Audit Law of the People’s Republic of China

Chapter I
General Provisions

Article 1. This Law is enacted in accordance with the Constitution for the purpose of strengthening state audit supervision, maintaining the fiscal and economic order of the state, improving the efficiency in the use of fiscal funds, promoting the building of a clean government, and safeguarding the sound development of the national economy and society.

Article 2. The State shall institute an audit supervision system. The State Council and the local people’s governments at or above the county level shall establish audit institutions.
The State Council departments, local people’s governments at all levels and their departments, the revenues and expenditures in fiscal and financial affairs of state-owned financial institutions, enterprises and institutions, and other fiscal revenues and expenditures and financial revenues and expenditures that are subject to auditing in accordance with this Law shall be subject to audit supervision in accordance with the provisions of this Law.
Audit institutions shall, in accordance with the law, conduct audit supervision over the truthfulness, legality and effectiveness of the fiscal revenues and expenditures or financial revenues and expenditures referred to in the preceding paragraph.

Article 3. Audit institutions shall conduct audit supervision in accordance with the functions and powers and procedures prescribed by law.
Audit institutions shall, in accordance with laws, regulations and other State provisions on fiscal and financial revenues and expenditures, make audit assessments and, within their statutory limits of authority, render audit decisions.

Article 4. The State Council and the local people’s governments at or above the county level shall report on audit work to the standing committees of the people’s congresses at the corresponding levels each year. The audit reports of the State Council shall cover audit findings and the handling thereof with respect to the implementation of the central budget and other fiscal revenues and expenditures; audit working reports of the local people’s governments at or above the county level shall cover audit findings and the handling thereof with respect to the implementation of the budget at the corresponding level, budget adjustments, final accounts, and other fiscal revenues and expenditures. The standing committees of the people’s congresses at or above the county level may adopt resolutions on the audit working reports.
The State Council and the local people’s governments at or above the county level shall report to the standing committees of the people’s congresses at the corresponding levels on the rectification and handling of the problems identified in the audit working reports.

Article 5. Audit institutions shall independently exercise their power of audit supervision in accordance with the law and shall not be subject to interference by any administrative organ, public organization or individual.

Article 6. Audit institutions and auditors shall, in handling audit matters, be objective and fair, seek truth from facts, be clean and honest, and keep secrets.

Chapter II
Audit Institutions and Auditors

Article 7. The State Council shall establish the National Audit Office, which shall, under the leadership of the Premier of the State Council, take charge of audit work nationwide. The Auditor-General shall be the administrative head of the National Audit Office.

Article 8. Audit institutions of the people’s governments of provinces, autonomous regions, municipalities directly under the Central Government, cities divided into districts, autonomous prefectures, counties, autonomous counties, cities not divided into districts, and municipal districts shall be responsible for audit work within their respective administrative areas under the leadership of the governors of provinces, autonomous regions, mayors, heads of prefectures, counties or districts, and under the leadership of the audit institution at the next higher level.

Article 9. Local audit institutions at all levels shall be responsible and report on their work to the people’s governments at the corresponding levels and to the audit institutions at the next higher level, and audit work shall be conducted primarily under the direction of the audit institution at the next higher level.

Article 10. Audit institutions may, as required by work, establish dispatched audit offices within their jurisdictions.
Dispatched audit offices shall, as authorized by the audit institutions, conduct audit work in accordance with the law.

Article 11. Funds necessary for audit institutions to perform their functions shall be included in the budgets of the governments at the corresponding levels and shall be guaranteed by the people’s governments at the corresponding levels.

Article 12. Auditors shall possess the professional knowledge and competence commensurate with the audit work they undertake.
Audit institutions shall, in accordance with relevant State provisions, implement a system of qualification examinations and assessment for auditors.

Article 13. Audit institutions shall establish a recusal system. An auditor shall recuse himself or herself from handling audit matters where he or she has an interest in the auditee or the audit matter.

Article 14. Audit institutions shall keep confidential the State secrets and trade secrets they come to know in the course of performing their audit functions.
Audit institutions shall circulate audit results to relevant government departments or publish audit results to the public in accordance with the law.

