As a developing socialist country, China attaches great importance to education, taking the development of education and training of talented people as a long-term strategy for scientific and technological progress and the modernization drive. In recent years, the government has allocated more funds for education from its budget inspite of a strain in the state financial capacity. Compared with the previous year, the total outlay for culture, education, science and public health in the state .budget increased 17.8 percent in 1984 and another 11.2 percent in 1985. The two increases contained a higher growth rate of educational funds than that for culture, science and public health. This has played a positive role in promoting culture and education, improving educational conditions and raising the educational level.
Vice-Premier Li Peng pointed out at a press conference during the 4th Plenary Session of the 6th National People's Congress of the People's Republic that in the Seventh Five-Year Plan period (1986-1990) the total outlay earmarked for education would increase by 72 per cent over the period of the Sixth Five-Year Plan (1981-1985), representing a growth rate higher than that of state revenues from regular items. But even so, there is still a shortage of educational funds. In order to strengthen the control and use of educational funds, ensure that every cent of it is used for education, strive for better value-for-money and promote the development of education, China's audit institutions have made, since 1983, the audit of educational funds one of their focuses of work, and have conducted it extensively in many places
The stress of such audit is on checking whether the educational spending by the departments responsible for education at various levels conform with the state regulations and on putting forward constructive ideas on how to strengthen the control of educational funds in connection with the problems discovered in auditing.
Acting according to a unified arrangement, the audit institutions in 21 provinces, autonomous regions and municipalities directly under the Central Government carried out audit of the general educational spending by the departments responsible for education in 1985, and obtained excellent results. In the 12 provinces and cities including Huhan, Shaanxi, Liaoning and Shanghai where the work was carried out more extensively involving 2,218 units, a total expenditure of 82.28 million yuan that did not conform with the state regulations was uncovered, accounting for roughly 9 per cent of their total outlay for education.
In 1986 such audit has been further developed in both depth and scope. So far the audit institutions in 27 provinces, autonomous regions and municipalities directly under the Central Government have audited the educational spending of more than 2,000 departments responsible for education at and above the county level as well as a number of schools. The main problems found are as follows:
First, misappropriation and embezzlement of educational funds. Some educational departments misappropriate or embezzle educational funds for non-educational purposes, such as building houses, running businesses and increasing material benefits of their staff members.
Second, fraudulent, presentation of expenditure and transfer of funds. Some of them doctor budgetary funds into extra budgetary funds so that they can spend them at will.
Third, weak financial control and laxity in enforcing financial and economic rules. In some units, unqualified accounting personnel keep confusing books, and some do not keep books according to the state accounting rules. Laxity in financial rules also gives rise to criminal activities, as there have been cases of graft of public funds in a few places.
The audit of educational funds, which has aroused the attention of the people's governments at various levels, presents a clear picture of the funds' control and use. Based on these findings, the Audit Administration of the People's Republic of China submitted a Report on the Audit of Educational Funds to the State Council, which, upon approval, transmitted it to all localities and departments, calling their attention to the problems raised in the report, and asking them to earnestly study and implement the suggestions made therein. The audit institutions in some places report their findings to the standing committees of the local people's congresses. On their part, the departments responsible for education not only actively cooperate with the auditors, but also conscientiously analyse and study the problems found, take effective measures to solve them and improve the financial control system. In order to strengthen the internal control, many educational departments have established internal auditing bodies to carry out the work in earnest. For example, in 1986 the internal auditing body of the educational department of Huanggang Prefecture, Hubei Province audited a total of 39.97 million yuan in educational funds, greater than the volume audited by the state audit institution in that region.
The purpose of such audit is to promote effective control and use of the educational funds so as to yield better results. Therefore, the audit institutions at various levels are not content with the problems they find, but make painstaking efforts to help get them solved. In many places, the audit institutions send out people to give training to the auditees' accounting staff, lecture in accounting, help set up and improve the accounting rules and provide consulting service. It is much appreciated by the auditees and can lay down a firm foundation for the rational and effective control and use of the educational funds It has not been long since China started to audit educational funds. We need to make constant explorations in practice and advance it through summing up.
As far as the audit of educational funds is concerned, we still have a long way to go. During the Seventh Five Year Plan which began in 1986, the central and local governments will increase their outlay for education at a rate higher than the growth of their regular income so that the per-student educational outlay will gradually rise. In the five years covered by the Plan, the total outlay for education in the state budget will increase 72 per cent over the previous five-year period. Under such circumstance, we have to reinforce the audit of educational funds to ensure that they are used as intended and with good effects so as to promote the vigorous development of China's education.