Abstract
Economic interests (economic rationality) and political interests (political rationality) are the dual goals pursued by political state in promoting structural reform. Improving the independence of the national audit as the premise in the national audit system reform, simultaneously not challenging the existing political system, in this paper we construct Pareto Optimality Model with “independence” and “political control ability” as the basic variables and “political state-economic society” as the basic stakeholders with dichotomy, draw Pareto Optimality interval of “political control ability” under the condition of considering transaction costs. Based on stakeholders formed by the national audit system reform in the past 30 years, we further decompose and integrate the stakeholders with dichotomy, and construct a dynamic model of the national audit system reform with the central government, local interest groups and the public as stakeholders, thus to explain theoretically the reform course of national audit system. As fundamental reform in the national audit system that exceeds the constraints of political system and historical tradition is unlikely to occur in a short time, in this paper we put forward promoting the internal optimization of national audit system under the existing political system framework to realize the interaction between good governance of the state and good performance of the national audit.
Highlights
The basic pattern of China’s national audit system has been in use since it was established in the early 1980s
It is disadvantageous to carry forward the national audit system reform too early surpassing the constraints of political system and historical tradition: on the one hand, it’s adverse to the balance of different stakeholders, one the other hand, it’s not conducive to carry out auditing, it hinders the development of national audit
“the objectives, modes, means and methods of the governance for different countries are different in different historical periods, achieving good governance is common pursuit” [22]
Summary
The basic pattern of China’s national audit system has been in use since it was established in the early 1980s. The state promotes economic growth for the purpose of increasing tax revenue, on the other hand, it maximizes the power rent by identifying the basic rules of competition and cooperation that form the property right structure, i.e., the state has dual objectives of “economic benefit (economic rationality)” and “political benefit (political rationality)” These two goals are often difficult to coincide with each other, forming a national paradox. Under the hypothesis of low time preference, “duration” has become the key to achieve the goal of “rent maximization” in political state, i.e., only under the premise of political stability, political state will consider how to increase the single-term rent This provides a new perspective for understanding China’s national audit system reform. The optimization direction of interaction between national governance and national audit is put forward
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