Recently, the National Audit Office issued the "Report of the State Council on the Rectification of Problems Identified in the Audit of the Implementation of the Central Budget and Other Financial Revenues and Expenditures in 2022" (hereinafter referred to as the "Audit Rectification Report").
From the perspective of the effect of rectification, 92% of the problems required by the State Council on the Audit of the Implementation of the Central Budget and Other Financial Revenues and Expenditures in 2022 have been rectified, the problems requiring phased rectification are generally progressing smoothly, and measures and plans have been formulated for the problems requiring continuous rectification. Relevant localities, departments and units have rectified more than 957 billion yuan, formulated and improved more than 1,600 rules and regulations, and held more than 2,540 people accountable.
The "Audit and Rectification Report" pointed out that the relevant localities, departments and units have adopted a variety of ways to strengthen audit rectification: the central finance and central departments have rectified 118.222 billion yuan by recovering surplus funds, adjusting investment plans, and cleaning up illegal fees, etc., and 82.143 billion yuan have been rectified by recovering and returning, coordinating and revitalizing, reissuing benefits, and implementing policies, and 757.404 billion yuan have been rectified by central enterprises and financial institutions by adjusting accounts, clearing loans or adjusting classifications, and strengthening investment management.
The risk assets that were not truthfully reflected have been rectified by 285.256 billion yuan
With regard to the problems identified in the audit of state-owned assets of financial enterprises, 286.292 billion yuan has been rectified, 87 systems have been improved, and 305 people have been punished.
From the perspective of the "Audit Rectification Report", there are mainly two types of issues:
The first is the problem of false asset base and lax management. 24 financial institutions have reduced the scale of risk assets by formulating repayment plans and increasing collateral, and the risk assets that are not truthfully reflected have been rectified by 285.256 billion yuan. The four central financial institutions have further standardized the payment of salaries, marketing expenses and other matters, and put idle office and technical buildings for sale for lease or put into use, and have rectified 1.036 billion yuan.
The second is the issue of conducting business in violation of regulations. Twenty-five financial institutions rectified illegal deposits and loans, wealth management, insurance and other businesses by canceling the deposit and loan linkage, recalling loans in advance, and negotiating and formulating repayment plans. 17 trust companies terminated their contracts ahead of schedule and no longer cooperated when they expired, and rectified and helped enterprises to whitewash their financial statements and conceal related party transactions. In response to the problem of violating the rules in the name of the main business, eight trust companies have terminated cooperation or transferred creditor's rights, and have connected data with the public security and the People's Bank of China to strengthen the substantive review of loan risks, and no longer outsource the credit review business.
Forty-six regions entered 19.6 billion yuan of hidden debts borrowed in violation of regulations into the government's hidden debt statistics system
The "Rectification of Outstanding Problems Identified by the Audit Identified by Relevant Departments" (hereinafter referred to as the "Rectification Situation") issued at the same time as the "Audit Rectification Report" In response to the problems identified in the audit, the Ministry of Finance for the first time handed over local financial issues to the local supervision bureaus to take the lead in supervising rectification, verified the hidden debt resolution data in various places one by one, and supported local governments to carry out hidden debt risk resolution pilots; in conjunction with the National Development and Reform Commission, it strengthened the review of special bond projects, appropriately expanded the scope of special bond investment and project capital, and seriously pursued responsibility for illegal debt borrowing, and issued a total of 25 batches of accountability recommendation letters since 2022, with a total of 428 people held accountable and 24 typical cases publicly exposed。
Among them, the problem of "local government debt management" includes two aspects: one is the illegal addition of hidden debts, and the other is the illegal issuance or use of special bond funds.
Regarding the issue of "illegal new hidden debts, 49 regions have added 41.516 billion yuan of hidden debts in violation of regulations by promising to repurchase and state-owned enterprises to advance funds for construction", the "Rectification Situation" shows that the Ministry of Finance urges the relevant regions to seriously rectify and rectify, and requires that the balance of hidden debts that are temporarily difficult to complete rectification through repayment and other means be included in the government's hidden debt statistics system according to procedures. As of the end of September, 46 localities had entered 19.6 billion yuan of hidden debts borrowed in violation of regulations into the government's hidden debt statistics system, and repaid 11.021 billion yuan of hidden debts by abolishing government repurchase clauses, adjusting construction contents, repaying project loan balances, and paying arrears for projects, and 44 people were held accountable.
Promote the risk resolution of local small and medium-sized financial institutions in an orderly manner
The "Audit Rectification Report" pointed out that the relevant departments and localities carefully studied and adopted the audit recommendations and promoted the transformation of audit rectification results into governance efficiency.
Regarding strengthening and improving macro-control policy measures, in terms of monetary policy, the People's Bank of China guided financial institutions to expand credit to small and micro enterprises, and the balance of inclusive small and micro loans reached 27.78 trillion yuan by the end of August, a growth rate 13.8 percentage points higher than that of other loans, and the prudent monetary policy was more precise and powerful.
In terms of fiscal policy, the Ministry of Finance has increased the overall planning of financial resources, optimized the combination of fiscal deficits, special bonds, interest discounts and other tools, increased investment in weak links and key areas such as scientific and technological research, rural revitalization, and major regional strategies, and worked with the State Administration of Taxation and other departments to optimize preferential tax policies and promote their implementation, and actively improve the efficiency of fiscal policies.
With regard to the effective prevention and resolution of risks in key areas, in the financial sector, the State Administration of Financial Supervision has promoted the risk resolution of local small and medium-sized financial institutions such as urban commercial banks and rural commercial banks in a timely and orderly manner, guided the formulation of reform and risk reduction plans for "one province, one policy" and "one bank, one policy", and promoted the implementation of territorial risk disposal responsibilities; In addition, the relevant financial institutions have significantly reduced the scale of risk assets, rectified risk assets by 285.256 billion yuan, and further strengthened the substantive review of loan risks.
In the field of finance, the Ministry of Finance and other departments have seriously investigated and dealt with new hidden debts and false debts, and held people accountable;
Crack down on violations such as falsification, misstatement and omission of asset risk classification
The "Rectification and Reform" pointed out that in the next step, the State Administration of Financial Supervision will continue to strengthen the supervision of financial asset quality, guide financial institutions to accurately classify risk assets, increase law enforcement inspections, and crack down on asset risk classification fraud, misstatement and omission and other violations. Further urge financial institutions to standardize salary management, strictly implement salary deferrals and recourse clawbacks, and effectively give play to the guiding role of salary constraints in financial institutions' risk management and control.
Column Editor-in-Chief: Qin Hong Text Editor: Fang Ying Title Image Source: Shangguan Title Picture Editor: Yong Kai
Source: Author: Financial Times