Chapter I: General Provisions
The audit of the financial affairs of the governments shall be conducted in accordance with the provisions of this Act.
Duties and functions of audit are enumerated as follows:
1.To supervise the implementation of budget;
2.To certify receipt and payment orders;
3.To examine financial activities; to certify annual financial reports;
4.To inspect irregularities and dereliction of duties concerning of the financial activities;
5.To evaluate the performance of financial activities;
6.To judge financial responsibilities;
7.To perform other audit works stipulated by other laws.
Audit duties and functions shall be conducted by the audit agencies.
Central government agencies and their subordinate institutes' financial activities shall be audited by National Audit Office. For those agencies based in provincial or local areas, may be audited by the designated audit bureaus (offices) nearby.
Provincial (municipal) governments and their subordinate agencies shall be audited by in charged provincial (municipal) audit bureaus. Audit offices may be set up in counties and cities to audit the financial affairs of these local governments and their subordinate agencies.
Special public service agencies, government enterprises and institutions shall be audited by the audit bureaus (offices) having jurisdiction.
Whenever there is no related audit bureau (office) on place, government agencies' financial activities should be audited by the audit agency governing them, or by an audit bureau (office) in the vicinity so delegated.
In order to facilitate auditing work, an auditing agency may delegate another auditing agency to carry out certain audit and the latter shall inform the former concerning the decisions and opinions about the audit.
When an audit involves special technique, or requires surveillance or testing, other organizations or specialists may be consulted or requested by audit agencies to perform certain assignments. However, the final decision rests with the auditing agency in question.
Auditors shall carry out their audit functions in accordance with the law without interference.
The important audit cases in the National Audit Office should be referred to the Council of Auditors for decision; similar cases in an audit bureau (office) shall be referred to the Auditors’ Meeting for decision.
The bylaws of the Meetings shall be prescribed by National Audit Office.
The auditing agencies shall regularly or irregularly dispatch personnel to various agencies to conduct on-the-spot audit; whereas this type of audit has not been conducted, the agencies concerned shall be asked to submit their financial reports for audit. In the latter case, personnel may be dispatched to carry out spot audit.
Audit agencies may inspect, at any time, the receipts, disbursements and properties of the various government agencies.
In performing the auditing function, the auditors may inspect the books, vouchers, other documents, cash balance, and properties of various agencies under audit. The officers in charge of those agencies under audit shall not conceal, or refuse to produce what is to be audited. Upon questioning or requesting for information by the auditor, the officers in charge shall give detailed and accurate answers or furnish the needed information.
In case the responsible officers do not comply with the foregoing provision, the auditors shall report the fact to the competent auditing agencies so that they request the directors of the said government agencies to effect punishment thereupon, or to appeal to the Control Yuan for action.
In performing the auditing function, the auditing agencies may dispatch officers armed with Inspection Certificates issued by the National Audit Office to make inquiries at any public or private organizations and individuals, or to inspect the books, vouchers, and other documents of these organizations. The various responsible persons concerned shall not conceal the above or refuse cooperation. Upon questioning, they shall furnish detailed and truthful answers.
When it is deemed necessary in connection with the performance of the auditing function, judicial or military police authorities may be asked to render appropriate assistance.
The auditing agency or auditor, in performing the auditing function as mentioned in the above two articles, may take notes about the inquiries and ask the persons questioned to sign or stamp their personal chops on the notes. When it is deemed necessary, the auditing agency or auditor may seal off the various relevant books, vouchers, and other documents for the time being, and may take into custody the whole or a part thereof.
When an auditor discovers evidence of irregularities or dereliction of duty committed by individuals of an organization, he shall have the case reported to the auditing agency concerned. The latter shall notify the organization in question to take necessary action, and shall report to the Control Yuan to take action according to the law. Cases involving criminal offenses shall be referred to the court for action and shall also be reported to the Control Yuan.
