Laws & Regulations

Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds

Notice of the General Office of Shanghai Municipal People’s Government on Transmitting the “Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds” Formulated by Three Departments Including the Municipal Finance Bureau
(October 31, 2006)

SMPG GO G [2006] No. 34

Attention: all District and County People’s Governments, and all relevant Commissions, Offices and Bureaus (Administrations) of the Municipal People’s Government:
The “Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds” made by the Municipal Finance Bureau, the Municipal Labor and Social Security Bureau, the Municipal Medical Insurance Bureau have been approved by the 124th routine meeting of the Municipal People’s Government. We hereby transmit them to you and request you to implement them conscientiously.

Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds

Chapter I  General Provisions

Article 1
With a view to normalizing the financial acts of handling the social insurance funds by the social insurance handling organs, enhancing the administration on social insurance funds, and safeguarding the legitimate rights and interests of the insurance objects, these Procedures are formulated on the basis of relevant laws, regulations, and the “Notice on Printing and Distributing ‘Financial System of Social Insurance Funds’ Made by the Ministry of Finance, and the Ministry of Labor and Social Security” (FSC Z[1999] No.60), and in the light of the actual circumstances of this Municipality.
Article 2
These Procedures apply to the social insurance funds handled by the social insurance handling organs at all levels of this Municipality (hereinafter referred to as the handling organs) including the city/town employees’ basic endowment insurance funds (hereinafter referred to as the BEIF), unemployment insurance funds, city/town employees’ basic medical insurance funds (hereinafter referred to as the BMIF), industrial injury insurance, child-bearing insurance, small city/town basic social insurance funds (hereinafter referred to as the SCIF), non-local employees’ comprehensive insurance funds (hereinafter referred to as the CIF), etc..
Article 3
The social insurance funds (hereinafter referred to as the Funds) mentioned in these Procedures refers to the special funds paid by the paying units or individual persons at a certain ratio of the paying base or collected through other legal channels in accordance with relevant laws and regulations of the State and relevant provisions of this Municipality, and used to safeguard the social insurance treatments of the social insurance objects.
Article 4
The tasks of the Funds financial administration are: to conscientiously carry out relevant laws, regulations, general and specific policies of the State, and collect and use Funds in accordance with laws; to set up and perfect financial administration system, do well the work of plan, control, account, analysis and examination of the Funds, and accurately reflect the revenue and expenditure situation; to strictly follow the financial and economic disciplines, enhance the supervision and inspection to ensure the safety of the Funds.
Article 5
In view of guaranteeing the collection and payment of the Funds in time and in full amount, the handling organs shall, in accordance with the requirements of the work, be entitled to require the paying units to accurately provide the employing situation, pay sheet, financial statement and other original materials and data related to the social insurance in accordance with the provisions.
Article 6
The Funds shall be brought into separate Funds financial special account (hereinafter referred to as the special account), and managed in two separate lines of revenues and spending, and used for specific purposes under specific items, and all departments, units and individual persons shall not get possession of or misappropriate the Funds, and shall not use the Funds to balance the financial budgets.
Article 7
The Funds shall be managed in a unified way in accordance with the State requirements, deposited to their own accounts separately in accordance with the insurance type, audited and settled separately, spent for specific purposes, and self-balanced, and shall not be appropriated or interchanged for other items.

