Performance Audit China

EMPIRICAL REVIEW OF PERFORMANCE AUDIT IN CHINA AND DEVELOPED WESTERN COUNTRIES AND MEASURES FOR THE IMPROVEMENT OF PERFOMORNACE AUDITING WORK IN CHINA

INTRODUCTION OF THE DISSERTATION

The performance audit is a recent expansion in audit scope within these 30 years. Now it is one of the most important and flourishing areas for government audit work in China. The aim of this dissertation is to give a holistic and comparative review on the rising and development of performance audit in Western Countries and China, study the challenges faced by audit institutions in China, and give recommendations and suggestions to audit institutions in the development of performance audit from a scientific and development point of view.

This dissertation has five parts:

The first chapter will begin with the rising of performance audit in Western Countries and the definition coined by International Organization of Supreme Audit Institutions (hereinafter referred as INTOSAI). A comparison with performance evaluation or performance monitor will be made, and the relationship between performance audit and other forms of audit, such as financial audit, environmental audit and management audit will also be reviewed.

In the second part, it will give a holistic view of the performance audit in China National Audit Office (hereinafter referred as CNAO) and audit institutions at all other levels, from the rising of performance audit in China, to legal mandate, to the audit objects and areas which covered, to the audit focus of performance audit.

In the third chapter, the current status of performance audit in UK, USA, Canada and Sweden will be scanned. The legal mandate given, the audit areas covered, audit methods employed, the resource allocation will be reviewed and compared. The advanced experience in the performance audit area will be concluded.

Chapter 4 of this essay is an investigation of the challenges faced by government audit in China in performance auditing. The risks in political system and macroeconomic environment will be discussed. The interior flaws such as the lack of competences of auditors, the shortage of standard or guidelines will also be talked about.

In the last chapter, suggestions and recommendations in how to improve performance audit in the context of current China will be given from both the macro and micro aspects.

The Desk study based on a review of the literature is deployed. A large number of books and articles about performance audit manuals, annual reports and handbooks produced by SAIs of some developed countries and China will be categorized and analyzed.

INTRODUCTION OF PERFORMANCE AUDIT

The Rising of Performance Audit in Western Countries

As one of the oldest and venerable state functions, audit has a history of thousand years. However, the performance audit has risen and become a large scale and self-consciously distinct practice within the latest thirty years. It is a modern, challenging and fascinating form of audit, and is treated as a separate and professional activity that requires specialized skills and standards.

Over almost exactly the same period as performance audit has emerged as a distinct variant of audit, the government of developed countries, such as Western Europe, United States of American, Canada, Australia and United Kingdom, have embarked upon series of public management reforms, which is so called ‘New Public Management’. ‘Most of the public management reform initiatives emphasized a shift from control of imputes and processes to the new form s of control based on the measurement of outputs and outcomes.’ (Christopher Pollitt et al, Performance or Compliance, P195).

Previously, the administrative system emphasized on the correct allocation of public finances to appropriate budget lines, the compliance of the use of resources, and conformity of actions with prescribed procedures. The new approaches aimed at modernizing and streamlining the public management process, and giving more flexibility in respect of inputs. Although the details of the reform programs differed from one country to another, most of them highlights on: firstly, increasing the productivity of public services, i.e., raising efficiency; secondly, the convenience and preferences of its users; thirdly, the transparency of public services, which is assumed as a feature of democratic governance. Both singly and collectively, these new attributes considerably changed the ways in which public management system has been run in the past.