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Audits target nine giant SOEs
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. |
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