Article 15. Auditors shall be protected by law in performing their duties in accordance with the law. No organization or individual may refuse or obstruct auditors from performing their duties in accordance with the law, or retaliate against auditors.
Persons in charge of audit institutions shall be appointed or removed in accordance with statutory procedures. Persons in charge of audit institutions shall not be removed or replaced at will unless they are found guilty of illegal acts or are incompetent for the post. The appointment and removal of persons in charge of local audit institutions at all levels shall be made after consultation with the audit institution at the next higher level.

Chapter III
Duties of Audit Institutions

Article 16. Audit institutions shall conduct audit supervision over the budget implementation, final accounts and other fiscal revenues and expenditures of the departments (including directly affiliated units) of the people’s governments at the corresponding levels and the people’s governments at lower levels.

Article 17. The National Audit Office shall, under the leadership of the Premier of the State Council, conduct audit supervision over the implementation of the central budget and other fiscal revenues and expenditures, and submit audit reports on the results of such audit to the Premier.
Local audit institutions at all levels shall, under the leadership of the governors of provinces, autonomous regions, mayors, heads of prefectures, counties or districts, and under the leadership of the audit institution at the next higher level, conduct audit supervision over the implementation of the budget at the corresponding level and other fiscal revenues and expenditures, and submit audit reports on the results of such audit to the people’s government at the corresponding level and the audit institution at the next higher level.

Article 18. The National Audit Office shall conduct audit supervision over the revenues and expenditures of the central bank.

Article 19. Audit institutions shall conduct audit supervision over the assets, liabilities, profits and losses of the State-owned financial institutions.

Article 20. Audit institutions shall conduct audit supervision over the financial revenues and expenditures of the undertakings of the State.

Article 21. Audit institutions shall conduct audit supervision over the assets, liabilities, profits and losses of State-owned enterprises.

Article 22. Audit institutions shall conduct audit supervision over State-owned enterprises and State-controlled or State-dominant enterprises and financial institutions.

Article 23. Audit institutions shall conduct audit supervision over the budget implementation and final accounts of government-invested or government-dominated construction projects.

Article 24. Audit institutions shall conduct audit supervision over the financial revenues and expenditures of social security funds, public donation funds and other relevant funds and capital managed by government departments or by other units as entrusted by governments.

Article 25. Audit institutions shall conduct audit supervision over the financial revenues and expenditures of projects involving international organizations or aid or loans provided by foreign governments.

Article 26. Audit institutions shall, in accordance with relevant State provisions, conduct audit supervision over the performance of economic accountability of the principal leading cadres of State organs and other units subject to audit supervision by audit institutions in accordance with the law during their terms of office.

Article 27. In addition to the audit matters specified in this Law, audit institutions shall also conduct audit supervision over the matters that shall be audited by audit institutions under the provisions of other laws and administrative regulations.

Article 28. Audit institutions shall have the authority to conduct audit supervision over matters and items that are related to State fiscal revenues and expenditures within the specific audit matters under the jurisdiction of audit institutions, and may conduct special audit investigations.

Article 29. Audit institutions may conduct audit supervision over the internal audit work of units subject to audit supervision according to law. Audit institutions may utilize the results of internal audit work in conducting audits.

Article 30. Audit institutions may conduct audit supervision over the quality of audit reports issued by public audit firms. Audit institutions may, in conducting audits, utilize the results of the audit work of public audit firms that have been verified to be valid.

Chapter IV
Powers of Audit Institutions

Article 31. Audit institutions shall have the authority to require auditees to provide, in accordance with the provisions of audit institutions, their budgets or plans for financial revenues and expenditures, budget implementation statements, final account statements, financial and accounting reports, electronic data on financial revenues and expenditures stored or processed by computers, and other relevant materials; auditees shall not refuse, delay or make false reports.

Article 32. Audit institutions shall have the authority to examine the accounting vouchers, account books, financial and accounting statements, and the electronic data system for financial revenues and expenditures stored or processed by computers, and other relevant materials and assets of auditees; auditees shall not refuse.

