MEASURES FOR PUBLIC FINANCE EXAMINATION WORK

Ministry of Finance

Order of the Ministry of Finance

No. 32

The Measures for Public Finance Examination Work, which were adopted at the executive meeting of the Ministry of Finance on January
10, 2006 upon deliberation, are hereby promulgated and shall enter into effect as of the day of March 1, 2006.

Minister of the Ministry of Finance, Jin Renqing

January 26, 2006

Measures for Public Finance Examination Work

Article 1

The present Measures are formulated in accordance with the laws of the Budget Law of the People’s Republic of China and the Regulation
on Penalties and Sanctions against Illegal Fiscal Acts and other administrative regulations for the purpose of regulating the public
finance examination work, guaranteeing and supervising the effective implementation of finance examination conducted by the department
of finance and protecting the legitimate rights and interests of citizens, legal persons and other organizations.

Article 2

The present Measures shall be applied to any finance examination implemented in accordance with the law by the departments of finance
of the people’s governments at or above the county level and the offices dispatched by the departments of finance of the people’s
governments at or above the provincial level (hereinafter uniformly referred to as the finance department).

Article 3

The term “public finance examination” as mentioned in the present Measures refers to an act that the finance department carries out
an examination on the implementation of regulations on finance and taxes and the matters of administration on fiscal, finance and
accounting etc. by entities and individuals for the purpose of executing its duties and functions of supervision over public finance,
rectifying any illegal fiscal act and maintaining the fiscal and economic order of the state.

Article 4

When implementing any public finance examination, the finance department shall follow the principles of legality, objectivity, fairness
and openness.

Article 5

The finance department shall, in accordance with the provisions of laws, regulations, rules as well as the present Measures, implement
public finance examination within the scope of its prescribed powers and functions, and draw a relevant conclusion on examination
or decision on treatment or punishment in accordance with law.

Any dispute on the jurisdiction of public finance examination shall be reported to the same superior finance department to designate
the jurisdiction.

Article 6

The finance department shall establish an annual plan of public finance examination and organize and implement relevant public finance
examination in accordance with the plan, or organize and carry out the relevant public finance examination in accordance with the
requirements of daily fiscal administration.

Article 7

Where the finance department implements any public finance examination, an examination team shall be set up and a team leader shall
be designated as well. Examination teams shall adopt a leader responsibility system.

Article 8

The examiners of an examination team shall consist of functionaries of the finance department, who shall be qualified as follows:

(1)

Being familiar with the relevant laws, regulations, rules and policies;

(2)

Mastering the relevant professional knowledge; and

(3)

Having the capability of investigation and research, comprehensive analysis and literal expression.

Article 9

In accordance with the requirements, the finance department may invite special institutions or personnel with specialized knowledge
to assist the relevant examiners to implement the finance examination.

Article 10

Any examiner who has any direct interest with any entity or individual under examination (hereinafter uniformly referred to as the
examinee) shall withdraw. Where any examinee believes that any examiner has any interest with him, he may require the withdrawal
of the examiner.

The principal of the finance department shall be responsible for making decision on the withdrawal of any examiner.

Article 11

The examiners shall comply with the relevant provisions of the state on confidentiality and shall not reveal any state secret or commercial
secret learned from the examination or use any data as learned from the examination for any matter impertinent to the examination.

Article 12

Before the implementation of any finance examination, the examination team shall be familiar with the relevant laws, regulations,
rules and policies concerning the examined items, find out the essential information of the relevant examinee and formulate a work
plan for public finance examination.

Article 13

Where the finance department implements any public finance examination, it shall send a Notice on Public Finance Examination to the
examinee 3 workdays before the relevant examination.

Where the finance department considers that the sending of a Notice on Public Finance Examination 3 workdays before the relevant examination
will cause any negative impact on the examination, it may, with the approval of the principal of the finance department, the Notice
on Public Finance Examination may be sent at a proper time before implementing the public finance examination.

The contents in a Notice on Public Finance Examination shall be as follows:

(1)

The name of the examinee;

(2)

The basis, scope, contents, means and time of the examination;

(3)

The specific requirement to the relevant examinee on cooperating with the work of examination;

(4)

A name list of the leader and examiners of the examination team and their contact ways; and

(5)

The seal of the finance department and the date of issuance.

Article 14

Where any public finance examination is implemented, there shall be not less than 2 examiners, who shall show the relevant examinee
their certificates.

