Government Audit Supervision And Local Government Governanc

With the establishment of a moderately prosperous society in all respects,the primary stage of socialism with Chinese characteristics has crossed the threshold into a new era.In the new era,China’s economy has transitioned to a stage of high-quality development,and the principal contradiction facing Chinese society has evolved.The changes in the principal social contradictions in the new era will inevitably put forward higher requirements for local governments.On the one hand,the people’s ever-growing needs for a better life requires local governments must take a people-centered approach.On the other hand,the reality of unbalanced and inadequate development urgently calls for promoting coordinated regional development system,which focusing on promoting the economy of underdeveloped regions and improving the welfare level of poor group.At the same time,in the process of supply-side structural reform affecting the highquality development of the economy,local government has created a series of government governance issues.Combined with the administrative management model of “combination of strips and blocks” in China,these problems are mainly concentrated in the following three aspects: From the point of view of "stripes",the lack of independence of local government supervision leads to information asymmetry between the central and local governments,which affects the effect of financial supervision.From the point of view of "blocks",on the one hand,the "promotion tournament" makes local government officials unable to uphold the people-centered value orientation;on the other hand,the financial irregularities of local governments,especially underdeveloped local governments,are not conducive to coordinated regional development.As the contradiction between the higher requirements for local governments in the new era and the issues of local government governance continues to deepen,how to regulate the behavior of local governments and improve the efficiency of local government governance so that they can better adapt to or resolve the principal social contradiction is a problem that the Chinese government needs to face and solve urgently.The key to local government governance is to improve the supervision and accountability mechanism.The Fourth Plenary Session of the 19 th Central Committee of the Communist Party of China proposed to advance the modernization of China’s system and capacity for governance,with particular emphasis on the functional role of government audit supervision in upholding and improving the Party and state oversight system.To address the above local government governance issues,the Chinese government audit system has carried out reform practices:the regional offices of China’s National Audit Office has been set up in the "strips" model,aiming at alleviating the degree of information asymmetry between the central and local auditing governments and improving the independence of the local financial supervision and accountability mechanism by strengthening the vertical management of the central auditing institution to the local auditing institution.In the "block" model,the first is the implementation of the economic responsibility audit,aiming to strengthen the supervision of the behavior of local government officials and promote the construction of a "people-oriented" local government by strengthening the governance of local government officials;Second,the poor counties’ financial poverty alleviation funds audit has been carried out,aiming to promote the sunny management of financial funds in poor counties,improve the efficiency of financial funds use and speed up the economic development of poor counties by supervising the use of financial funds.Based on the above realities and institutional background,this study focuses on the governance problems of local governments under the administrative management model of "combination of strips and blocks" in China,and tries to explore the relationship and impact mechanism between Chinese government audit supervision and local government governance by using the reform practice of Chinese government audit system.After sorting out the domestic and foreign literature,this study first starts with the focus of China’s financial system reform,combs the evolution of China’s audit supervision system,summarizes the factors that affect the efficiency of government audit supervision,further introduces the main contents,similarities and differences of the three government audit supervision systems,and provides a realistic background for the following theoretical analysis and empirical research;Secondly,the paper theoretically discusses the influence mechanism of alleviating the asymmetry of audit information between central and local governments in the "strip" model and strengthening the governance of local government officials and the supervision of the use of local financial funds on local government behavior in the "block" model;Finally,on the basis of the above theoretical analysis,using the establishment of the regional offices of China’s National Audit Office,the audit of economic responsibility and the audit of the poor counties’ financial poverty alleviation funds as the three exogenous audit system reform practices,the audit data of local governments are used to provide verified evidence for the corresponding theoretical analysis.The main conclusions of this study are as follows:First,by sorting out the changes of China’s government audit system,it is found that when the financial incentive mechanism lacks corresponding constraints,the incentive to local governments is likely to distort local government behavior and bring about local government governance problems.The changes of China’s government audit system and the subsequent supervision and accountability system provide institutional conditions for solving local government governance problems through strengthening audit supervision.At the same time,by summarizing the main contents of the three government audit