2008 Finalist
Chengdu City, Sichuan Province
The Innovations and Excellence in Chinese Local Governance Program
The Innovations and Excellence in Chinese Local Governance Program

"On-line Supervision in Budget Execution" was initiated by the Budget Commission of the Standing Committee of the Sichuan Provincial People's Congress in February 2003 and began operation in 2005. This online system remedied flaws in the traditional supervision system that provided for only occasional paper review of budget execution. It also allows the People's Congress to supervise the entire budget process from drafting to final account expenditure by government departments.

Innovators networked the Budget Commission computers with those of the The Provincial Treasury Payment Center to create a real-time, dynamic supervision mechanism for 130 provincial government departments and 856 departments at the sub-provincial level. The networked system allows The Budget Commission to supervise budget execution by budget line item, payment mode, time, and amount. The system even allows The Commission to monitor the bank account information of payees.

Not only did innovators create a new electronic system, they also empowered staff members to supervise budget execution. Budget Commission staff now review departmental expenditures and make comparative analyses of financial statements. They also publish the bi-weekly Budget Scrutiny and Supervision News. The publication makes instances of budget execution misconduct transparent by reporting them to the Provincial Finance Department, auditing offices, and other related departments who then can take immediate action to remedy misconduct.

This system has had a number of positive effects including:

  1. Improved transparency of the Party Congress budget process;
  2. Reduced corruption and misconduct in government agencies;
  3. Improved training for civil servants; they are more familiar with financial systems including budget drafting and execution;
  4. Increased effectiveness and efficiency; lessons learned about irregularities and problems are now incorporated into process improvement;
  5. Reformed work procedures; the system compels government departments to execute their budgets in a standardized manner;
  6. Reduced overall workload of audit officials; the system allows them to focus audits on problem departments and locations; and
  7. Created a model system for other government departments; for example, the People's Congresses at municipal, district, and county levels have also begun to undertake initiatives to improve their budget execution.

The online supervision system is a work in progress. Innovators plan to increase the effectiveness of the system by:

  • Remedying problems that occurred because of rapid implementation;
  • Finding methods to strengthen supervision of budget execution, e.g., passage of a law that creates a special committee and improves the inquiry system;
  • Extending the scope of the system and using budget execution reviews to further standardize and improve budget drafting;
  • Publicizing the results and process at the sub-level People's Congresses; and
  • Exploring additional approaches for making government expenditures available to the public.