The examiners may inquire of the relevant examinee about the relevant information, wherein the relevant examinee shall cooperate with
them by replying to the inquiries and reflecting the circs faithfully. A transcript shall be formulated for an inquiry, which shall
bear the signature or seal of the examinee.

Article 15

Where any public finance examination is implemented, the examiners may require the relevant examinee to provide relevant materials,
which may be photocopied thereof.

Where any material as provided is written in a foreign language or in any language of a minority ethnical group, the examinee shall
translate the said material into Chinese.

Article 16

Where any public finance examination is implemented, such methods as account check, inventory check, inquiry and letter-confirmation,
calculation and analytical check may be adopted by the examiners.

Article 17

Where any public finance examination is implemented, with the approval of the principal of the department of finance, the relevant
examiners may inquire the relevant entity that has any economic and business relation with the examinee about the relevant information
and may also inquire the relevant financial institution about the deposit of the examinee under examination according to law.

Any examiner shall, when inquiring about the relevant deposit, hold the Notice on Deposit Inquiry as issued by the finance department
and perform the obligation of confidentiality.

Article 18

Where any public finance examination is implemented, and under any circumstance that the relevant evidence may be destroyed or lost
or hard to obtain later, the said evidence may be registered for preservation in advance upon the approval of the principal of the
finance department and a decision of treatment shall be made within 7 workdays timely. During this period, the relevant examinee
or relevant personnel shall not destroy by melting or burning or transfer the evidence.

Article 19

The certification materials as obtained by any examiner in an examination shall bear the signature or seal of the relevant provider.

For any material that doesn’t bear the signature or seal of the relevant provider, the examiner shall give a note of the reasons.

Article 20

Where any public finance examination is implemented, the relevant examiner shall make records and extracts on the contents and matters
under examination, and formulate a draft on public finance examination, which shall bear the signature or seal of the examinee.

Article 21

The leader of an examination team shall conduct supervision over the work quality of other examiners in the team and shall conduct
necessary examination and review on the relevant matters.

Article 22

When meeting with any serious problem during the implementation of examination, the examination team shall report it to the finance
department for instructions in time.

Article 23

Before any examination is concluded, an examination team shall solicit the opinions of the relevant examinee on such matters as the
fundamental state of implementation on the examination as well as the subsistent problem of the examinee in written form. The relevant
examinee shall, within 5 workdays as of the day when he receives a letter of opinion solicitation in written form, bring up written
opinions or explanations. Where the relevant examinee fails to refer any written opinion or statement within the prescribed time
limit, it shall be considered to have no different objection.

Article 24

An examination team shall, within 10 workdays as of the day when the relevant examination comes to an end, submit to the finance department
a written report on public finance examination. Under any special circumstance, the time limit to submit a report on public finance
examination may be prolonged upon approval, which shall be not more than 30 days at the most.

An examination team shall, when handing in a report on public finance examination, simultaneously hand in such materials as administrative
treatment, suggestion on penalties or suggestion on transfer for treatment as well as a draft on public finance examination.

Article 25

A report on public finance examination shall include such contents as follows:

(1)

The brief introduction of the examinee;

(2)

The scope, contents, means and time of the examination;

(3)

The implementation of regulations on finance and taxes by the examinee as well as the essential information on such administrative
matters as fiscal, finance and accounting;

(4)

The basic facts of fiscal illegal act of the examinee as well as the basis and evidence for confirmation;

(5)

The opinions or statement of the examinee;

(6)

Any other matter that shall be submitted to the finance department; and

(7)

The signature of the leader of the examination team as well as the date when the report on public finance examination is filed.

Article 26

The finance department shall establish and perfect a check system of public finance examination, authorize the relevant internal functionary
department or special personnel to have a check on the report of public finance examination as well as other relevant materials as
handed in by the examination team.

Where any functionary in charge of a check has any direct interest with the relevant examinee or examiner, he shall withdraw.

Article 27

The relevant functionary department or special personnel in charge of a check shall conduct the check to the report on public finance
examination and other relevant materials from the following aspects:

(1)

Whether or not the facts as confirmed in the examination are clear;

(2)

Whether or not the evidence as obtained is true and ample;

(3)

Whether or not the procedures of examination are legal;

(4)

Whether or not the legal basis for confirming any illegal fiscal act is proper;

(5)

Whether or not the administrative treatment, suggestion on punishment or suggestion on transfer for treatment is appropriate; and

(6)

Any other matter that shall be checked.

