A Study On Audit Of Financing Platform Of Local Government

Since the Reform and Opening up Policy, China’s urbanization process continues to accelerate and the funds required for urban development is also in rapid growth. However, the long-term property rights and powers of local government do not match with each other, and the legal restrictions on local government financing, lead to the financial scale of local government is difficult to keep up with the rapid development of urbanization, the urban development is faced with a huge funding gap. To make up for the funding gap over urban development and break the legal barriers, local governments try to be flexible in the form of financing, set up financing platform of local government, it take advantage of its legal Independent role to finance on market-based way for city construction funds. The financing platform of local government turned out to open up new channels of financing, as it is more market-oriented, and more flexible financing process and convenient, it therefore promote the construction of urban infrastructure and the rapid development of public utilities. However, some local cadres to highlight the achievements of local government, use the financing platform to finance blindly, lead to the "moral hazard". In response to the 2009 international financial crisis, to ensure the economic growth, Chinese government introduce the four trillion investment plan to expand domestic demand and a series of stimulus measures to cope with the crisis, which the central government invested 1.2 trillion, the remaining funds leave to the local government. Experienced the rapid expansion, the number of financing platform of local government reached its highest point, at the same time, the local government debt risk is also rising rapidly, causing the public’s attention and concern.Under the circumstances, in order to find out the nature of the government debt situation, according to the deployment of central government, during August 2013 toSeptember, the National Audit Institutions and affiliate Audit organizations organized 54,400 auditors, conducted a comprehensive audit on the central, provincial, municipal, county and township. Audit results show that financing platform of local government bears the responsibility to repay the debt balance of 4.08 trillion yuan, accounting for the balance of local governments bear the responsibility to repay the debt ratio of 37.44%. From this auditing, we found that the financing platform of local government for the company solvency has increased, but in actual operations remain illegal guarantee, illegal use of public assets injection operation is not standardized.For a long time, the financing platform of local government lacks unified and effective supervision, resulting in the accumulation of a lot of operational risk, which has became a threat to our national economic security.How the financing platform of local government to prevent and resolve debt risk has became an important issue. As an indispensable institutional arrangements need to detect and correct operation of the various social issues, audit governance need to act to protect the healthy operation of the national economic and unleash its social "immune system" role. How to play the audit’s "immune system" role to better safeguard national economy, has become a hot issue in current theory and practical field.