Rectification Results of the Problems Identified in the Audit on Budget Implementation

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Rectification Results of the Problems Identified in the Audit on Budget Implementation

Rectification Results of the Problems Identified in the Audit on Budget Implementation and Other Fiscal Revenues and Expenditures of the National Health and Family Planning Commission for the Year 2013

Pursuant to the provisions of the Audit Law of the People’s Republic of China, the National Audit Office of China conducted an audit from November 2013 to March 2014 on the budget im- plementation and other fiscal revenues and expenditures of the National Health and Family Plan- ning Commission (hereinafter referred to as NHFPC) for the year 2013. According to the informa- tion provided by NHFPC up to the end of October 2014, the rectification of the problems identi- fied by the audit is hereby announced as follows: I. Rectification of the main problems in budget implementation 1. In 2013, the former Ministry of Health, the former Population and Family Planning Com- mission and NHFPC used 11.1854 million yuan of project funds by expanding the scope of expen- ditures and used 3.8952 million yuan of public funds to make up for expenditures on salaries and benefits. Regarding the above-mentioned problem, NHFPC has formulated after research Interim Measures for the Management of the Departmental Budget for NHFPC and Interim Measures for the Management of Budgets for Projects of Departments and Bureaus of NHFPC to further stan- dardize budget management, rigorously implement approved budgets, strictly prohibit unautho- rized budget adjustments and reinforce the audit on project budget outlays. 2. From 2010 to 2013, NHFPC-affiliated International Exchange and Cooperation Center of the Ministry of Health ( hereinafter “International Exchange Center”) and 8 other units expanded the scope of expenditures and used 17.9737 million yuan of project funds (of which 6.1472 mil- lion yuan in 2013) for expenditures on housing rent, decoration and renovation. Regarding the above-mentioned problem, the International Exchange Center and the other 8 units have recovered the relevant funds and adjusted the accounting records. 3. Problems in the management of outbound visits for official purposes 1) From 2011 to 2013, the former Ministry of Health had 4.1335 million yuan of expenses on outbound visits undertaken by its subordinate units. 3.672 million yuan out of this amount was di- verted from the capital for other projects. Regarding the above-mentioned problem, NHFPC has submitted the application for budget adjustments to the Ministry of Finance and returned the expenses on outbound visits paid by the subordinate units. Hereafter it will strictly implement the relevant regulations of the Ministry of Finance, reinforce the post-supervision and post-inspection over outbound visits for official pur- poses, and rigorously enforce the foreign affairs discipline. 2) In 2013, the former Ministry of Health and NHFPC had 2 person-times extending the du- ration of their investigation tours abroad by 5 and 2 days respectively. In the expenditures on out- bound visits of NHFPC groups, the documents for the reimbursement of 360,800 yuan did not meet the regulations. Its affiliated China National Center for Food Safety Risk Assessment over- spent the budget for outbound visit expenses by 1.2381 million yuan. Regarding the above-mentioned problems, NHFPC has launched learning activities on regu- lations on outbound visits for official purposes as well as the discipline for foreign affairs, tight- ened the check on the financial reimbursement of air tickets for such visits, strengthened the post- supervision and post-inspection over such visits, and rigidly enforce the discipline for foreign af- fairs. China National Center for Food Safety Risk Assessment will further do well in preparing and implementing the budget for expenses on outbound visits. 3) From 2011 to 2013, its affiliated National Institute of Hospital Administration (NIHA) ac- cepted 4.5114 million yuan of sponsorship fees from enterprises. Out of this amount, 4.2367 mil- lion yuan was used to organize outbound visits by staff members of NIHA itself and the former Ministry of Health, as well as directors of some domestic hospitals. Regarding the above-mentioned problem, NIHA has laid down Regulations on the Use of Private Passports for Leaders of NIHA to manage the passports of leading cadres above the divi- sional level in a centralized manner. Hereafter NIHA will, in strict accordance with the procedure, examine itineraries before approval and implement budgets, tighten the control over the times of academic exchanges abroad, insist on practicing strict economy, prohibit travelling abroad with public funds, and firmly eliminate the recurrence of such problems. 