supervision systems,we can find that: on the one hand,although the three government audit supervision systems have different emphasis on the audit subject,audit mode and audit result feedback,these different system designs ensure the independence and authority of government audit supervision,which is conducive to giving full play to the supervision role of government audit and improving the efficiency of government governance.On the other hand,the audit object,audit purpose and audit content of the three government audit supervision systems exactly correspond to the governance problems faced by local governments in the process of supply side structural reform,forming the framework of “the establishment of the regional offices of China’s National Audit Office – local audit strength(alleviating the central local information asymmetry)– local audit efficiency”,“economic responsibility audit – official governance(service-oriented local government)– public satisfaction(people centered)”,“ the poor counties’ financial poverty alleviation funds audit – fund supervision(fund use efficiency)– economic development in povertystricken counties(regional coordination)”,which provides a good practical basis for the following analysis of impact effects and mechanisms.Second,in terms of information asymmetry between the central and local governments,theoretically,the information asymmetry between the central and local governments may lead to the capture of local audit institutions by local governments,weakening the auditing of the use of local government financial funds,and thus reducing the efficiency of local government audit supervision.The establishment of the regional offices of China’s National Audit Office has improved the audit supervision efficiency of local audit institutions by strengthening the central audit supervision,alleviating the degree of information asymmetry between the central and local audit information.To provide empirical evidence for the above theoretical analysis,we find that central audit supervision,represented by the establishment of regional offices of China’s National Audit Office,has a significantly positive correlation with local audit enforcement on misusing public.And after the establishment of regional offices of China’s National Audit Office ’s influence,provincial level audit offices have increased the number of cases transferred to the judiciary and cases handled by the judiciary.In addition,we also find the following conclusions: auditor’s turnover,whom from the regional offices of China’s National Audit Office,will not have a significant impact on the role of central audit supervision,indicating that the central supervision effect of the system design of the regional offices of China’s National Audit Office will not be affected by the personnel arrangement.The influence of the regional offices of China’s National Audit Office has shown an upward trend,which shows that the regional offices of China’s National Audit Office has promoted the audit work to operate more orderly and efficiently by continuously summarizing and promoting the practical results and experience in the exploration process from the pilot to the full rollout.Third,in terms of local government officials,theoretically,the "promotion tournament" causes local government officials to pay too much attention to economic affairs and does not respond to the opinions and demands of the public who directly bear the consequences of governance,forming a model in which local government officials are "responsible to superiors".By focusing on the economic responsibility of leading party and government cadres,the economic responsibility audit restricts the behavior of local government officials,builds a service-oriented local government,and enhances the public’s satisfaction with government work.On the one hand,it has significantly improved local government officials’ "downward responsibility" service awareness;on the other hand,it optimizes the allocation of local government resources to better serve the people.To provide empirical evidence for the above theoretical analysis,we find that the audit supervision of local government officials,represented by economic responsibility audit,significantly improves the public’s satisfaction with government work.More importantly,the channel for economic responsibility audit to improve people’s satisfaction with government work is to build a “service-oriented”local government.In terms of improving the service awareness of local government officials’ "downward responsibility",the main performance is that it significantly reduces the probability of people being unfairly treated by government officials,conflicting with government officials,and receiving unreasonable delays and unreasonable charges when they go to the government to do business.In terms of optimizing the allocation of local government resources to better serve the people,it is mainly manifested in improving the level of people’s livelihood expenditure and service level.Further,Considering the heterogeneous influence of information dissemination,it is found that the positive moderating effect of information dissemination on economic responsibility audit mainly depends on the accuracy of information dissemination,or whether the information comes from official channels,and has nothing to do with the medium of information dissemination.Finally,the consequences analysis found that economic responsibility auditing significantly improved people’s life satisfaction and confidence in the future.Fourth,in terms of the use of local government financial funds,theoretically,the mismatch between the financial autonomy and supervision mechanism of poor counties makes the governments of poor counties have the motivation to change the use of transfer payment funds,increase consumption expenditure,and affect the efficiency of the use of financial transfer payment funds.The poor counties’ financial poverty alleviation funds audit strengthens the supervision of financial transfer payment funds,optimizes the financial