Ladies and Gentlemen,

According to the arrangement by the CPC Central Committee and the State Council and the annual work plan of the National Audit Office, audit organs nationwide have been earnestly performing our statutory duties, and taking concrete steps to strengthen audit supervision, so as to secure a healthy economic and social development and to promote full implementation of the macro control policies and measures introduced by the central government.

1. Audit Activities

Since the fourth quarter of last year, the National Audit Office of the P.R.China (CNAO) has actively participated in the special inspection campaign, which was led and organized by the Central Commission for Discipline Inspection, to various localities in respect of the central government’s newly added investment to expand domestic demand for stimulating economic growth. At the same time, in its audit work for 2009, the CNAO sets promoting the steady and relatively fast economic development as the main job.

By far, the CNAO has audited the budgets of 56 central departments (including the Ministry of Finance and the National Development and Reform Commission) and had a clear picture of the investment plan, the allocation of the fund and the progress of the projects. It also expanded the audit to another 18 provinces (autonomous regions and municipalities) for the allocation, management and utilization of the newly added investment. As for the ten major capital projects including the state subsidy for grain producers and government-invested housing projects for people of low-income and the five major investment projects like disaster relief work and reconstruction for Wenchuan earthquake and Beijing-Shanghai high-speed railway, the audit or follow-up audit has also been gradually carried out. Following the unified plan made by the CNAO and under the leadership of the Party committees and governments at all levels, local audit organs further highlighted the audit priorities and strengthened their efforts in auditing projects concerning people’s well-being, infrastructure, ecological environment and other major investment projects and earmarked funds. Generally speaking, an all-round audit system has been initially established, following the fiscal capital flow and covering the utilization and management of capital and projects in governments at all levels.

2. Results of Audit

Our audit work showed that by the first quarter of this year, all the central investment and budget of 100 billion RMB newly added at the end of 2008 had been put in place, and basically, the fund of 130 billion RMB allocated in early 2009 had been put in place too. Specific investment plans were made in line with the state regulations and capital flows, giving priorities to key investment areas identified by the central government. By far we have not found any investment in high-energy consumption and high pollution industries, nor in industries with surplus production capacity, nor in government-building projects. However, there are still some problems which need our attention.

1) The disbursement rate of local supporting fund is comparatively low. For the 335 newly-added investment projects in 18 provinces (autonomous regions and municipalities) selected as key objects for audit, 24.859 billion RMB was planned to be allocated, among which the central budget accounted for 8.669 billion RMB, the supporting fund from local governments 6.894 billion RMB, and bank loans and corporate self-raised fund 9.296 billion RMB. However, by the end of March 2009, the overall disbursement rate of fund was only 64.03%. In the breakdown, 94.01% of the central budget was in place while the disbursement rate of local supporting fund 47.98%.

2) The management of some projects is yet to be standardized, and the progress of the projects does not fully meet the predicted requirements. The reasons are as follows: first, preparations in the primary stage of the projects were inadequate to fully meet the conditions for construction, resulting in some idle funds; second, tendering, bidding and contracts signing of the investment projects launched by some central units were yet to be completed, leading to slow progress of the projects; third, instead of starting new projects, the investment was used in some cases to settle overdue payments for previous projects; fourth, the project fund was misappropriated by related departments in very few regions.

The related departments and local governments have attached great importance to the issues revealed by our audit, and are taking effective measures to improve relevant systems and to rectify the issues.

Next, in line with the plan made by the CPC Central Committee and the State Council, we will actively coordinate with the Central Commission for Discipline Inspection, the Ministry of Supervision and other departments to do a better job in inspection. Meanwhile, we will earnestly organize and carry out the audit plan, and put forward suggestions to address any problems once discovered. Moreover, we will further publicize the results of audit, improve the system and management, so as to promote and safeguard the smooth implementation of the central government’s policies.

Thank you!