Article 33. Audit institutions shall have the authority to make investigations of units and individuals concerned regarding matters relating to audit matters and to obtain relevant evidentiary materials; the units and individuals concerned shall support and assist the audit institutions in their work, truthfully report the relevant information to the audit institutions and provide relevant evidentiary materials.

Article 34. Where an auditee violates the provisions of this Law by transferring, concealing, falsifying or destroying accounting documents, account books, financial and accounting statements, or other materials relating to fiscal or financial revenues and expenditures, or by transferring or concealing assets obtained in violation of State provisions, the audit institution shall have the authority to stop such acts.
Where necessary, an audit institution may, with the approval of the person in charge of the audit institution of the people’s government at or above the county level, seal up relevant materials and assets obtained in violation of State provisions; where it is necessary to freeze relevant deposits held by the auditee with a financial institution, the audit institution shall apply to the people’s court for such freezing.
Audit institutions shall have the authority to stop the acts of an auditee in disposing of ongoing violations of State provisions on fiscal or financial revenues and expenditures; where the stop is ineffective, the audit institution may, with the approval of the person in charge of the audit institution of the people’s government at or above the county level, notify the financial department and the relevant department in charge to suspend the allocation of funds already directly linked to the violation, or to suspend the allocation of funds already appropriated.

Article 35. Audit institutions may, in accordance with relevant State provisions, make inquiries into the accounts of auditees with financial institutions.

Article 36. Where an audit institution considers that an auditee is implementing acts in violation of the provisions on fiscal or financial revenues and expenditures by a department (or unit) at a higher level, it shall advise the department (or unit) at a higher level to make corrections; where the department (or unit) at a higher level fails to do so, the audit institution shall raise the matter with the competent authority for handling.

Chapter V
Audit Procedures

Article 37. An audit institution shall, in accordance with the audit project plans determined by the audit institution, form audit teams and serve audit notices on auditees three days prior to the implementation of the audit; in special circumstances, an audit institution may, with the approval of the people’s government at the corresponding level, directly conduct the audit with the audit notice.
Auditees shall cooperate with the work of the audit institutions and provide necessary working conditions.

Article 38. Auditors shall conduct audits and obtain audit evidence by examining accounting vouchers, account books, financial and accounting statements, consulting documents and materials relating to audit matters, checking cash, negotiable securities and physical objects, and making investigations of units and individuals concerned.
In making investigations of units and individuals concerned, auditors shall produce their auditor credentials and a copy of the audit notice.

Article 39. An audit team shall submit an audit report to the audit institution after an audit is completed. Before submitting the report, it shall solicit the opinions of the auditee. The auditee shall, within ten days from the date of receiving the audit report, submit its written opinions to the audit team or the audit institution.

Article 40. An audit institution shall, in accordance with the audit procedures, deliberate on the audit report submitted by the audit team, and shall, after considering the written opinions of the auditee, issue an audit report of the audit institution. For acts in violation of State provisions on fiscal or financial revenues and expenditures that shall be dealt with or punished in accordance with the law, the audit institution shall, within the limits of its statutory authority, render an audit decision or make a proposal for handling by the competent department in charge or authority.
Audit institutions shall serve audit reports and audit decisions on auditees and the relevant competent departments in charge or authorities. Audit decisions shall take effect as of the date of service.
Audit institutions shall, within the limits of their statutory authority, render audit decisions regarding acts in violation of State provisions on fiscal or financial revenues and expenditures committed by auditees; or they shall submit proposals to the competent departments in charge or authorities for the imposition of sanctions.

Chapter VI
Legal Liability

Article 41. Where an auditee refuses to provide or delays the provision of materials relating to audit matters as required by an audit institution, or provides incomplete or false materials, or refuses or obstructs an inspection, the audit institution shall order it to make corrections and may circulate a notice of criticism and issue a warning; where the auditee refuses to make corrections, the audit institution shall impose sanctions in accordance with the law.

Article 42. Where an auditee transfers, conceals, falsifies or destroys accounting documents, account books, financial and accounting statements, or other materials relating to fiscal or financial revenues and expenditures, or transfers or conceals assets obtained in violation of State provisions, the audit institution shall impose sanctions in accordance with the law.