When auditor considers that urgent action should be taken with respect to his discovery of irregularities or mal-practices, as mentioned in above articles, he shall promptly report the case to the auditing agency concerned. The latter shall notify the officer in charge of the agency in question to take immediate action.
The officer in charge of the agency in question shall be held jointly responsible if he does not take immediate action upon notice of the above.
Where the person suspected of committing an act referred to in the second paragraph of Article 14, Article 17, 18 and 78 is the officer in charge of an agency, the auditing agency shall notify his higher agency to take necessary action.
Where the agency has deferred or taken improper action toward the case which was referred to it for action by an auditing agency, the auditing agency shall inquire the agency in question and the latter shall respond with responsible answer.
Where the auditing agency does not get responsible answer from the agency in question, or considers the answer unsatisfactory, the National Audit Office may refer the case to the Control Yuan for action.
An auditing agency or auditor shall, in pre-audit, refuse to sign any disbursements that violate budgetary or other law or statute; and shall, in post-audit, disallow and require a refund of such disbursements.
Audit agency shall issue the notice of approval of audit, or the notice of audit, to the respective agencies audited concerning the result of the audit.
Upon receipt of the notice of the result of audit, the agency concerned shall submit a statement of explanation, within thirty days, for the decision of the auditing agency, except for cases concerning the audit of annual reports where the Law of Final Report shall apply. The auditing agency may make the decision without consulting the agency in question after the above-mentioned time limit.
Whenever the agency disagrees with audit agency's decision up by the preceded article, the agency under audit may ask for reconsideration within thirty days after receipt of the decision notice, except for cases concerning the audit of annual reports which shall be governed by the Law of Final Report. The auditing agency will not reconsider the case after the expiration of the prescribed period.
Request for reconsideration may be filed once only.
Where an agency, due to special reasons, is not able to ask for reconsideration on the audit agency's decisions or to reply to the auditing notice within a prescribed time, the agency may submit a request for extension within above time limit, by offering a statement of the reasons.
The auditing agency may grant an extension but once only.
In reviewing important audit cases, the audit agency, when necessary, may notify the respective agency to dispatch staff members to explain and answer inquiries.
In the event of subsequent discovery of error, omission or repetition relative to a closed case, the auditing agency may re-examine this case provided that it is within two years from the date of decision. In the event of subsequent discovery of false evidence, re-examination may be conducted provided that it is within ten years from the date of decision.
Where an auditing agency changes its decision as a result of re-examination, the previously issued notice of approval and verification becomes null and void, and shall be cancelled within a prescribed period.
Where an auditing agency couldn't settle a case due to missing of the personnel in charge, the audit agency may ask its supervise agency to trace, publish the gist of the case and inform the personnel agency to suspend the employment of the person in question until case resolved.
An auditing agency, while dispatching a staff member to participate in the financial council of a government agency, shall not be bound by the resolutions thereof, in case the participant designated by the auditing agency has expressed disagreement to the resolutions in question.
Government agencies' accounting systems and regulations concerning internal audit shall be promulgated and enforced only after due consultation with the respective competent auditing agencies; the same procedure governs changes in the above-mentioned matters. Where there are regulations governing the operational inspection or performance evaluation, the auditing agency shall be informed of the same.
Where in examining and certifying disbursements, the officers in charge, or their proxies and their chief accountants have any doubts or disputes about the relevant auditing law and regulations, they may request in writing the competent auditing agencies for advice, and the latter shall oblige with due interpretation.
The above-mentioned interpretation may be publicly announced.
Where the government issues bonds or borrows, the competent agency shall submit the statutory provisions for bond issuance or the loan agreement to the competent auditing agency for record. The auditing agency shall be kept informed of any subsequent modifications therein.
Follow the close of a fiscal year, the government shall prepare an annual report and submit it to the auditing agency for audit. Upon the submission of the Central Government annual report by the Executive Yuan, the National Audit Office shall, within three months, complete its audit and have its audit report submitted to the Legislative Yuan.