4) From 2011 to 2013, its affiliated National Medical Examination Center (NMEC) and 5 other units organized outbound visits through travel agencies without preparations on plans for outbound visits, involving 854,300 yuan. Regarding the above-mentioned problem, NMEC and the five other units have formulated regulations on outbound visits for official purposes, and will hereafter rigorously implement rele- vant state regulations and stipulations to eliminate the recurrence of similar problems. 4. Problems in the management of official vehicles 1) In 2013, NHFPC had 9 official vehicles supplied beyond the prescribed number. Its affili- ated China National Center for Food Safety Risk Assessment used 2 vehicles of other units. The International Cooperation Department of the former Ministry of Health has long occupied one ve- hicle of its subordinate unit since 2006. NHFPC-affiliated Ministry of Health Personnel Exchange Service Center has been using gratis 3 vehicles of its subordinate units since 2010. Regarding the above-mentioned problem, NHFPC and the units concerned have returned or handled the formalities of transfer for the vehicles of the subordinate units or other vehicles used or occupied by them. The problem of being supplied with vehicles beyond the prescribed number is to be solved in combination with the official vehicle reform. 2) In 2013, the former Population and family Planning Commission had 196,900 yuan of ex- penses on the operation and maintenance of official vehicles undertaken by its Office Service Cen- ter. From 2007 to 2013, the former Ministry of Health reimbursed 336,700 yuan of expenses on official vehicles in its subordinate units. Regarding the above-mentioned problem, NHFPC has returned the 336,700 yuan of expenses on the operation and maintenance of official vehicles paid by the subordinate units. It will further reinforce the management of expenditures on official vehicles and other relevant expenses in strict accordance with the requirements of the reform of logistic services socialization and the reform of official vehicles for state organs. 3) From 2012 to 2013, its affiliated China Population Communication Center (CPCC), with- out approval, used 1.0205 million yuan of management fees receivable but not received from its subordinate company to buy 2 cars. The assets were registered in the accounts of the subordinate company, resulting in off-the-book assets. Regarding the above-mentioned problem, CPCC has transferred the two cars to its ownership and registered them in the account of fixed assets. 5. Problems in the management of conference fees 1) From 2010 to 2013, the former Ministry of Health and NHFPC sponsored or co-sponsored conferences together with other units including State Administration of Traditional Chinese Medicine (ATCM). They accepted contributions from pharmaceutical enterprises through relevant subordinate units or shifted conference fees onto other units, totaling 15.7811 million yuan. In 2012, the affiliated NIHA spent 284,600 yuan holding symposiums and all these expenses were supported by pharmaceutical enterprises. 2) From 2011 to 2013, the former Ministry of Health, the former Population and Family Plan- ning Commission, NHFPC and their affiliated units had 12 conferences stating 1.1894 million yuan of expenditures beyond prescribed standards. Some departments and bureaus held 11 confer- ences with 152,500 yuan of expenses on dinners and high-end tobacco and alcohol consumption, etc. 340,600 yuan of capital fraudulently obtained through false statement of conference fees was deposited in the hotels. 22 conferences were held at non-designated hotels or scenic spots with 2.6375 million yuan of expenses. 75,400 yuan of expenses on conferences was paid by subordi- nate units. Regarding the above-mentioned problems of 1) and 2), NHFPC and its affiliated units have recovered the fraudulently-obtained capital and returned it to original funding channels and formu- lated Notice on the Measures for the Management of Working Conferences in the Health and Fam- ily Planning System and other regulations to further strengthen and standardize the management of conference fees and reinforce the management of plans and budgets for conferences. Hereafter the regulations on conference expenses will be strictly implemented to eliminate the recurrence of such problems. 