, it reflects some initial effect of government audit’s governance function, although more improvement is needed.Third, in order to improve China’s government audit governance’s effectiveness, I designed a specific practical strategy and implementation steps. Previous research literature has pointed out suggestions but only in a theoretical level, they did not provide any specific practical strategy for implementation. The paper emphasized the importance of testing and monitoring the rational allocation of audit resources, suggested using new method for auditing such as continuous auditing, in order to increase the efficiency, and also designed the macro implementation framework and detail implementation steps. It also pointed out that further development is needed for personnel’s professional knowledge, developing high quality auditing talent that has multiple knowledge skills background. It suggested building a database of implementation result of auditing database system to track audit results.