Research On The Mechanism And Pach Of Internal Control Servicing Local Government Debt Governance

At the start of new political cycle, the local government debt risk problem has received unprecedented attention, which has not only been recorded into government work report in central, province and city governments, but also becomes the light spot of CPC’s "Decision on Deepening the Reform of the overall number of major issues. "The intensive attention of the Central Committee of the Communist Party of China, the State Council and local governments at all levels reveals us that the local government debt problem has developed beyond the scope of conventional fiscal and economic problems and became a major issue concerning overall situation.Since 2011, our governments have adopt positive measures such as resolving the debt stock, regulating loan behaviors to tackle this debt problem, it has achieved some success, but still exposed some chronic disease which are difficult to cure. The existing literatures analyzed the essence and factors of local government debt risk from multifarious angles such as finance, economy, politics, organizational behavior and so on. Some scholars had established a framework for systematic analysis, which had promoted the development of rational cognition, but on the other hand they had only put forward similar suggestions which consider something as it stands. In fact, we had constructed a series of self-consistent theories and institutional framework system, which can provide targeted guideline for the governance of specific risk issues, no matter in national governance or internal control. Especially for the internal control, itself can comprehensively analyze and response to the internal and external risks that may exist in the systems from aspects of system theory and control theory.This thesis aimed at exploring the possibility of internal control acting on national governance, and particularly described its operational mechanism and implemention approach, which can provide a new thought for the modernization of our countries’ governance system and capacity. The main parts are as follows:Chapter 2 The theoretical basis of internal control servicing national governance. This paper firstly made some simple but necessary instructions about the basic problems of internal control and national governance. They are as follows:the fundamentals of system theory and control theory as well as their guiding significance on theory research and practice; power control theory; national governance and bureaucratic theory; essential features of state functions, alienation theory and Chinese-style governance; et. Al. Based on the above basic theories, this paper demonstrated in addition the relationships between governmental accounting, state auditing, internal control and national governance, which had laid the foundation of the construction of local government debt risks governance system framework.Chapter 3 Historical investigation on internal control servicing national governance. In the current mainstream view, internal control happened indeed in forties of last century, but this paper defined the origin time of internal control as "Spring and Autumn Period" which is about 3052 to 2777 years ago. Indeed, this discrepancy was just derived from the different definition about internal control. this paper regarding the essence of internal control as "constraints on power" is not only better to hold the internal relationship between governments’internal control and corporations’internal control, but also to provide a solid theoretical foundation for local governments to construct their debt internal control system.Chapter 4 The influence factors of local government debt based on the experimental evidence from provincial panel data. This paper had collected the referred government debt data of 30 provinces from 2010 to 2012, and empirically tested the influence factors of government debt risks according to the referred literatures. Results show that:1) government debt level keeps significantly lower in the provinces whose provincial secretary comes from the central; 2) Economic incentive has a significant influence on the government debt level. Thus this paper had provided the most reliable empirical evidence so far.Chapter 5 The inherent limitations and optimization path of local government debt auditing. Based on the affirmation of the effect on the auditing activities, this paper analyzed the inherent limitations of national auditing on the local government debt govenance, which was regarded as the professional monitoring tools, and then made an empirical analysis on the auditing results. This paper tried to prove that a impeccable government internal control system can be the main staring point and powerful tool to realize the modernization of national govenance system and governance power. Internal control can be a good alternative offer to fix the insufficient of "Campaign-style Governance", which must be used in conjunction with conventional methods of governance.Chapter 6 The conventional long-term mechanism of local government debt risks governance based on the framework of internal control. This chapter firstly generalized the essence of local government debt risks governance and the starting point, strait, internal logic of its governance, especially the applicability of internal control in the governance of government debt risks supervision; Moreover, this chapter tried to define the objective and basic principles of the internal control system, and eventually constructed the targeted internal control system. In addition, this paper introduced the exploration and institutional innovation on the local government debt risks governance since 2011, as well it had stressed the importance of internal control concept’s introduction into the national governance.Rooted in the rich theoretical research and practical exploration, the local government debt problem should be put in the theory of organization and governance framework. This paper attempts to provide new perspectives and ideas of basic category of local government debt risk nature, causes and treatment methods. The possible innovations of this paper are mainly as follow:(1)Using the governance theory, this paper investigates the local government debt problem from the interactive relations between the central and local governments, which provides a new insight into the nature of government debt. A few literatures regarded local government’s excessive debt as the’behavior alienation’of local government in specific circumstances, and they didn’t consider the relationship between central and local government from the dynamic perspective. How to understand the local government borrowing behavior comprehensively from the interaction of strengthen control of central government and anti-control of local government, and then establish rigorous theoretical analysis framework to guide the policy making, are the key and difficult problems of this paper intends to solve.(2)Based on government debt audit results, this dissertation examines the effects and economic consequences of local government debt first through the provincial panel, which provides new evidence for the study of the causes and influences of government debt. The "government debt audit results" provides government debt provincial panel data, and how to established model by drawing lessons from the local government behavior, excessive investment and other related research achievements, or providing more detailed, reliable evidence for the nature and causes of local government debt, are the key and difficult problems of this paper intends to solve.(3)This dissertation investigates government debt audit in the historical process of evolution of governance system of the country, and analyzes the achievements and difficulties of audit supervision, which provides a new perspective for the understanding of the national audit service path of state governance. Both the quantity and the quality, the theory of government debt audit has lagged behind the practice. How to base on the material of fresh government debt audit, and draw lessons from the administration new advances in theoretical study, based on careful to distinguish between different types of audit supervision function in national administration on the difference of its future development direction, is a another focus of this paper intends to solve.(4)Based on the urgent need to issue local bonds, this dissertation conducts a comparative analysis through multi dimension, and advocates the establishment of internal control system framework for effective governance mechanism of local government debt, which provides a new idea for realizing national modernization management system. The establishment of a comprehensive internal control is actually an integration of the various management systems based on the System theory and the risk management theory. It has been the key and difficult points to be solved of this topic that how to accurately grasp all kinds of restraining factors in the face of local government debt risks governance to recognise the institutional and mechanism obstacles, in order to form a long-term mechanism and provide a possible train of thought to realize the modernization of national governance system and power.