The relevant functionary department or special personnel shall, after a check on the report of the public finance examination, put
forward relevant check opinions.

Article 28

The finance department shall, after conducting an examination on a report of public finance examination and relevant opinions on check,
make the following treatment in accordance with the different circumstances:

(1)

Drawing a conclusion on examination for an examinee without illegal fiscal act;

(2)

Drawing a decision on administrative treatment or punishment to any examinee with illegal fiscal act in accordance with law; or

(3)

Transferring any matter that doesn’t belong to the power limit of this department.

In the case of any great difference between the report on public finance examination and the relevant opinions on check, the finance
department shall order the examination team to make further verification as well as supplement and correct of the relevant information
or materials. Where necessary, another examination team shall be sent to implement renew a public finance examination.

Article 29

The finance department shall, when drawing any decision on administrative treatment or punishment, formulate a decision letter on
administrative treatment or punishment. A Decision Letter on Administrative Treatment or Punishment shall indicate the matters as
follows:

(1)

The name or post_title and address of the party involved;

(2)

The facts in violation of any law, regulation or rule and the relevant evidence;

(3)

The categories and basis of administrative treatment or punishment;

(4)

The means and time limit for the performance of administrative treatment or punishment;

(5)

In the case of dissatisfaction with the relevant administrative treatment or punishment, the means and time limit to apply for an
administrative reconsideration or lodge an administrative litigation; and

(6)

The name of the finance department that has made a decision on administrative treatment or punishment as well as the date when the
decision is made. The Decision Letter on Administrative Treatment or Punishment shall be affixed with the seal of the finance department
that has made the decision.

Article 30

The finance department shall, before making any decision on administrative punishment, notify the party involved of the facts, reasons
and basis for the administrative punishment, and notify the party involved of the rights that he may enjoy in accordance with law.

Any party involved has the right to make statement and defense. The finance department shall fully solicit the opinions of the party
involved and verify the facts, reasons and evidence as brought up by the party involved. Where the relevant facts, reasons and evidence
as brought up by the parties involved are reasonable, the finance department shall adopt them.

Article 31

The finance department shall, before making any decision on administrative punishment where about the right to hold a hearing shall
be notified, inform the party involved of his right to require a hearing. Where any party involved requires a hearing, the finance
department shall organize it.

When the finance department holds a hearing, it shall implement the hearing in accordance with the provisions of the Measures for
Implementing a Hearing on Administrative Punishment by Public Finance Organ (Order of the Ministry of Finance, No.23).

Article 32

The finance department shall, after making a decision on administrative treatment or punishment, send a Decision Letter on Administrative
Treatment or Punishment to the party involved.

The Decision Letter on Administrative Treatment or Punishment shall become effective as of the day of sending.

Article 33

Any party involved who is dissatisfied with any administrative treatment or punishment may apply for an administrative check or lodge
an administrative litigation in accordance with the provisions of the Administrative Review Law of the People’s Republic of China
and the Administrative Litigation Law of the People’s Republic of China.

During the period of any administrative check or administrative litigation, the implementation of the relevant administrative treatment
or punishment shall not be stopped except as otherwise herein provided by law.

Article 34

The finance department shall conduct supervision and examination over the implementation of the relevant administrative treatment
or punishment in accordance with law.

Article 35

Where any examinee has any illegal fiscal act, the finance department may proclaim the illegal fiscal act thereof as well as the relevant
decision on administrative treatment, punishment or sanction.

Article 36

Where any public finance examination is concluded, the finance department shall do a good job in filing for records of the relevant
materials pertinent to public finance examination.

Article 37

Where any functionary of the finance department abuses his power, neglects his duty or misconduct for self-seeking in any public finance
examination, an administrative sanction shall adopted to him in accordance with law. Where any crime is constituted, the offender
shall be subject to relevant criminal liabilities in accordance with law.

Article 38

The finance department shall, when finding any serious problem that may influence the implementation of policies for finance and taxes
or budget, report it to the people’s government at the same level or the finance department at a higher level in a timely manner.

Article 39

Any accounting examination as implemented by the finance department shall be applicable to the present Measures as well as the Measures
for the Implementation of Accounting Supervision by the Public Finance Department (Order of the Ministry of Finance, No.10)

Article 40

The present Measures shall go into effect as of March 1, 2006. The Rules on the Public Finance Examination (Cai Jian Zi [1998] No.223)
as promulgated by the Ministry of Finance on October 8, 1998 shall be abolished simultaneously.