A Research On Enhancing Local Governmental Financial Transparency

Financial transparency is opening some materials to the public, such as government's structure and functions, fiscal policy intentions, the public sector accounts and financial forecasts. Financial transparency should promote official's accountability who is responsible for the formulation and implementation of fiscal policy , following a stronger and more credible fiscal policy, which will help win the support of the public informed, access to domestic and international markets and create more favorable conditions. Good governance for achieving macroeconomic stability and high quality growth is extremely important while financial transparency and good governance are the keys. Therefore, it is very important to improve the financial transparency.China is a country with multi-nationality, has a vast territory and large population, China's governments functions are executed both from the central government and local governments and the local governments have a relatively unique identity and status in the socio-economic activities, which is our regional economic development strong impetus. So it is important to China's socialist market building by improving the financial transparency of local governments and enhancing the fiscal efficiency of performing functions. Comparing to the foreign financial transparency, there is a big gap between China's local governments and foreign's. The main performance is included in three aspects: First, the distinction between government and the market is not clear; the phenomenon of the financial offside and the absence coexisting; there is no clear demarcation between local governments and the central government. Second, many of the Government's activities and a large number of non-budgeted funds are not included in the budget, so government is lack of effective regulation. Third, it is difficult for the legislative sectors and the public to understand the budget from the budget table and carry out the examination and supervision, because the budget is not according to such principles as easy to understand, timely, reliable and effective.The financial transparency of China's local governments is low, this situation part same with other countries while others inside China's traditional system and actual conditions: First, government has a strong motive to conceal public information, in order to cover up failed policies, reduce its negative consequences and escape punishment. Second, that is the administrative relationship between the central and local finances. As China is a unitary country of centralization, China's financial management system follows the unified leadership and classification management principles, many issues of financial transparency to a large extent depend on the provisions of central government. Third,that is the internal contradictory of fiscal and taxation system. Because of the functions of local governments at all levels below the provincial level and sources of income are not explicitly stipulation,which are not included in the tax distribution system refom in 1994,forming the situation of centralization of financial power at each government levels, routine power transfers to lower levels,serious unbalanced between financial power and rountine power. Fourth,that is the problem of the intergovernmental transfer payments system. China's current special appropriation-in-aid is not standardized,the distribution is no standard to follow with arbitrary and low transparency.Western developed countries have implemented a number of effective reforms in the promotion of financial transparency: First is that the financial information should be clearly opened according to law and the public access to financial information is protected by law. Second, the law explicitly stipulates the intergovernmental rountine power, matters which belong to that government who desearve should responsible for it and pay for it. Third is that government creates favourable conditions for the public to obtain financial information, publish financial information regularly and timely which contents comprehensive, detailed, and the public access to financial information channels is very convenient. Fourth, government audits and supervises the authenticity of that information.There are many lessons we should learn to promote financial transparency in China, I believe that, our country should exercise in three aspects to increase financial transparency in the near future from a financial management perspective,making a fundamental resolution of the issue of low transparency in order to improve the financial operation efficiency and enhance governments decision-making process with scientificness and democratization: first, rebuilding the government's financial reporting system. Improving government's financial reports system through clearing its objectives, defining its main bodies and reforming its structure. Second,reforming government's accounting. Governments should make a clear distinction between the budget accounting and the government accounting. The checkage area of budget accounting should expand from budget funds movement to government fund movement which comprehensively and accurately reflects the government trustee responsibility by the public. Foundation of accounting confirmed by transfer from cash-basis system to accrual-based system in order to be effectively analysis the cost of public service provisioned by government sectors,and make government's responsibility for economy management workable. Third,opening the budget preparation and implementation to the public. Budget preparation should be made ahead about nine months in order to ease the pressure and improve the quality of budgeting; medium-term budgetary framework also should be made in order to analysis the long-term sustainability of fiscal policy; speeding up the building of departmental budgets system in order to improve budget integrity, consummation budget transparency and reduce the "black box operations" .