Audit procedures followed by government audit institutions in China usually include four steps: audit planning, audit preparation, audit implementation and conclusion of audit.

 

Audit planning —an audit institution should, in view of the situation of the State and current practice of audit work, prepare the plan for the projects to be audited for certain period of time in order to ascertain audit objectives, missions, priorities and implementation measures.

 

Audit preparation —an audit institution will form an audit team on the basis of the audit matters specified in the plan for the projects to be audited and serve an audit notification on the auditee three days prior to execution of audit; under special circumstances, the audit institution may, with approval of the people’s government at the corresponding level, directly execute audit on the strength of the audit notification. An audit institution at a higher level should prepare an audit work program when authorizing subordinate audit institutions to carry out an audit project in a uniform manner, and each audit team should carry out survey prior to execution of audit and prepare its own audit implementation program.

 

Audit implementation —auditors shall conduct audit and obtain testimonial materials through examining accounting documents, account books, financial statements, consulting documents and data relating to the audit matters, checking cash, material objects and negotiable securities, and conducting fact-findings among the units and individuals concerned. Auditors shall, in accordance with relevant stipulations, compile audit logs and prepare audit working papers.

 

Conclusion of audit —after executing audit of the audit matters, the audit team shall submit its audit report to the audit institution. However, prior to submission of the report to the institution, the team shall solicit opinions of the auditee. An audit institution shall, in accordance with the procedures specified by CNAO, produce its audit report after deliberating the audit team’s report and analyzing the auditee’s comments. Where violations of State regulations governing government and financial revenues and expenditures should be dealt with or punished in accordance with law, it shall, within the limits of its statutory functions and powers, make an audit decision or put forward to department in charge its suggestions as to how to deal with or punish the violations.