Chapter II  Funds Budgets

Article 8
The Funds budgets refer to the annual Funds financial revenue and expenditure plan examined and approved by the handling organs in accordance with the implementation plan and assignment schedule of the social insurance system, and in accordance with the provided procedures.
Article 9
The municipal handling organs shall, in accordance with the forms, time limit, and drawing-up requirements provided by the municipal finance department and the municipal social security department, and in accordance with the enforcement situation of the budgets of that year, and the forecasting of Funds revenue and expenditure of the next year, draw up the drafts of Funds budgets of the next year at the end of each year.
Article 10
The annual Funds budgets drawn up by the municipal handling organs shall be first examined and verified by the municipal social security department, and after summing up, be reported to the municipal finance department for examination and verification, and then be reported to the Municipal People’s Government for approval after the consent of the municipal finance department. The municipal finance department shall, after the approval of the Municipal People’s Government, timely notify the municipal social security department to carry out, and report to the Ministry of Finance, and the Ministry of Labor and Social Security for the record.
The municipal social security department shall timely notify the municipal handling organs in written the approved annual Funds budgets.
Article 11
The municipal handling organs shall carry out strictly in accordance with the approved annual Funds budgets, conscientiously analyze the revenue and expenditure situation of the Funds, and regularly report to the municipal finance department and municipal social security department the performance situation of the budgets.
The municipal finance department and municipal social security department shall regularly report to the Ministry of Finance and the Ministry of Labor and Social Security respectively, in accordance with the requirements, the enforcement situation of the budgets, and enhance the supervision and control over the operation of the Funds, and make proper corrections in case of finding problems.
Article 12
Where the annual Funds budgets need to be adjusted in special circumstances, the municipal handling organs shall draw up the adjustment scheme, the municipal social security department shall examine and verify the scheme and report to the municipal finance department for examination and verification, and then the scheme shall be reported to the Municipal People’s Government for approval after the consent of the municipal finance department. After the approval of the Municipal People’s Government, the municipal finance department shall timely notify the municipal social security department to carry out the scheme, and report to the Ministry of Finance and the Ministry of Labor and Social Security for the record in accordance with the requirements.
The municipal social security department shall timely notify the municipal handling organs in written the approved adjustment scheme.

Chapter III  Funds Collection

Article 13
The Funds shall be collected within prescribed time limit and in full amount in accordance with relevant provisions on levying of the State and this Municipality, and no departments, Units and individual persons can hold back or reduce and exempt.
Article 14
The income of the Funds includes the income of the social insurance premium, the income of interests, the income of financial subsidies, the income of transfer, and other incomes.
1. The income of social insurance premium refers to the basic endowment insurance premiums, the unemployment insurance premiums, the basic medical insurance premiums, the industrial injury insurance premiums, the child-bearing insurance premiums, comprehensive insurance premiums and other incomes paid by the paying Units and the paying individual persons at a certain rate of the paying base.
2. The income of interests refers to the interests obtained by using the social insurance funds to purchase the national bonds or deposit in the banks and other incomes.
3. The income of financial subsidies refers to the subsidies given to the Funds by the finance department at the same level.
4. The income of transfer refers to the incomes transferred to the Funds owing to the social insurance objects’ act of trans-regional moving.
5. Other incomes refer to overdue fines and other incomes examined and approved by the municipal finance department.
The above-mentioned Funds income items shall go to the BEIF, the unemployment insurance fund, the BMIF, the industrial injury insurance fund, the child-bearing insurance fund, the SCIF, and the CIF, etc. respectively in accordance with the provisions.
Article 15
The income of the BMIF shall be respectively allocated to the basic medical insurance overall planned fund, the local additional medical insurance fund, and the medical insurance personal account fund in accordance with the provisions.
1. The income of the basic medical insurance overall planned fund includes the income of basic medical insurance premiums, which is paid by the paying units and shall be allocated to overall planned accounts in accordance with the provisions, the income of interests of the overall planned account fund, the income of financial subsidies and other incomes.
2. The local additional medical insurance fund includes the incomes of local additional medical insurance premiums paid by the paying units in accordance with the provisions, and the income of interests, the income of financial subsidies and other incomes.
3. The income of the medical insurance personal account fund includes the income of basic medical insurance premiums, which is paid by the paying units and shall be allocated to personal account in accordance with the provisions, the income of the basic medical insurance premiums paid by paying individual persons, the income of interests of the personal account, and the income of transfer, etc..
Article 16
The handling organs shall set up social insurance funds income accounts (hereinafter referred to as the income accounts) at the state-owned or state-holding banks identified by the municipal bidding commission, and determined by the public bidding.
The major functions of the income accounts are: to temporarily deposit the income of social insurance premiums levied by the handling organs; to temporarily deposit the Funds income turned over by the handling organs of lower level; to temporarily deposit the income of interests of this account and other incomes. The income accounts of the municipal handling organs shall be solely used to transfer the Funds to the special account and shall not involve in any other payment businesses.
Article 17
The handling organs shall regularly transfer the Funds collected and the incomes of interests to the special account. The municipal finance department shall entrust the bank of deposit to transfer the Funds incomes to the special account in case the handling organs fail to perform in accordance with the provisions.
The receipt note or transfer certificate (one form and several copies) printed and issued by the bank shall be filled in at the time of depositing, and the income items and specific amount shall also be filled in. The municipal finance department and the handling organs shall charge to the account against such certificates.