expenditure structure of poor counties,improves the"hematopoietic effect" of poverty alleviation funds,and promotes the economic development of poor counties.To provide empirical evidence for the above theoretical analysis,we find that the supervision of the use of local government financial funds,represented by the poor counties’ financial poverty alleviation funds audit,has significantly improved the economic development level of poor counties.Investigating its mechanism,it is found that the poor counties’ financial poverty alleviation funds audit alleviates the idle situation of transfer payment funds in poor counties,ensures that more poverty alleviation funds sink to villages,and effectively restrains the"running and leaking" of poverty alleviation funds;the expenditure structure of poor counties has been optimized by reducing the scale of consumptive expenditures and increase the scale of public expenditure represented by industrial poverty alleviation;and drive the industrial transformation and upgrading of poor counties through the"hematopoietic effect” of poverty alleviation industries.Finally,further analysis finds that the poor counties’ financial poverty alleviation funds audit improved the welfare effect of poor groups,the heterogeneity analysis shows that in poor counties with lower audit supervision cost and better business environment,the economic development effect is stronger.Compared with the previous literature,this research has important theoretical significance and practical value:Theoretically speaking,first,this study is helpful to fully understand the formation mechanism of local government behavior.Previous studies have shown that information asymmetry between central and local governments,local government officials and the use of local government financial funds are important factors that affect local government behavior.This study incorporates the above factors into the same framework system,combined with the administrative management model of“combination of strips and blocks” in China,studies the internal mechanism of local government governance under the decentralization system and how to improve the efficiency of local government governance,which is helpful to comprehensively understand the formation mechanism of local government behavior during the transition period.Second,this research is of great significance for deepening the understanding of the governance function of government audit supervision.In terms of the governance of local government officials,existing research pays more attention to the changes in the tenure of officials,the individual characteristics of officials,and the influence of officials’ communication in different places.In terms of the use of local government financial funds,existing research pays more attention to the impact of the scale and structure of transfer payments.This study explores the role of the government audit supervision model in the local government governance system from the perspective of Chinese government audit supervision for the first time.Third,this study complements the theoretical framework of a "Chinese-style supervisory accountability mechanism".The key to the governance of government violations lies in the formation of a sound supervision and accountability mechanism.More and more scholars study this issue from the perspectives of media supervision,election supervision,and financial supervision.This study focuses on the impact of government audit supervision.Combined with the existing research,this study provides the perspective of government audit supervision in the "Chinese-style supervision and accountability mechanism",which is conducive to the formation of a relatively complete theoretical analysis framework.Realistically speaking,first,in order to transform the construction of China’s system and capacity for governance into real economic growth,it is necessary to continuously improve its internal driving force,focusing on adhering to and improving the audit supervision system under the leadership of the Party.This study deeply discusses the important impact of the current China’s government audit supervision system reform in local government governance,and proposes a reform plan for local government governance mechanisms,which has a certain practical reference value for how to fully perform the government audit supervision duties according to the law,give full play to the role of the government audit supervision system,and realize the modernization of China’s system and capacity for governance.Second,as the most important government supervision department in the past three decades,government audit supervision has become an important means to regulate the behavior of local governments and strengthen the image of a responsible government.By exploring the impact of economic responsibility audit on people’s satisfaction,this study not only provides a theoretical basis for a comprehensive understanding of the impact of government officials’ audit supervision on improving government performance evaluation,but also provides a feasible plan for how to build a service-oriented government that the people are satisfied with and promote the modernization of China’s system and capacity for governance.Third,in the face of the dual pressure of economic downturn and improving the quality and efficiency of public finance,how to better utilize the efficiency of fiscal funds and promote high-quality economic development to better drive the development of poor regions is not only a major issue facing China’s rural revitalization,but also an urgent need to contribute Chinese experience to the cause of poverty reduction in the world.This study provides a feasible plan for how to make better use of institutional advantages,consolidate and develop the existing achievements in poverty alleviation,and create a Chinese sample for the world’s poverty alleviation governance by discussing the impact mechanism of the poor counties’ financial poverty alleviation funds audit on poor counties’ economic development.