responsibilities objectively and independently, without specific functions of decision making and management; however, a vast majority of countries also explicitly require legally safeguarding the independent exercise of audit power in accordance with the law, without any intervention. Such role design and institutional guarantee determine that government audit institutions are not tied to the interests of any institution, organization, or individual and can reveal problems, report realities, audit, and offer recommendations objectively and fairly based on the overall situation of national governance so as to safeguard the interests of the State and the general public. Second, it is comprehensive. Government auditing is a regular control system covering all public funds, State-owned assets, and State-owned resources. The wide-ranging audit targets and contents involve many fields of national governance, including a number of institutions and participating personnel. The exertion of audit role is also comprehensive, that is, government auditing can promote duty performance, use of power, and wealth management through auditing the use of public funds, exercise of public powers, and duty performance of public sectors, and improve the corresponding institutional mechanism. Third, it is specialized. As government auditing is highly professional and policy based, auditors should have adequate professional knowledge, rich practical experience, and good organizational and coordination skills, including the skills and knowledge for checking accounts, handling financial affairs, and managing business. By checking audited units in regard to capital, business, material, and information flows, audit institutions can understand the real situation, reveal potential risks, identify prominent issues, act appropriately, and analyze all collected materials relating to the problems precisely so as to put forward audit recommendations. Fourth, it is objective. Audit institutions must adhere to the basic principle of auditing according to the facts and the law. Audit institutions have to detect the source, reveal problems, and analyze causes in a practical manner and make evaluation and recommendations in an objective and fair way, so as to reveal and solve problems on the strength of precise evidence. This is the professional habit and professional ethic of auditing. It is observed that these essential attributes and unique advantages of government auditing determine the relationship between government auditing and other aspects of national governance. That is to say, by independently and fairly reviewing the truthfulness, compliance, and performance of various economic activities concerning national governance, government audit institutions can understand the real situation, reveal hidden risks, reflect prominent problems, and analyze systemic obstacles and defects, so as to solve the problems in a timely and effective manner. In this way, the government auditing plays an “immune system” role of preventing, revealing, and resisting and provides a bedrock and assurance role for standardized, efficient national governance in other aspects.
In view of the above features, to give full play to the role of government auditing as the bedrock of and important guarantee for effective state governance, various countries adopt some common practices. First, most supreme audit institutions (SAIs) are constitutional institutions. As mentioned earlier, a majority of countries stipulate the legal status, responsible person, organizational framework, protective mechanism, and the like, of SAIs in the Constitution, and no adjustment is allowed unless it is made via a constitutional amendment. Second, the independent exercise of audit power in accordance with the law is explicitly specified in the law. Third, legality of auditing authority is emphasized; that is, in the process of fulfilling their supervisory duties, SAIs are generally given the authority of inspection, investigation, reporting, transferring, and, in some cases, temporary handling of major matters, as well as audit disposal and punishment and judicial decision making. Fourth, audit results announcement is emphasized. That is, audit results must be made public. Fifth, exerting the constructive role of audit is highlighted. All of these endow SAIs with the authority to specifically put forward warnings and recommendations.16
Third is analysis of the relationship between auditing system and system functions. A system, in general terms, is characterized by normative and relative stability. Its core function is to improve the order and basically regulate coordinated relationships, work development, operations management, restrictions, and incentives. In brief, the function of a government auditing system is to meet the demand of external systems for government auditing through coordinating the internal operations of the government auditing system, which are mainly specified as follows:
1. Providing the fundamental methods and approaches for government auditing to serve national governance. A government auditing system is generated in conformity with the needs of national governance. “To discuss a system, we should certainly attach importance to the ’nature of the times’ and ’territoriality,’” “a system established and well implemented in a country or region is not necessarily effective in another country or region.” 17 To meet the needs of national governance and operation mechanism, various countries adopt different design modes of auditing, define the basic duties and authorities of auditing in their national governance system, and stipulate the basic methods, approaches, and working modes to exert the functional roles of auditing. The more scientific and reasonable auditing system will better meet the needs of national governance, and the role of government auditing in national governance will be greater.
2. Providing the legal and compulsory foundation for audit supervisory power. Endowed by national laws, the power of supervision through auditing has legality and a mandatory nature, which is mainly reflected in three aspects. First, SAIs should audit in strict accordance with authorities endowed by laws. Second, SAIs should effectively exercise their supervisory power through auditing, and any random waiver is prohibited. Third, audit targets, other units, and individuals must not refuse or hinder audit institutions from legally enforcing their audit power, or they should bear the legal consequences. Audit on the basis of public acceptance and conviction will enjoy much authority and enforceability, and can thus better play its role. By specifying the allocation pattern of audit power, the auditing system can regulate and adjust the relationships among auditors, audit institutions, audited units, and other institutions or organizations, which provides a foundation for legality and enforcement.
3. Specifying the organizational structure and operating rules of auditing. Organizations and rules are elements of a system. Organizations function as the carriers to exercise the power and also the principals to exert the role of systems; rules mean the elaborated relations between procedures and standards. The auditing system defines the space to exercise the audit power in aspects of auditing organization structure and rules of exercise. To be specific, audit institutions, as a material part of the auditing system, are the carriers to implement the auditing system and safeguard audit order and constitute a relatively static space for the execution of audit power. Auditing rules provide a dynamic space for the exercise and development of audit power, and stipulate various procedures and rules on the authorities, restrictions, and responsibilities of audit subjects and auditees. These two spaces constitute two basic dimensions that regulate and restrain every aspect of exercise of audit power.
4. Stipulating the operation mechanism and responsibilities of audit power. Audit supervisory power stems from the powers and responsibilities of audit endowed or entrusted by people to the State through the national political system, while the State, in turn, endows such powers and responsibilities to audit institutions in a legal format. The auditing system provides a basis and guarantee for audit institutions to exercise their power of audit through defining the basic functions, basic properties, statutory authorities, and business boundaries of the government auditing. Meanwhile, the auditing system restricts and restrains the audit power in aspects of normal operation mechanism and power role, so as to balance the audit power and safeguard auditing according to the law and in compliance with the law.
Hence, from the perspective of system functions, the specific contents of an auditing system are designed around the functions of the auditing system, reflecting the requirements of the State and the public for government auditing. In this regard, the contents of the world’s auditing systems are by and large the same, mainly covering audit management system, institutional setting, audit staffing and management, audit duties and authorities, audit targets, audit scope, and audit operation mechanisms. Accordingly, the audit results
For relevant situation, see Scientific Research Institute of the China National Audit Office, p. 4.
Chien, p. 4.