Chapter IV  Funds Payment

Article 18
The Funds shall be paid in accordance with the planned scope of social insurance, and in accordance with the items and standards provided by the State and this Municipality, and no departments, units and individual persons can add outgo or raise the payment standards for any excuses.
Article 19
The expenditures of the Funds include the social insurance treatment expenditure, the transfer expenditure, the subsidizing-the-subordinates expenditure, the turning-over to superior expenditure, and other expenditures.
1. The social insurance treatment expenditure refers to the basic endowment insurance treatment expenditure, the unemployment insurance treatment expenditure, the basic medical insurance treatment expenditure, the industrial injury insurance treatment expenditure, the child-bearing insurance treatment expenditure, the small city/town insurance treatment expenditure, and the comprehensive insurance treatment expenditure, etc. paid to the social insurance objects in accordance with the provisions.
2. The transfer expenditure refers to the outward transfer of the Funds expenditure owing to the social insurance objects’ trans-regional moving.
3. The subsidizing-the-subordinates expenditure refers to the Funds expenditure allocated to the handling organs of lower level by the handling organs at higher level.
4. The turning-over to superior expenditure refers to the Funds expenditure turned over to the handling organs at higher level by the handling organs of lower level.
5. Other expenditures refer to other expenditures with the nature of non-social insurance treatment that are examined and approved by the municipal finance department.
The above-mentioned Funds expenditure items shall respectively form the BEIF expenditure, the unemployment insurance fund expenditure, the BMIF expenditure, the industrial injury insurance fund expenditure, the child-bearing insurance fund expenditure, the SCIF expenditure, the CIF expenditure, etc. in accordance with the provisions.
Article 20
The subsidizing-the-subordinates expenditure, the turning-over to superior expenditure, and other expenditures of the BMIF shall be listed and drawn from the overall planned accounts
Article 21
The expenditure of the basic endowment insurance treatment includes the basic pensions, the medical subsidies, the funeral and comfort subsidies, the personal deposits refunded, and other expenditures.
1. The basic pensions refer to the basic living expenses and various kinds of subsidies paid to the persons retired or retired with merits.
2. The medical subsidies refer to the medical expenses paid to the persons retired or retired with merits that have been brought into the expenditure scope of the BEIF but not with implementation of the medical insurance procedures in accordance with the provisions.
3. The funeral and comfort subsidies refer to the funeral subsidies for the retiree and the comfort subsidies and living subsidies for lineal relatives owing to the death of the persons retired or retired with merits that have brought into the expenditure scope of the BEIF.
4. The personal deposits refunded refer to the deposits of personal account returned to the employees owing to his/her settlement out of the mainland or in foreign countries, or dead before reaching the retiring age, or not in compliance with retirement conditions although reaching the retiring age.
Article 22
The expenditure items of the unemployment insurance treatment includes the unemployment insurance payment, the medical subsidies, the funeral and comfort subsidies, the unemployment subsidies and other expenditures.
1. The unemployment insurance payment refers to the basic living expenditure in the unemployment period paid to the unemployed personnel.
2. The medical subsidies refer to the medical expenditure paid to the unemployed personnel in the period of his/her receiving unemployment insurance payment in accordance with the provisions.
3. The funeral and comfort subsidies refer to the funeral subsidies for the unemployed person and the comfort subsidies for his/her spouse and lineal relatives owing to the death of the unemployed persons in the period of his/her receiving unemployment insurance payment in accordance with the provisions.
4. The unemployment subsidies refer to the subsidies paid to the unemployed personnel that are not qualified for getting unemployment insurance payment in accordance with the provisions.
5. Other expenditures include the lump-sum living subsidy for contracted peasants as workers and other expenditures provided by the State. The lump-sum living subsidy for contracted peasants as workers refers to the living subsidies paid in a lump-sum to the contracted peasants as workers that will not renew the contract after the expiration or terminate the labor contract in advance.
The unemployment insurance fund can be used not only for dispensing the unemployment insurance treatment in full amount, but the balance of which may also be used for professional training, public practices, job introduction, post allowances, guarantee or discount on loans for starting businesses, and other employment promotion projects, and may be used for other employment promotion projects upon the approval of the Municipal People’s Government and reporting to the State Council for the record.
Article 23
The expenditure items of the basic medical insurance treatment shall respectively form the social overall planned medical insurance treatment expenditure, the local additional medical insurance treatment expenditure, and the personal account medical insurance treatment expenditure in accordance with the provisions.
