Alexander Pan, February 25, 2010
Beijing, China
In yet another effort to curtail the problem of widespread corruption in China, The State Council recently passed new regulations on the implementation of audit law. These new regulations will do much to strengthen the country’s auditing system and will increase the supervision of areas that have demonstrated high levels of corruption, in particular the field of construction.
According to the new regulations, which take effect May 1st, auditors will be granted the authority to monitor and supervise the use of fiscal funds by all state owned firms and projects, as well as any other company or project that utilizes any amount of public funds.
Furthermore, the regulations specifically speak to the field of construction where corruption has been notoriously common. The regulations state that in any construction project that has a government investment of over fifty percent or any project that has government control of construction or operation must submit to auditing.
The new regulations will also increase the transparency of the auditing process by removing restrictions on the publication of audit results
Most experts agree that these regulations will do much to ensure the legitimate and efficient use of public funds. In addition they will help to increase the autonomy of the auditing process and consequently reduce the extent of corruption.
The regulation and supervision of the construction industry is particularly poignant as large amounts of public funds flow into major construction projects to meet the demand for such projects as the nations economy continues to boom at such a rapid pace.
Edward Lehman, managing director of Lehman Lee and Xu said that “these new regulations clearly demonstrate China’s seriousness about cracking down on corruption and ensuring the efficient and proper allocation of public funds. These regulations and attempts to reign in the rampant corruption present in China is a good sign that China will continue its efforts to establish a true rule of law. We are excited to be working in this ever evolving market and look forward to helping our clients to navigate these new regulations.”