Assessment of Financial Performance: Concepts, Systems and Practice

Social Sciences in China (Chinese Edition)

No.4, 2017


Assessment of Financial Performance: Concepts, Systems and Practice



Zheng Fanghui, Liao Yier and Lu Yangfan


Finance is the very foundation of national governance and provides it with major support. Assessment of financial performance, including expenditure and revenue performance, is an important part of the assessment of government performance. This process is designed to achieve the credibility of public finance and demonstrate the value and instrumental rationality of assessment. Since 2003, the practice of assessment of expenditure performance presided over by financial departments has opened the door to the construction of a modern financial system in China, but it essentially remains a goal-oriented internal government assessment, or even, one could say, a simple version of audit. It contains theoretical paradoxes and practical contradictions and has systems and mechanisms that do not operate smoothly, unclear goals and functions, non-standard organizational procedures, an incomplete regulatory basis, an unscientific technical system and misdirected application of results, all of which prevent it from functioning as an effective means of error correction and supervisory oversight. In the present circumstances, setting up a new model of assessing financial performance that is led by the National People’s Congress, coordinated by government departments and conducted by a third party is both theoretically inevitable and practically feasible. Its indicator dimension would be oriented toward funding inputs, procedural supervision, goal attainment and public satisfaction.