1. The social overall planned medical insurance treatment expenditure refers to the medical expenses paid within the payment scope of the basic medical insurance overall planned funds in accordance with the provisions of the medical insurance procedures of this Municipality.
2. The local additional medical insurance treatment expenditure refers to the medical expenses paid for clinic treatments within the payment scope of the local additional funds in accordance with the provisions of the medical insurance procedures of this Municipality.
3. The personal account medical insurance treatment expenditure refers to the medical expenses paid from the medical insurance personal account funds in accordance with the provisions of the medical insurance procedures of this Municipality.
The basic medical insurance overall planned funds, the local additional medical insurance funds, and the medical insurance personal account funds shall have their respective payment scope, and shall not be misappropriated for each other.
Article 24
The industrial injury treatment expenditure includes the expenditure for cripple owing to work and the expenditure for death owing to work.
The expenditure for cripple owing to work refers to the medical expenses, the lump-sum subsidy for cripple, the grade one to grade four allowance for cripple, the living nursing expenses, the supporting instruments expenses, and the working capability appraisal charges.
The expenditure for death owing to work refers to the medical expenses, the lump-sum subsidy for death owing to industrial injury, the comfort subsidy to provide for relatives, subsidy for funeral, and the working capability appraisal charges.
Article 25
The child-bearing insurance treatment expenditure includes the child-bearing living allowances, and the subsidy for child-bearing medical expenses.
Article 26
The small city/town insurance treatment expenditure includes the treatment expenditure of endowment, medical treatment, and unemployment, etc.
1. The endowment treatment expenditure refers to the pensions drawn in accordance with the provisions, and the subsidy for funeral, the relief payment to provide for lineal relatives, and the comfort subsidy etc. applied and drawn by the relatives in accordance with the provisions.
2. The medical treatment expenditure refers to the medical insurance treatment enjoyed when hospitalization or heavy diseases’ clinic treatment occurred in accordance with the provisions.
3. The unemployment treatment expenditure refers to the unemployment insurance payment, the unemployment subsidy, the medical subsidy drawn in accordance with the provisions, and the subsidy for funeral, and the lump-sum comfort subsidy to provide for lineal relatives applied and drawn by the relatives in accordance with the provisions.
Article 27
The comprehensive insurance treatment expenditure includes the treatment expenditure of industrial injury, medical treatment, and subsidy for aged people, etc.
1. The industrial injury treatment expenditure refers to the expenses paid, by taking the industrial injury treatment standards of this Municipality as the reference, to the non-local employees who have met the industrial injury accidents (or fortuitous injury), or suffer from professional diseases in the period of participating in the insurance and through the appraisal.
2. The medical treatment expenditure refers to the medical expenses incurred from the hospitalization of non-local employees owing to disease or injury not due to the work in the period of participating in the insurance, and the subsidies for daily medical expenses paid in accordance with the provisions.
3. The aged-people subsidy treatment expenditure refers to the aged people subsidy expenses paid to non-local employees provided they had participated in the insurance and paid the premium for not less than one year.
Article 28
The handling organs shall, in accordance with the needs of the work, set up social insurance funds expenditure accounts (hereinafter referred to as the expenditure accounts) respectively according to the insurance type and the payment level in the state-owned or state-holding banks jointly identified by the municipal finance department and the municipal social security department.
The major functions of the expenditure accounts are: to accept the funds transferred from the municipal special account, temporarily deposit the social insurance payment and the income of interests of that account, effect the payment of various kinds of social insurance treatments, transfer the income of interests of the funds of this account to the special account, and turn over to the superior handling organs or allocate to inferior handling organs the Funds. The expenditure accounts shall be solely used to accept the Funds transferred from the special account and the income of interests of that account, and shall not involve in any other income businesses.
Article 29
The municipal handling organ shall, in accordance with the approved annual budgets of the Funds, fill in the application form of using Funds unifiedly printed by the municipal finance department month by month, marking out the expenditure items, sealed with the special stamp of money-using of the unit, and report to the municipal finance department, and send copies to the municipal social security department within the prescribed time limit. The municipal finance department is entitled to order the municipal handling organs to make corrections on the certificates and money-using procedures that are not in compliance with the provisions. The municipal finance department shall transfer the funds to the expenditure accounts of the handling organs within prescribed time limit after the examination and approval of the application for using the Funds.