Where there are questions raised or information requested in connection with the deliberation of the above-mentioned audit report by the Legislative Yuan and the Control Yuan or by their various committees, the Auditor General shall make reply or furnish pertinent information.
Foregoing provisions be applied mutatis mutandis to the submitting and auditing of local governments’ annual financial statements.
Chapter II: Audit of Public Affairs
The approved appropriation budget of government agencies, together with the administrative plans and on programs, shall be submitted to the auditing agencies. This rule also applies to any subsequent modifications thereof.
If an allotment budget is found to be not in conformity with the legal budget or the relevant laws or regulations, it shall be corrected accordingly.
Accounting reports of various government agencies and funds as well as related information and archives shall be prepared in accordance with the Accounting Act and relevant accounting systems, and shall be submitted to the authorized auditing agency to audit. The auditing agency may notify them to submit original vouchers or related documents.
Auditors may be dispatched to conduct spot-audits for the affairs of the Treasury and various disbursing agencies anytime.
Where there is a calculation error or irregularity uncovered by the personnel dispatched by an auditing agency to a tax collecting agency to conduct the audit of tax assessment and collection, the case may be referred to the competent authority for appropriate action.
In assigning personnel to various government agencies to conduct on-site audit, the auditing agency shall evaluate the effectiveness of establishment and implementation in the related internal control systems, and then decide the degree and scope of the audit.
In conducting on-site audit of various government agencies, the auditing officer may notify these agencies to submit the relevant reports to him for audit. The auditing officer may, at any time he choose, check their records and verify with the related vouchers, case and properties.
The auditing officer shall report the result of his on-the-spot audit of the various government agencies to the auditing agency for deliberation and decision.
After closing the fiscal year, government agencies shall prepare annual reports, and have these reports submitted to the auditing agency for audit. The auditing agency shall, upon completion of the audit, issue a certificate of approval to the agencies concerned.
Auditing agency shall issue a written notice to those have not submitted their annual reports within the prescribed time reminding them or prompt submission. In case no annual report is submitted after the written notice is served, Article 17 may be invoked to deal with the case.
Chapter III: Audit of Public Enterprises
Following public enterprises and institutions shall be audited by an auditing agency:
1.Sole government ownership;
2.Joint government and private ownership with the government holding over 50 percent of the stock;
3.Reinvestment by the enterprises described in 1, and 2 which accounts for over 50 percent of the total capital of the reinvested enterprise.
The general auditing principle applicable to business enterprises shall be applied in the audit of the financial affairs of government enterprises and institutions, in addition to the application of the provisions of this Law and other relevant laws and regulations.
The business or operational plan, projects to be implemented by stages, cash flow estimate, and monthly accounting report of various government enterprises and institutions shall be submitted to the auditing agency.
Government enterprises and institutions shall prepare the semi-annual and the annual reports and have these reports submitted to the auditing agency for audit.
Earnings or loss of a government enterprise or institution shall be certified by the audit agency in charge.
The appropriation of earnings or loss of a government enterprise or institution shall be processed in accordance with the legal procedures. The auditing agency shall effect necessary corrections for non-compliance with the law on this matter.
Where a government enterprise or institution has undertaken reappraisal of its fixed assets in accordance with law or regulation, the records concerning the reappraisal shall be submitted to the in charge auditing agency for verification.
Articles 41 to 43, Article 45 and Article 46 shall be applied to the audit of government enterprises and institutions.
Chapter IV: Audit of Public Properties
The auditing agency may in investigate the administration, uses and other matters concerning cash, negotiable instruments, securities and all other properties of various government agencies; the auditing agency may make its opinion known to the agency concerned about any improper handling of the above matters.
Government agencies shall prepare a property accounting reports under the Law of Accounting and other regulations. These reports must be submitted to the audit agency within the prescribed time on matters concerning the increase or decrease, custody, transfer, and disposal of the real estate, supplies or other properties under their administration. The audit agency may assign personnel to look into these areas.
