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February 22, 2010

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China steps up audits to thwart graft

China plans to audit all fiscal funds and government-related construction projects in a bid to ensure the sound use of public money and head off corruption.

A regulation addition to the Audit Law, issued over the weekend by the State Council, the nation's Cabinet, and to take effect on May 1, will help improve the country's auditing system, according to experts.

It would boost supervision of areas with high incidences of corruption, such as building projects, they said.

Apart from state-owned companies and projects, auditors will be entitled to track and supervise the spending of funds by other companies and projects that use public money, according to the regulation.

The regulation makes it clear that construction projects whose government investment exceeds 50 percent, or those with less than 50 percent government investment but with construction and operations government controlled, must be audited.

"The tracking audit will be good for the legitimate and efficient use of public funds and will also provide clues for anti-corruption campaigns," said Mao Shoulong, public policy professor at the Renmin University of China in Beijing.

In last year's government work report, Premier Wen Jiabao proposed auditing follow the path of public money allocations. Wen said auditors should be allowed to play a full role in detecting potential risks and guaranteeing economic security, as well as to fight corruption.

"Audit work is of much significance to construction projects, where power-for-money deals happen," said Wang Yukai, a professor with the Chinese Academy of Governance.

Over the past decade, large amounts of public money have flowed into major construction projects nationwide, in the wake of the country's booming economy and rapid development.

However, frequent cases of bribery and corruption have caused public concern.

He Guoqiang, head of the Communist Party of China Central Commission for Discipline Inspection, the Party's internal anti-graft body, said in January that one of the major tasks for the discipline commission this year was to "severely deal with violations of laws and regulations in the construction area."

In the past two years, reconstruction funds for regions hit by the 2008 earthquake in southwest China's Sichuan Province and the 4 trillion yuan (US$585.7) stimulus package to combat the global financial crisis have come under close scrutiny as both involve a large number of infrastructure and construction projects.

China's National Audit Office said in January that 230 million yuan of reconstruction funds had been misused.

Wang said regulation with explicit and detailed provisions would play a big role in containing and preventing corruption. "Auditors can take more initiative," Wang said.

The regulation also specifies the extent of auditors' power and strengthens internal supervision.

"Good procedures are indispensable for a good auditing system," Mao said.

The Audit Law took effect in June 2006, after being passed by the Standing Committee of the 10th National People's Congress.


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