Chapter V  Funds Balance

Article 30
The Funds balance refers to the final balance after the offset of the income and expenditure of the Funds. The balance of the BEIF includes the balance of the overall planned funds and the balance of the personal account funds, the balance of the BMIF includes the balance of overall planned funds, the balance of local additional funds, and the balance of personal account funds.
Article 31
The Funds balance shall be used to purchase the State bonds or transfer to fixed deposits, except for the payment left in advance that has been negotiated and determined by the municipal finance department and the municipal social security department, with the maximum not exceeding the provided amount. All departments, units and individual persons shall not use the Funds balance to carry out direct or indirect investments in any form.
Article 32
Where the Funds’ income falling short of expenditure that year, the case shall be settled in the following order:
1. To use the deposits of accumulated balance over the years;
2. Where the deposits can not guarantee the demands of payment, the State bonds purchased with the Funds can be transferred or realized in advance, and the case shall be handled in accordance with the detailed provisions of the Ministry of Finance;
3. Where the transfer or realization of State bonds can not guarantee the demands of payment, the municipal finance department shall provide certain supports;
4. While providing financial supports, the rate of payment shall be adjusted in accordance with the needs after the approval of the State Council in accordance with relevant provisions. Where the State have no unified rate of payment, the municipal social security department may put forward the suggestions, and upon the examination and verification of the municipal finance department, and the approval of the Municipal People’s Government, the corresponding rate of payment may be adjusted within the scope provided by the State.

