China's National Audit Office will begin its new round of audit
work on nine super-scale State-owned enterprises (SOEs) involving
1.8 trillion yuan (US$216.9 billion) as well as the State Tobacco
Monopoly Administration.
The office has gained respect for its recent announcement on
accounting irregularities found among giant State-owned
enterprises, including the China Life Insurance Company.
China Life Insurance Co, Ltd, which was listed on the New York
and Hong Kong stock exchanges last December with a US$3.4 billion
initial public offering (IPO), was hit by falling share prices and
questioning into the company's practices began after China's
National Audit Office announced on February 4 the accounting
irregularities of its parent company, involving 5.4 billion yuan
(US$652 million) during a routine audit.
Starting next month, the National Audit Office will inspect the
records of the China National Petrochemical Corporation, China
National Offshore Oil Corporation, China Electronics Science and
Technology Corporation, China Netcom Corporation and five other
SOEs.
The audit work will mainly focus on the financial activities and
accounting practices at these SOEs in 2003, and the pre-audit
investigation has already commenced, according to the National
Audit Office.
"This audit will not be a routine one, but a special task
entrusted by the Organization Department of the CPC (Communist
Party of China) Central Committee, which is in charge of major
leaders of those SOEs," said an official with the National Audit
Office.
This audit is not the first one of its kind, since 22 SOEs were
audited by the National Audit Office according to a relevant
regulation issued by the State Council in 1999.
About 500 people will participate in the latest round of audit
work, and special reports will be submitted to the State Council
upon conclusion of the inspections, the official said.
This new round of large-scale audit work is expected to be the
strictest ever, marking progress and bringing benefits to SOEs,
said an audit expert.
"During previous audits we were informed well ahead of time of
the names of affiliated enterprises that would be checked, but this
time it is still a secret even when the investigation will begin,"
sources from the China National Petrochemical Corporation said.
Some SOEs claim that no irregularities will be found in the
upcoming audit.
The China National Offshore Oil Corporation, which has shares
traded on the Hong Kong stock exchange, was recently suspected of
infringing upon finance regulations in Hong Kong.
A spokesman with the Hong Kong stock exchange announced in April
it was investigating the fund transfer of 6.8 billion yuan (US$822
million) from the listed company to a financial company controlled
by a parent company, which resulted in share prices from China
Offshore Oil plummeting soon after the announcement.
(China Daily May 6, 2004)