The Independence of the Chinese Auditor-General: A critical comparison with Australia

Independence is generally accepted as fundamental and essential to every audit. This study explores the independence of the Chinese Auditor-general through comparison with the independence status of the Australian Auditor-general. Using the independence quantification framework proposed by Coghill (2004) and the independence criteria proposed by International Organisation of Supreme Audit Institutions (INTOSAI), the study finds that the Chinese auditor-general and the Chinese National Audit Office are not independent. However, many public sector audit mechanisms and processes in China are consistent with Australian (and Western) mechanisms and processes. In addition, it also has been observed that Chinese public sector audits are strongly outcome-oriented. The public sector audit system that has developed in China emphasises outcome rather than independence.

Many studies have investigated audit independence issues in the private sector. However studies on audit independence in public sector in developing countries remained under-researched. This study partly fills this research gap by investigating public sector audit independence in China and therefore, contributing to the audit-independence-related literature in the context of developing countries. So far, few studies have investigated the status of public sector audit independence in the context of a unitary national government. This study fills in this research gap.