Chapter VI  Special Account

Article 33
The special account mentioned in these Procedures refers to the special interest-counting account of social insurance funds set up by the municipal finance department in accordance with relevant provisions of the State council, and at the state-owned or state-holding banks identified by the municipal bidding commission and determined through bidding.
The municipal special account, income account and expenditure account can only be set up at the state-owned or state-holding banks.
Article 34
The major functions of the municipal special account are: to accept the income of social insurance premiums imposed and transferred by the municipal handling organs, accept the temporarily deposited income of interests and other incomes of the income account, accept the income of principals and interests from the cash of State bonds purchased with the Funds, the income of interests incurred from the funds of that account, and the income of interests transferred from the expenditure account, etc., and accept the income of subsidies from municipal finance, etc., and to transfer Funds to the expenditure account to purchase State bonds in accordance with the money-using plan of the municipal handling organs.
Article 35
The income of interests incurred from the municipal special account shall be directly counted in the municipal special account. The income of interests incurred from the expenditure account of the municipal handling organs shall be timely transferred to the municipal special account.
The municipal finance department shall charge to the account against original certificates issued by the banks, and at the same time, issue the payment and allocation certificates of special account, and, attached by the copies of original certificates sealed by special stamps, to be handed over to the municipal handling organs for account-charging and for future reference.
Article 36
The income of financial subsidies shall be directly transferred from the national treasury to special account.
The municipal finance department shall charge to the account against the money-transferring document issued by the national treasury, and at the same time, issue the payment and allocation certificates of special account, and, attached by the copies of original certificates sealed by special stamps, hand them over to the municipal handling organs for account-charging and for future reference.
Article 37
For the funds used for promoting employment regulated from the unemployment insurance funds, the municipal social security department shall put forward the money-using plan, and after the examination and verification of the municipal finance department, timely fill in the payment and allocation certificates of special account, and directly transfer the funds from the unemployment insurance funds of the special account to the special fund account of promoting employment. The municipal finance department and the handling organs shall charge to the account against the payment and allocation certificates of special account.
Article 38
The municipal finance department shall, in accordance with the suggestions put forward by the municipal social security department, and on the basis of joint consultation, timely purchase the State bonds with the Funds or transfer the Funds to fixed deposits in accordance with the provisions.
The municipal finance department shall charge to the account against the original certificates issued by the banks, and at the same time, issue the payment and allocation certificates of special account, and, attached by the copies of original certificates sealed by special stamps, hand over to the handling organs for account-charging and for future reference.

Chapter VII  Assets and Liabilities

Article 39
The assets include the cash, bank deposits (including the deposits in income account, the deposits in special account, and the deposits in expenditure account), bonds investment, and the funds temporarily paid, formed in the process of Funds operation.
The handling organs shall be responsible for the storage, transportation escort, and administration of cash, and the setting-up and perfect of inner controlling system. The collection, payment and administration on cash shall strictly follow the “Interim Regulations on the Administration on Cash” promulgated by the State Council.
The handling organs at all levels shall timely handle the deposit formalities of the Funds, and check the account with the bank month by month. The municipal handling organs and the municipal finance department shall regularly and mutually check the accounts to guarantee the compliance between accounts and between the accounts and the money.
The State bonds purchased with the Funds shall be taken as the currency, and shall be managed by the bank of deposit entrusted by the municipal finance department consulting with the municipal social security department to guarantee the compliance between the accounts and the actual situation.
The funds temporarily paid shall be regularly checked up and drawn back in time.
Article 40
The liabilities refer to various kinds of borrow-in money and temporarily collected money formed in the process of Funds operation. The borrow-in money and temporarily collected money shall be regularly checked up, and reimbursed in time. Where reimbursement can not be effected owing to creditors or other special reasons, the municipal handling organs shall investigate the reasons and put forward the applications, upon the approval of the municipal finance department, to transfer the money into other incomes of relevant funds.

Chapter VIII  Funds Assets in Kind

Article 41
The Funds assets in kind refers to the assets in kind that provided by the units having operational difficulties with disposal rights registered and filed for the record, and, upon the approval of the municipal social security department, delaying in paying the social insurance premiums, but still failing to pay the social insurance premiums in full amount in accordance with the paying plan within the period of deferred payment, mandatorily enforced by people’s court upon the application of the municipal social security department in accordance with laws, and decided by the people’s court to put under the administration of the social insurance handling organs, and on the basis of the “Provisions of Shanghai Municipality on the Levying of City/Town Employees’ Social Insurance Premiums” examined and adopted by the Municipal People’s Congress, and the “Implementation Procedures of Shanghai Municipality on the Levying of Social Insurance Premiums” promulgated by the Municipal People’s Government in 2002 (Decree No.117).
Article 42
The municipal social insurance handling organs shall separately set up accounts for the assets in kind, and count at the price decided by the people’s court. The formed assets in kind shall be properly realized, and the net income obtained from the realization shall be totally counted in the income of social insurance premiums of that period.

