An accountant accreditation system and department budgeting plan have seen fruitful results in Jiaozuo City of central China's Henan Province, after three years of financial reform in the city. People would like to call the power of all government departments and institutions to manipulate financial power. It is the most important among all administrative powers because it is closely related to the interests of the leaders and the staff as well as the ordinary people, and because the money comes from the nation and the ordinary people. We will take you to see what has resulted from a reform targeted at financial power in the hands of department leaders in Jiaozuo City of Henan Province.
To most people, reform is first and foremost about a change in mentality, because custom dies hard. Disruptive as it may sound to many people at the beginning; the pioneering financial reform in Jiaozuo City has achieved great results, to the benefit of ordinary people and local leading officials as well.
Financial seals were retrieved by the City's Finance Bureau for unified use as a means of regulating ways of spending money. Shen Xiangchen, deputy director of Jiaozuo Finance Bureau of Henan Province, said: “We carried out this reform not to gather power, but to improve the efficiency of financial capital and to regulate financing behavior.” The 45-year old Shen Xiangchen assumed the position of deputy director in 1995. He also said: “The finance bureau didn't know a thing as to where and how the money they had earmarked was spent in the past. Now we focus on individual projects. We'll see to it that all the money we gave was appropriately used in the most needy places.”
The way Jiaozuo City government spends their money is different from that of other places in China. When the budgeting conference for 2003 was held in September, 230 heads from different administrative departments were present. Discussions were held as to how various departments would spend money for the next year. Tian Yi, director of Jiaozuo Science and Technology Bureau of Henan Province, said: “The finance bureau used to appropriate all the money one department needed that year and we could use it in different ways according to our own arrangements. Now they set a quota on individual items.”
All the expense items of each department are listed when the final budget plan is formed. The Science and Technology Bureau invited some Russian scientists to visit this January. And as this project didn't pass department budgeting, they couldn't get the expenses reimbursed. Tian Yi said: “Those visitors stayed in hotels and we haven't been able to settle the accounts till now. The director ruled the house in the past; he had the final say on business travel and loans. And you can get the cash once a project was approved. Now everything goes through the accounting office; everything is strictly regulated.”
The director's signature is not enough for the science and technology bureau to render an account now that they don't have their own accountant. Right now, there are 14 accounting offices under the city’s finance bureau, and 78 accredited accountants are in charge of the financial affairs of 250 administrative departments. Accredited Accountant Jie Tieshuan said: “In the past, once the department head signed his name, the finance personnel rushed to complete the transaction without any word. What was wrong with that! It doesn't work now. It is equally impossible for us to undermine our future just to cash the accounts for the science and technology bureau. We belong to a government agency under the direct administration of the finance bureau.”
It is not as easy for department heads to spend a sum of money in Jiaozuo City as it was before. Mu Yuhua, director of Jiaozuo Education Department of Henan Province, said: “If you wanted to construct an office building or buy an air conditioner before, you just did it. Now you have to have a budget at the beginning of a new year.” Li Changgen, deputy director of Jiaozuo Public Security Bureau of Henan Province, said: “We used to have too many receptions in the past, and the accountant would agree to yield the account once we asked them to. This doesn't work now. The accredited accountants work on behalf of the finance bureau and are carrying out national policy for others to supervise.”
Starting from 1999, Jiaozuo City has launched a series of financial reforms including department budgeting and accountant accreditation. Shen Xiangchen, deputy director of Jiaozuo Finance Bureau of Henan Province, said: “The reform aims to balance inconsistency of income and expenses to ensure that public servants and teachers get their full salary on time. That was the incentive for our financial reform.”
Jiaozuo City is located at south Taihang Mountain and accommodates 3 million people. Township enterprises were once prosperous because of its rich underground resources such as coal. Local financial income also ranked high in 13 of the cities and prefectures in Henan Province. But the nation ordered the shutdown of small businesses with heavy pollution in 1997 and financial problems began to follow. 80 percent of the public servants and teachers couldn't get their pay on time. Some were delayed for 18 months. Shen Xiangchen said: “Salary arrears were due to several reasons. For some places, the local finance office was unable to guarantee full pay on time because of their inadequate income. But in Jiaozuo, as I can see, it was largely due to outside circulation of financial capital. Capital shortage on one hand and wasting on the other.”
Editor: Wang Yin
(Dec 28th,2002)
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