Second, continued progress was made in improving accounting work and other basic work. Two major systems of norms, one for accounting and one for auditing work, were established to be compatible with the country's current state of economic development and international standards. In addition, we carried out a project to foster leaders in the accounting field and improved the continuing education system. We formulated a general strategic framework for reforming the government accounting system. Improvements were made in oversight and management of certified public accountants and the asset evaluation industry, allowing their business to further expand.

Third, the results of oversight of public finance were substantial. The basic elements of a public finance oversight system with real-time monitoring, comprehensive examination, feedback on improvement efforts and performance tracking were put into place. The main focus of the system was on overseeing the handling of major items of expenditures that affect the pressing interests of the masses. Irregularities were uncovered in the handling of a total of 91.1 billion yuan of government funds, and 15 billion yuan in lost funds was recovered.

Fourth, rectification efforts were constantly strengthened. The State Council paid close attention to the comments and problems raised in relevant resolutions and auditing reports of the NPC. The State Council called for conscientious acceptance of auditing and oversight, diligent implementation of auditing decisions, and resolute efforts to rectify existing problems. All departments and relevant organizations diligently worked to make rectifications. Most of the problems uncovered through auditing in the implementation of the central budget have been rectified or corrected, and the persons involved have been investigated. The State Council has reported on the status of rectification work to the NPC Standing Committee.

There are also still some problems that urgently need to be addressed in the execution of the central budget of 2006 and in the handling of economic matters and public finance.

One, structural problems in the economy are still serious. Support for weak links in economic and social development such as agriculture, rural areas, farmers, education, and health is still inadequate.

Two, funding needs to be further increased to address problems related to the national economy and the people's wellbeing. For example, the employment situation is still grave, the system of providing basic cost of living allowances for rural residents is still not fully operational, and in some areas it is still difficult and expensive for students to attend school, and residents still face the problem of inadequate and unaffordable medical services.

Three, the cost of economic development is too high. Supporting policies and measures need to be strengthened to further improve the country's capacity for independent innovation and promote change in the pattern of economic growth.

Four, because the current state of local-level public finance is poor in some areas, financial guarantees for local-level public services need to be further enhanced.

Five, because loss and waste of public funds still occur from time to time, the management of revenue and expenditures needs to be standardized, made more scientific and modernized.

We need to increase our sense of urgency and our sense of mission, concentrate on deepening reforms, optimize the structure of expenditures, improve corresponding systems, tighten financial and economic discipline, strengthen oversight and inspection, and constantly improve budgetary management and the level of services.

II. The Draft Central and Local Budgets for 2007