Where government agencies desire to abandon properties under their administration which have been worn out after the prescribed period of use, and where these properties are of certain prescribed original value, the case shall be reported to the auditing agency for inspection. The abandoned properties, which can not be utilized in other ways and its original value exceed the prescribed amount, and the destruction of outdated accounting documents, vouchers, registers and reports after legal reservation period, shall be destroyed with the concurrence of the competent auditing agency.
Where there is disappearance, destruction, or loss due to other causes, in cash, negotiable instruments, securities, properties and other assets in the possession of the various government agencies, the case shall be reported, together with the related evidences, to the auditing agency for inspection.
The audit agency has the right to inspect and examine the planning, designing, bidding, implementing, accepting and other related procedures of procurement of government agencies. When any illegal procedures or not consist with the contract, regulations or unreasonable situations are found, the audit agency should notice the auditee to have a proper action. Government agencies should provide any related information for the audit.
Where the negotiation over prices in connection with construction work or procurement by various agencies follows certain special condition as to warrant the basis of actual cost plus profit, the term shall be specified in the contract. The auditing agency may dispatch personnel to the contracting party to audit its accounts relative to the actual cost, and inform the agency concerned of the result of the audit.
On the occasion of drawing lots for repayment of bond principal or destruction of redeemed bonds, the bond administrative agency shall notify the auditing agency.
Chapter V: Evaluation of the Efficiency of Financial Administration
The head agencies of different department shall inform the auditing agency periodically, of their evaluation of the agencies under their supervision, about the latter’s in progress in carrying out on-going programs and actual status of receipts and disbursements against the respective expenditures, on a monthly or other periodic basis.
In the submission of accounting statements and annual reports by various government agencies to the auditing agency, the performance report which describes the program implementation and budget execution shall be appended. Where there is available information on measurable job units, the cost analysis report should be appended and interpreted.
In submission of semi-annual and annual reports by government enterprises and institutions, business operation reports shall be appended thereto. Where cost accounting has been in use, the cost analysis report, together with an accompanying interpretation, shall also be appended.
In the audit of general fund agencies, the auditing agency shall pay attention to the following:
1.The standing procedure of operation for administration, finance, accounting and general services and the relevant laws and regulations;
2.The progress of on-going programs, receipt and disbursement budgets, and the execution and performance thereof;
3.The efficiency of the financial operations and sampling check of cash and properties;
4.The verification of the responsibilities relative to receivables, payables and other assets and debts;
5.Improvements should be made in the above matters.
To concerning the audit of government enterprises and institutions, audit agency shall pay attention to the following, in addition to those enumerated in the foregoing Article:
1.Accuracy in the calculation of assets, liabilities and income or loss;
2.Sources and uses of capital;
3.Efficiency in the implementation of major projects;
4.Causes of fluctuation in costs, expenses and business revenues and outlays;
5.Trend of business prospects;
6.The conditions of finance and the performance of business.
In auditing the annual reports of various government agencies or funds, the auditing agency shall pay attention to the following:
1.Violation of law, dereliction of duty or other irregularities, if any;
2.Budgetary deficit or surplus;
3.The ratio of that portion accomplished and that yet to be accomplished against the administrative plan, operational plan, or business plan;
4.The degree of economic or uneconomic operation;
5.The comparison of administrative efficiency, operational efficiency, and business efficiency among similar agencies or funds;
6.Other matters related to the annual reports.
During the auditing of the general final report of the Central Government, the auditing agency shall pay attention to the following:
1.Whether or not the revenue and expenditure of government could coordinate with the budget; if not, what's the reason?
2.Whether or not the annual revenue could balance with the annual expenditure; if not, what's the reason?
3.Whether or not the revenue and expenditure are compatible with the national economy and economic growth;
4.Whether or not the revenues and expenditures dovetail with the national policy and the administrative program of the government;
5.Recommendations for the improvement on revenues and expenditures made by all interested parties.
