A Study On The Operation Mechanism And The Governance Efficiency Of Economic Responsibility Audit

The economic responsibility audit originated from the departure audit which began in 1985. After the General Office of the CPC Central Committee and the General Office of the State Council released "Interim Provisions on Economic Responsibility Audit of Leading Officials during'Their Terms of Office in the Party and Government at and under the County Level" and "Interim Provisions on Leaders during Their Terms of Office in State Owned Enterprises or State Share Controlling Enterprises" in 1999, the economic responsibility audit has got a comprehensive development. The audit scope has expanded from enterprise to government office and public institution, the audit object has extended from at and under the county level to leading roles of prefectures or equivalents and the level of province and department. As an institution innovation resulted in the combination of modern audit theory and audit practice, economic responsibility audit is an economic supervisory institution with Chinese characteristics for strengthening the supervision of power, pushing forward the administration by law, improving the management system of officials in the Party and government and promoting the construction of incorrupt politics. In recent years, the CPC Central Committee and the State Council have accorded great importance to economic responsibility audit, and the related national departments have released a lot of laws and regulations to guide the practice of economic responsibility audit, for example, The State-owned Assets Supervision and Administration Commission of the State Council released "Interim Measures for Management of Economic Responsibility Audit of Central Enterprises" in 2004 and "Rules for the Implementation of Economic Responsibility Audit of Central Enterprises" in 2006; the Standing Committee of the Tenth National People's Congress adopted "Audit Law" in 2006; The Ministry of Finance, The Ministry of Supervision, The Ministry of Personnel, The National Audit Office, The Central Commission for Discipline Inspection and The Central Organization Department released "Guidance Opinion to the Implementation of Economic Responsibility Audit in 2007" & "Guidance Opinion to strengthen the internal management of Economic Responsibility Audit of Leading Officials" in 2007; The State-owned Assets Supervision and Administration Commission of the State Council released "Notice of Strengthening Economic Responsibility Audit of Central Enterprises" in 2008; The National Audit Office released "The Economic Responsibility'Audit Regulations (A Draft for Discussion)" and "Development Plan of Audit Work for Year 2008-2012" in 2008. The above laws and regulations pointed out the direction and provide a basis for the economic responsibility audit work. But there are still some unsolved problems which need further discussion by academic circles, including the determination of target economic responsibility, the audit evaluation of economic responsibility, the operation mechanism and the governance efficiency of economic responsibility audit. The dissertation studied the operation mechanism and the governance efficiency of economic responsibility audit based on the Key Projects of Philosophy and Social Sciences Research "Economic Responsibility Audit and Innovation of Audit Theory".(Ministry of Education, Grant Number: 07JZD0018).Any activity is a result of some factors'interrelation and interaction on each other. The realization of effectiveness and the promotion of efficiency must rely on a perfect operation mechanism. The economic responsibility audit also must construct a perfect operation mechanism to realize its objectives and its effectiveness. The dissertation analyzed the connotation of economic responsibility audit, constructed a theory framework for the operation mechanism of economic responsibility audit based on the logical start points of audit client, audit object, auditor and audit information user, and proposed the viewpoint that operation mechanism of economic responsibility audit is composed of five parts, including audit motivation, audit entrustment mechanism, audit execution mechanism, audit information transmission mechanism and audit results applying mechanism. The author explained audit motivation in the basis of public accountability theory, principal-agent theory, democratic politics theory and public administration action theory; expounded audit entrustment mechanism from three aspects, including the formation of principal-agent relation, the arrangement of entrustment power in Party and the arrangement of entrustment power in Government; discussed audit execution mechanism from five aspects, including the audit planning, the arrangement of auditors, the choice of audit mode, the determination of audit main points, and the audit process; analyzed audit information transmission mechanism from two aspects, including information transmission carriers and information transmission process; explored audit results applying mechanism from three aspects, including improving the management system of leaders, perfecting institutions and policies, and promoting the efficiency of governance.As an institution arrangement in the governmental administration and corporate management, economic responsibility audit should be conducive to improving governance and corporate governance, and promote the governance efficiency and corporate governance efficiency. This dissertation analyzed the governance function mechanism of economic responsibility audit from four aspects, including participation mechanism, communication mechanism, supervision mechanism and accountability mechanism; tested the governance efficiency of economic responsibility audit by a sample composed of 31 administrative divisions of province level. It is shown that there were significant positive correlation between governance efficiency and auditors, significant positive correlation between governance efficiency and number of report or information submitted by auditors, significant positive correlation between governance efficiency and number of case handed over by auditors. So, economic responsibility audit can significantly promote governance efficiency. This dissertation analyzed the corporate governance function mechanism of economic responsibility audit from four aspects, including promoting the effective performing of principal-agent contract, preventing short-term market behavior, protecting the interest of stakeholders, and strengthening the supervision of power; tested the corporate governance efficiency of economic responsibility audit by a sample composed of 213 listed companies belong to central enterprises. It is shown that economic responsibility audit can significantly promote corporate governance efficiency.At last, this dissertation summarized the conclusions of the study, pointed out some innovations pushed forward by economic responsibility audit in basic audit theory, including the innovation of audit motivation, audit relationship, public accountability and audit theory framework. In addition, the dissertation put forward some proposals to improve the operation mechanism and promote the governance efficiency of economic responsibility audit, including reconstructing the entrustment institution of economic responsibility audit, establishing certified auditor system for economic responsibility audit and pushing forward auditing results announcement system. There are three innovations in this dissertation, as follows:(1) Establishing a theory framework for operation mechanism of economic responsibility audit. This dissertation analyzed the relationship between audit client and audit object, the relationship between audit client and auditor, the relationship between auditor and audit object, the relationship between auditor and audit information user, and the relationship between audit information user and audit object, correspondingly generated audit motivation, audit entrustment mechanism, audit execution mechanism, audit information transmission mechanism and audit result applying mechanism.(2) Discussing the governance efficiency of economic responsibility audit. This dissertation analyzed the governance function mechanism of economic responsibility audit, and tested the governance efficiency of economic responsibility audit by a sample composed of 31 administrative divisions of province level. In addition, This dissertation analyzed the corporate governance function mechanism of economic responsibility audit, and tested the corporate governance efficiency of economic responsibility audit by a sample composed of 213 listed companies belong to central enterprises.(3) Putting forward a conception of audit theory framework integrated by audit behavioral agent, audit operation mechanism and audit theory elements. The audit behavior concerns to four behavioral agents, including audit client, audit object, auditor and audit information user; the realization of function should rely on a perfect operation mechanism; the study of basic audit theory cannot be done without audit theory structure. This dissertation put forward a conception of audit theory framework integrated by audit behavioral agent, audit operation mechanism and audit theory elements:audit nature and audit objective concern with audit motivation, audit postulate concern with audit entrustment mechanism, audit regulations and audit information concern with audit execution mechanism, audit control concern with audit result applying mechanism, audit environment as a common factor influencing audit behavioral agents, audit operation mechanism and other five audit elements.