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China / Government

Third-party audit on way for overseas assets of SOEs

By LI XIANG (China Daily) Updated: 2015-03-18 03:15

Third-party audit on way for overseas assets of SOEs

Sinopec's logo is seen at one of its gas stations in Hong Kong on April 26, 2010 file picture. [Photo/Agencies]

China is to launch a comprehensive audit of the overseas assets of its State-owned enterprises in an attempt to tighten oversight of their international operations.

The country's top state-asset regulator issued an invitation on Tuesday for tenders to audit the assets.

It is the first time that the State-Owned Assets Supervision and Administration Commission has decided to audit overseas state assets through a tender offer.

Analysts said the move underscores the government's intention to improve transparency of the auditing system by inviting independent third parties to take part in the process based on market principles.

The auditing initiative will involve 12.4 million yuan ($2 million) from the fiscal budget, and the bidding result will be announced on April 7, the commission said in a statement.

To avoid a potential conflict of interest, organizations eligible for the bidding must not have provided accounting or auditing services between January 2012 and December last year to SOEs or their overseas subsidiaries that were inspected by the commission, the statement said.

Accounting firms that are eligible must be incorporated in China and have licenses issued by government agencies and ministries, it added.

Xu Baoli, director of the commission's research center, said the regulator's decision shows that there are potential risks or even serious problems with the overseas assets held by SOEs.

"Comprehensive auditing will allow the regulator to gain an overall knowledge of the situation and to learn how serious the problems are, so that it can take the necessary measures to tackle them," Xu said.

The value of overseas assets of SOEs under direct central government supervision is estimated at about 4 trillion yuan.

But Dong Dasheng, a former national deputy auditor-in-chief, said this month there has been a lack of supervision of these assets, as virtually no auditing has been conducted.

Some analysts said the commission's inspection may also be part of the ongoing anti-corruption campaign that has led to the downfall of senior executives in the energy, railway, financial and telecommunication sectors.

Li Jin, vice-president of the China Enterprise Reform and Development Society, a government think tank, said making auditing an institutionalized and transparent system is crucial to preventing corruption and loss of state assets.

SOEs have been key players as Chinese enterprises increase their overseas exposure. The country became a net capital exporter last year, with outbound direct investment reaching a record $102.9 billion.

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