The above points worthy of attention are applicable in auditing the general final reports of local governments.
When auditing agencies consider the audited agencies negligence of duty or inefficiency after auditing their performance, they shall notify the authorities at the next higher level and the Control Yuan. Where the audited agencies have system defects or inadequate facilities, the auditing agencies shall provide recommendations to the audited agencies.
Where the audit may improve the efficiency or advance public welfare, the auditing agencies shall provide recommendations to the audited agencies or related agencies.
Where auditing agencies discover the potential risks which affect administrative, operational or business efficiencies of various government agencies, they shall provide the government agencies early-warning recommendations in order to respond better.
Prior to the preparation of the annual budget estimates by the government, the auditing agency shall provide recommendations concerning the audit result of the budget execution for preceding years.
Chapter VI: Decision on Financial Responsibility
The public functionaries concerned shall not be relieved from the responsibility of their financial acts until a decision has been made by the auditing agency after making due examination.
Where it has been found out by the auditing agency that the occurrence of incidents as mentioned in Article 58 was due to the negligence of the persons in charge, the head of the agency and their supervisor shall be held responsible for indemnity payment.
For cases of missing, destruction or loss of valuable items which were originally in the joint custody of several persons and couldn't identify the responsible person, these persons shall be held jointly responsible for indemnity payment; intended persons are to be treated same as persons of joint action.
Where there is no full compliance within time limit, concerning the cash refund required by the auditing agency, and the officer-in-charge of agency, or his authorized personnel, and the chief accountant, have approved the payments on purpose or malpractice, they shall be held jointly responsible for indemnity payment.
Where it is discovered that the chief cashier and the clerk cashier issued check or paid cash in an amount exceeding the amount approved by the approving officer, or erroneously paid to a wrong claimant, they shall be held responsible for indemnity payment.
Where the officer-in-charge of accounting, and the officer-in-charge of the agency or his proxy have countersigned the check in question for which full compensation has not yet recovered from the persons mentioned in the first paragraph, they shall jointly be held responsible for indemnity payment.
The above two paragraphs shall be applicable mutatis mutandis to the Treasury checks issued by disbursing agencies in the Treasury Area.
In the examination of the accounting records, reports, if there is any difference with vouchers and cause the losses of public funds, the officer-in-charge of agency and chief accountant shall be held responsible for indemnity payment.
In reconsidering or re-examining the cases of disallowance, recovery or compensation, the auditing agency under situations below may wholly or partially relieve the indemnity payment required on the persons concerned, or suggest corrective measures:
1.Confirmed after inspection that the case was not related to deliberation, major fault, or corruption;
2.Substantiated things of financial value acquired or calculable profits obtained resulting from disbursements.
With respect to cases of disallowance, refund or indemnity payment as decided by the auditing agency, the officers-in-charge of the responsible agencies shall be asked to effect the payment within the prescribed period. The Treasury and the relevant agency in charge of government enterprises or institutions shall also be informed. The officer-in-charge of the responsible agency shall be referred to the court for compulsory action after expiration of the set time limit. Upon payment, it shall be reported to the auditing agency for examination.
Where there is non-compliance in above case and causing a loss to the government funds, the officer-in-charge shall be held responsible for indemnity payment, and he shall be sued in a court by the Treasury and the relevant agency in charge of government enterprise or institutions. The case shall also be reported to the auditing agency for examination.
Chapter VII: Attached Codes
The auditing agency may conduct audit into the enterprises jointly operated by the government and private interests and those private organization that receive government subsidies in a manner prescribed in this Law.
All of the auditing regulations, schedules and documentary formats shall be under the National Audit Office's administration.
The rules governing application of this Law shall be drafted by the National Audit Office Audit and submitted to the Control Yuan for approval and promulgation.
This Law shall become effective from the date of promulgation.
The amendment of article 59 will become effective up to the National Audit Office.