Chapter IX  Funds Final Accounts

Article 43
The municipal handling organs shall, in accordance with the forms, time limit and requirements provided by the municipal finance department, draw up the annual Funds financial report at the end of each year. The financial report includes the statement of assets and liabilities, balance sheet, relevant attached lists and the description on financial situation.
The description on financial situation mainly state and analyze the Funds’ financial incomes and expenditures, the administration situation, the matters having great influence on financial situation in this period or next period, and other matters that need to be explained. The handling organs may, in accordance with the requirements of the work, raise the relevant financial analysis indexes including the Funds’ balance rate of that year, the actual paying rate of social insurance premiums, etc.
The drawing-up of the annual Funds financial report must meet the requirements of “real numbers, accurate calculations, perfect formalities, complete contents, and timely reporting”.
Article 44
The annual Funds financial report drawn up by the municipal handling organs shall be submitted to the municipal finance department for examination and verification after the examination, verification, and summing up by the municipal social security department within the prescribed time limit, and be submitted to the Municipal People’s Government for approval after the approval of the municipal finance department. The approved annual Funds financial report shall be taken as the final accounts of the Funds.
Article 45
The municipal finance department and the municipal social security department shall report the Funds final accounts approved by the Municipal People’s Government to the Ministry of Finance, and the Ministry of Labor and Social Security respectively.

Chapter X  Supervision and Inspection

Article 46
The handling organs shall set up and perfect inner-administration system, regularly or irregularly announce to the public the situation of Funds’ income, expenditure, and balance, and accept the public supervision on the Funds administration.
Article 47
The municipal social security, finance and auditing departments shall regularly or irregularly carry out supervision and inspection on the situation of Funds’ income, expenditure, and balance of the income account, expenditure account and special account, make corrections in case of finding problems, and report to the Municipal People’s Government and the Municipal Social Security Fund Supervisions Commission.
Article 48
Where the paying units fail to pay the social insurance premiums in accordance with the provisions, the social security department shall order the units to pay within prescribed time limit; in case of units’ failure to pay before the deadline, the amount owed shall be paid and an overdue fine equal to 2‰ of the amount owed per day shall be also paid from the date of owing the payment.
Article 49
The following acts are illegal acts or acts violating the disciplines:
1. To retain, get possession of, misappropriate, embezzle the Funds;
2. To arbitrarily increase and raise, or reduce and exempt the social insurance premiums;
3. To fail to effect relevant payment of social insurance treatment in time, or in accordance with the provided standards;
4. To fail to deposit the Funds income to special account;
5. To fail to allocate the Funds from special account to the expenditure account in time, or in full amount;
6. Other acts of violating the provisions of the State laws and regulations.
Article 50
Where the acts listed in Article 49 existed, the situation shall be identified, corrections within prescribed time limit shall be ordered to make, and the financial handlings shall be carried out:
1. The Funds shall be recovered immediately;
2. The Funds that are over-collected shall be returned, and the Funds that are reduced and exempted shall be made up immediately;
3. Relevant payment of social insurance treatment shall be paid retroactively or recovered in full amount immediately;
4. The payment to special account shall be effected immediately;
5. The Funds from special account shall be allocated to the expenditure account in full amount immediately;
6. Other handling measures provided by the State laws, regulations and the Ministry of Finance.
Article 51
The punishment on the directly responsible person (s) among persons-in-charge and the units that having illegal acts or acts violating the disciplines listed in Article 49 shall be carried out in accordance with the “Administrative Punishment Law of the People’s Republic of China”, the “Regulations on Punishment and Penalty on Illegal Acts in Finance”, and the “Interim Regulations on the Levying of Social Insurance Premiums”. Where the act constitutes a crime, the wrongdoer(s) shall be prosecuted for criminal liabilities in accordance with laws.
The fines imposed on the units, persons-in-charge, and the directly responsible persons shall be timely turned over to the national treasury.