3) In 2013, its affiliated China National Center for Food Safety Risk Assessment and Institute of Science and Technology of the Population and Family Planning Commission used 5.1554 mil- lion yuan of horizontal topic funds and other funds to subsidize over-expenditures on conference. Regarding the above-mentioned problem, China National Center for Food Safety Risk As- sessment and the Institute of Science and Technology of the Population and Family Planning Commission have formulated relevant regulations to prepare budgets for full-aperture conference fees in accordance with regulations and rigorously implement the budgets. 6. Up to the end of 2013, its affiliated Personnel Exchange Service Center did not collect 185 million yuan of charges receivable for professional qualification examinations from various locali- ties which should be handed over to the central treasury. Its affiliated International Exchange Cen- ter did not turn over in time the 33.4489 million yuan it had collected to the State treasury in viola- tion of regulations. In addition, from 2011 to 2013, the college tuition fees and accommodation charges collected by its affiliated Peking Union Medical College were not handed over to the su- perior level month by month but concentrated and turned over by the year. Regarding the above-mentioned problem, the units concerned have turned over the capital to the central treasury and will hand over the revenues without delay in strict accordance with State regulations hereafter. 7. In 2013, its affiliated Population and Family Planning Commission Office Service Center and International Exchange Center, without implementing regulations on centralized government procurement, directly designated 3 companies to provide property management services and other services with contracted amounts at 3.5179 million yuan. Regarding the above-mentioned problem, the units including the International Exchange Center have laid down relevant regulations to rigidly define the scope, procedure and mode of government procurement, tighten the examination on government procurement contracts, and standardize the government procurement and bidding management. 8. In 2012, the number of shortlisted units for the assessment of their bids for the certificate printing project of its affiliated Chinese Medical Association did not reach the statutory require- ment, the bid-winning price being 746,100 yuan. Regarding the above-mentioned problem, the Chinese Medical Association has informed the bid-winning unit of the termination of the contract and will rearrange bid proceedings for the cer- tificate printing project. 9. From 2011 to 2012, the Institute of Medicinal Biotechnology of its affiliated Chinese Academy of Medical Sciences, in order to increase the budget implementation rate, did not make payment in accordance with the progress of projects as stipulated in the contract. Instead, it paid 8.0399 million yuan (accounting for 52.57% of the total price) of the project funds immediately after the contract was signed. Regarding the above-mentioned problem, the Institute of Medicinal Biotechnology of the Chinese Academy of Medical Sciences has reinforced the management of project fund disburse- ments, tightened the procedure for examination and approval, made sure of the departments and persons accountable for the project, and conducted regular supervision and inspection over the project. 10. Up to the end of 2013, its affiliated Chinese Center for Disease Control and Prevention and 6 other units, in violation of regulations, did not return to NHFPC 4.3934 million yuan of the surplus of the expenses on entrusted businesses. The Statistics Information Center of the Ministry of Health had 5.3865 million yuan of capital for 2 projects deposited for more than 3 years without clearance as required. The Institute of Science and Technology of the Population and Family Plan- ning Commission and 2 other units made slow progress in the implementation of 7 projects, result- ing in an accumulated deposit of 9.7761 million yuan. Regarding the above-mentioned problem, NHFPC has recovered the surplus funds of expens- es on entrusted businesses. The units concerned have reinforced the management of project progress, sorted out the surplus funds, and improved the project management system. 11. In 2013, the former Population and Family Planning Commission applied for authorized payment for 121.810 million yuan of project funds which should be directly paid, and obtained ap- proval from the Ministry of Finance. The former Population and Family Planning Commission, without approval, turned into authorized payment for 2.46 million yuan of charges for renting e- government transmission backbone network lines which should be implemented through direct payment. Regarding the above-mentioned problem, NHFPC and the units undertaking project topics have standardized the modes of payment for project funds for 2014 and adopted direct payment in compliance with the requirement of the centralized treasury payment system.

