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Monopoly enterprises under tighter auditing scrutiny

(Xinhua)
Updated: 2007-02-09 15:38

Chinese auditors will keep a close eye on centrally-administer State-owned enterprises (SOE) this year amid rising public concern about corruption inmonopolyindustries.

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The first four companies to receive stricter scrutiny are China National Petroleum, China Huadian Corporation, China Resources and the Harbin Power Equipment, auditor-general Li Jinhua of the National Audit Office (NA0) disclosed at the 2007 enterprise auditing training courses, which closed on Thursday.

Previously, auditors were only required to check the financial reports of companies to protect the interests of shareholders. This year, the auditing campaign which is targeting 53 centrally-administered SOEs will expand to examining the performance of management, Li said.

Qing Yi, director of the Economic Observer Research Institute, an independent academic research outfit, called this move "innovative".

"If auditors were allowed to examine both the accounts and the duties of SOE leaders, audit authorities will become the watchdog for both shareholders and the general public," Qing said.

Auditors will be on the look out for misconduct and corruption of SOE managers, especially when they jeopardize the security of State-owned assets.

Both incumbent managers and their predecessors, either retired or transferred to other posts, will also be inspected, according to Li.

The auditor-general attributed the need for stricter scrutiny to the significant role SOEs play in the national economy.

"The general public has become increasingly concerned with them (SOE's), especially monopoly enterprises. Auditing is very complex and arduous work," said Qing.

The China Audit, a newspaper run by NAO, said that Premier Wen Jiabao provided special instructions late last year, urging NAO to conduct regular audits of centrally-administered SOEs.

Deputy chief Yu Xiaoming said that NAO would stage special audit campaigns to address public concern with monopoly enterprises this year.

NAO also plans to set up nine audit teams to review the finances of the Ministry of Railway and its local bureaus.

China's auditors found problems with the financial records of 6,997 SOEs last year involving 28.14 billion yuan (US$3.7 billion), official figures reveal.

Fifteen of the SOE's were centrally administered, from which auditors found 13.2 billion yuan had been misused and 12 billion yuan were non-performing assets.

A total of 363 cases involving 5.3 billion yuan were sent to judicial and disciplinary inspection departments.