Game Of China's Local Government Debt Audit Oversight Mechanism Studies

At this stage, the State attached considerable importance to the local governmentdebt audit issues. February13th,2011, the State Council issued a notice on doing agood local government debt audit job. In the state'2012audit meeting, the AuditorGeneral Liu Jiayi said, this year's economic responsibility audit will be particularlyconcerned about the situation of local government debt, pay more attention to the debtof local governments, the problem of financial funds used for too much ahead of theproper construction and used for image projects. With local government debtmanagement office under the Ministry of Finance Budget Division, the AuditCommission also correspondingly has the national debt of local government auditwork leading group. March5,2012, Premier Wen Jiabao's government work report tothe Fifth Session of the11th National People's Congress, said that will strengthen thelocal government debt management and risk prevention, and overall strengthening ofthe audit of the key sectors of the focus areas and key funding.On the other hand, the debt crises in Europe and the United States raised the debtceiling initiatives the government debt problems and more attention. At present,China's public finance system is not perfect, and the relationship between the marketand the government is serious aliasing, and local government functions,"inadequacy"and "offside" behavior. To deal with the2008financial crisis, our governmentintroduced a4trillion economic stimulus plan, the financing platform companies insome parts of China have established.Local government have paid efforts to avoid the recession, but there are stillillegal operations of local government debt capital in the process of borrowing,using,repaying, also other processes are not standardized, and the production projects andnon-supply of public goods exist free-riding, crowding out the normal use of debtcapital, resulting in local government debt to rapid expansion and the debt risk. In thiscontext, to strengthen the audit of local government debt is even more important.View of this, through the use of game theory analysis, and after the analysis oflocal government debt status quo, and comparative analysis with the U.S., EU, Japan,we first draw the conclusion of audit mechanism design of the local government debtaudit, followed by the audit focuses of the concerns, the finally give somerecommendations about the innovation of audit methodology. This article suggests that the improvement of the debt of local government auditand supervision mechanisms should focus on the effectiveness of motivation ourauditors, preventing the audit department personnel's complicity and collusion withlocal government officials during practice which will undermine audit independence,and ultimately harm the majority of the people interests. For the violations, the localgovernment should implement the penalty, but the intensity of punishment should bemoderate, too strong and too weak will not achieve the best results. In order to achievegood supervision and additionally consider the problem on the system design shouldalso consider the audit key issues. Using the different methods in audit work is anothermeasure. From this point, we should fully integrated sooner auditing and tracking auditmethods, implement effectiveness and rationality audit, and the effectiveness audit.