12. From 2012 to 2013, its affiliated CPCC and Population and Cultural Development Center of the Population and Family Planning Commission (hereinafter “Cultural Center”) disbursed 16.3132 million yuan (of which 5.6 million yuan in 2013) of special fiscal funds to 2 companies through zero-balance accounts and then transferred them back to their basic deposit accounts. Regarding the above-mentioned problem, the relevant units have perfected the management system of budgeted financial revenues and expenditures to eliminate the recurrence of such prob- lems. II. Rectification of the main problems in other fiscal revenues and expenditures 1. In 2013, its affiliated Chinese Academy of Medical Sciences, Population and Family Plan- ning Commission Office Service Center and another unit, in violation of regulations, distributed 5.7947 million yuan of allowances, subsidies and festive benefits for staff members. Regarding the above-mentioned problem, the relevant units have ceased the distribution of ir- regular allowances, subsidies and benefits, strengthened the study of financial laws and regula- tions, and standardized the distribution of allowances and subsidies for staff members. 2. From 2011 to 2013, its affiliated CPCC, NIHA and 3 other units illegally obtained 6.6515 million yuan of capital to set up a private coffer through concluding false contracts and using false bills for reimbursement. Regarding the above-mentioned problem, the relevant units have recovered the capital as re- quired, paid the delayed taxes and perfected the management of centralized financial accounting. Hereafter the units concerned will strictly implement relevant regulations and incorporate the capi- tal into statutory books for accounting to eliminate the recurrence of such problems. 3. Up to the end of 2013, its affiliated NIHA, Chinese Health Education Center and 4 other units had not incorporated 32.3403 million yuan of revenues gained since 2011 into their statutory books for accounting. Its affiliated Cultural Center had not incorporated into its statutory records for accounting 50 million yuan of income obtained from the development of comprehensive and residential buildings in cooperation with other units in 2007. Regarding the above-mentioned problem, the units concerned have recovered the relevant capital and adjusted relevant accounting records. Hereafter the units will perfect the management of centralized financial accounting and rigorously implement relevant regulations to eliminate the recurrence of such problems. 4. From 2011 to 2013, the former Ministry of Health entrusted a property management com- pany with housing rentals and, in violation of regulations, kept 5.825 million yuan of income from the rent in the company for its own use instead of handing it over to the State treasury. Its affiliat- ed International Exchange Center and 3 other units, in violation of regulations, did not hand over to the State treasury 14.2403 million yuan of income from housing rentals or disposals. Regarding the above-mentioned problem, the units concerned have handed over the relevant revenues from housing rentals to the State treasury. 5. In 2011, its affiliated Cultural Center sold the houses bought in violation of regulations for 37 million yuan and deposited the income in its subordinate company. Out of this amount 13.7582 million yuan was transferred back to the center in 2012 to be used for expenditures on salaries, bonuses and charges for water and electricity. Regarding the above-mentioned problem, the Cultural Center has recovered from its subordi- nate company the total net income of 13.7582 million yuan gained through fixed assets disposals and revised Regulations on Finance and Assets Management. 6. From 2011 to 2013, its affiliated International Exchange Center, without approval, decided on the items by itself and collected charges for visa and endorsement services, totaling 1.1187 mil- lion yuan. Regarding the above-mentioned problem, the International Exchange Center has ceased the collection of visa and endorsement service charges. 7. From 2010 to 2013, its affiliated Personnel Exchange and Service Center Magazine of the Ministry of Health, without qualification for training, launched on its own the continuing medical education project which should have been organized by Beijing Health Personnel Training Center and collected 351,600 yuan of charges for the training. Regarding the above-mentioned problem, the Personnel Exchange and Service Center Maga- zine of the Ministry of Health has made a commitment to reinforcing the management, operating in strict accordance with the scope of business prescribed in the business license and not carrying out continuing medical educational trainings. 8. 33 social organizations under the administration of NHFPC including China Medical Asso- ciation and 9 NHFPC-affiliated public institutions including NIHA, taking advantage of their de- partmental influence, collected a total of 1,778.9354 million yuan of incomes through collecting irregular charges, carrying out unapproved appraisal and citation activities and providing com- pensable information, etc. For instance, from 2012 to 2013, the Chinese Medical Association held 160 academic conferences and collected 820 million yuan of sponsorship fees from pharmaceuti- cal enterprises through open marking of different grades of qualification for sponsoring enterprises at the prices from 200,000 yuan to one million yuan, using exhibition stands for advertisements, doctors’ address books and registration information as rewards. From Dec. 2012 to Dec. 2013, the Chinese Medical Association, without approval, collected 19.6504 million yuan of charges for re- training on qualification examinations in violation of regulations. From 2011 to 2013, the Chinese Medical Association did not incorporate into its statutory books for accounting the 114.7484 mil- lion yuan of income from 618 continuing education training projects organized by its Continuing Medical Education Department, Network Information Department and 86 sub-associations after application and approval. From 2011 to 2013, its affiliated NIHA sold to pharmaceutical market research firms the data of drugs used in the hospitals it had collected as entrusted by the former Ministry of Health and NHFPC, gaining an income of 35.271 million yuan in violation of regula- tions. Regarding the above-mentioned problem, the units concerned have ceased the activities and fee collections carried out in the name of health administrative departments, strengthened financial management, standardized accounting, reinforced the management of the information system, properly integrated social resources, and launched activities in compliance with laws and regula- tions.

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