Article 43. Where a department (or unit) at the corresponding or a lower level violates the budget act or other State provisions by committing any of the following acts in budget implementation or in the management of other fiscal revenues and expenditures, the audit institution, the people’s government or the relevant competent department in charge shall, within the limits of its statutory authority, handle the matter in accordance with laws and administrative regulations:
(1) failing to turn over budget revenues in accordance with the law;
(2) withdrawing budgetary funds without authorization;
(3) making expenditures in violation of State provisions;
(4) illegally using special fiscal funds; or
(5) committing other acts in violation of State provisions on fiscal revenues and expenditures.
Where, with respect to an act referred to in the preceding paragraph, laws or administrative regulations contain other provisions on punishment, such provisions shall apply.

Article 44. Where an auditee commits any of the following acts in violation of State provisions on financial revenues and expenditures, the audit institution, the people’s government or the relevant competent department in charge shall, within the limits of its statutory authority, handle the matter in accordance with laws and administrative regulations:
(1) misappropriating, embezzling, intercepting or withholding State funds earmarked for specific projects;
(2) committing fraud to obtain fiscal appropriations, subsidies or loans from the State;
(3) engaging in conduct that causes losses or waste of State assets; or
(4) committing other acts in violation of State provisions on financial revenues and expenditures.

Article 45. With respect to an act in violation of State provisions on fiscal or financial revenues and expenditures committed by an auditee, the audit institution may, within the limits of its statutory authority, render a decision to:
(1) order the auditee to turn over the funds that should be turned over;
(2) order the auditee to return the illegally obtained funds;
(3) order the auditee to return the illegally appropriated assets; or
(4) take other measures provided for by laws and administrative regulations.

Article 46. Where an auditee fails to implement an audit decision, the audit institution shall order it to implement the decision within a specified time limit; where the auditee still fails to do so upon expiration of the time limit, the audit institution may apply to the people’s court for compulsory enforcement, or propose that the relevant competent department in charge or authority impose sanctions.

Article 47. Where an auditee disagrees with an audit decision made by an audit institution on its financial revenues and expenditures, it may apply for administrative reconsideration or institute an administrative lawsuit in accordance with the law.
Where an auditee disagrees with an audit decision made by an audit institution on its fiscal revenues and expenditures, it may, within 60 days from the date of receiving the audit decision, request the people’s government at the corresponding level to make a ruling; the ruling of the people’s government at the corresponding level shall be final.

Article 48. Where an auditee commits an act in violation of the provisions of this Law and the case constitutes a crime, the audit institution shall transfer the case to the judicial authority for investigation of criminal liability in accordance with the law.

Article 49. Where an auditee refuses to provide, delays the provision of, or provides false materials relating to audit matters, or refuses or obstructs an inspection, and the case constitutes a crime, criminal liability shall be investigated in accordance with the law; where the case does not constitute a crime, disciplinary sanctions shall be imposed in accordance with the law.

Article 50. Where an auditee retaliates against or makes a false accusation against an auditor, disciplinary sanctions shall be imposed in accordance with the law; where the case constitutes a crime, criminal liability shall be investigated in accordance with the law.

Article 51. Where an auditor abuses his or her power, engages in malpractice for personal gain, neglects his or her duties, or divulges State secrets or trade secrets, disciplinary sanctions shall be imposed in accordance with the law; where the case constitutes a crime, criminal liability shall be investigated in accordance with the law.

Article 52. Where an audit institution imposes a fine as an administrative penalty in accordance with the law, the auditee shall pay the fine to the designated bank within 15 days of receiving the decision on the administrative penalty. Where the auditee fails to do so, the audit institution may impose an additional fine for each day of delay in accordance with the Law of the People’s Republic of China on Administrative Penalty.

Chapter VII
Supplementary Provisions

Article 53. Specific measures for the audit supervision over matters relating to the performance of economic accountability of leading cadres shall be formulated by the State Council.
The audit of the People’s Liberation Army shall be governed by the regulations formulated by the Central Military Commission.

Article 54. This Law shall come into force as of January 1, 1995. The Audit Regulations of the People’s Republic of China promulgated by the State Council on November 30, 1988 shall be repealed simultaneously.