Chapter XI  Supplementary Provisions

Article 52
The municipal social security department mentioned in these Procedures refers to the Municipal Labor and Social Security Bureau and the Municipal Medical Insurance Bureau.
Article 53
The special documents of social insurance funds in this Municipality shall be unifiedly printed by the municipal finance department.
Article 54
The municipal finance department shall, jointly with the municipal social security department, formulate the implementation rules in accordance with these Procedures, and report to the Ministry of Finance and the Ministry of Labor and Social Security respectively for the record.
Article 55
The administration on rural endowment insurance fund, and the fund used for guaranteeing the employment of the handicapped, etc. of this Municipality shall be carried out by reference to these Procedures.
Article 56
The Municipal Finance Bureau shall, jointly with the Municipal Labor and Social Security Bureau and the Municipal Medical Insurance Bureau, interpret and revise these Procedures.
Article 57
These Procedures shall become effective as of January 1, 2007, and where the provisions are not in conformity with these Procedures, these Procedures shall prevail.

Shanghai Municipal Finance Bureau
Shanghai Municipal Labor and Social Security Bureau
Shanghai Municipal Medical Insurance Bureau
October 30, 2006

Notice of the General Office of Shanghai Municipal People’s Government on Transmitting the “Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds” Formulated by Three Departments Including the Municipal Finance Bureau (October 31, 2006) SMPG GO G [2006] No. 34 Attention: all District and County People’s Governments, and all relevant Commissions, Offices and Bureaus (Administrations) of the Municipal People’s Government: The “Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds” made by the Municipal Finance Bureau, the Municipal Labor and Social Security Bureau, the Municipal Medical Insurance Bureau have been approved by the 124th routine meeting of the Municipal People’s Government. We hereby transmit them to you and request you to implement them conscientiously. Procedures of Shanghai Municipality on Financial Control over Social Insurance Funds Chapter I General Provisions Article 1 With a view to normalizing the financial acts of handling the social insurance funds by the social insurance handling organs, enhancing the administration on social insurance funds, and safeguarding the legitimate rights and interests of the insurance objects, these Procedures are formulated on the basis of relevant laws, regulations, and the “Notice on Printing and Distributing ‘Financial System of Social Insurance Funds’ Made by the Ministry of Finance, and the Ministry of Labor and Social Security” (FSC Z[1999] No.60), and in the light of the actual circumstances of this Municipality. Article 2 These Procedures apply to the social insurance funds handled by the social insurance handling organs at all levels of this Municipality (hereinafter referred to as the handling organs) including the city/town employees’ basic endowment insurance funds (hereinafter referred to as the BEIF), unemployment insurance funds, city/town employees’ basic medical insurance funds (hereinafter referred to as the BMIF), industrial injury insurance, child-bearing insurance, small city/town basic social insurance funds (hereinafter referred to as the SCIF), non-local employees’ comprehensive insurance funds (hereinafter referred to as the CIF), etc.. Article 3 The social insurance funds (hereinafter referred to as the Funds) mentioned in these Procedures refers to the special funds paid by the paying units or individual persons at a certain ratio of the paying base or collected through other legal channels in accordance with relevant laws and regulations of the State and relevant provisions of this Municipality, and used to safeguard the social insurance treatments of the social insurance objects. Article 4 The tasks of the Funds financial administration are: to conscientiously carry out relevant laws, regulations, general and specific policies of the State, and collect and use Funds in accordance with laws; to set up and perfect financial administration system, do well the work of plan, control, account, analysis and examination of the Funds, and accurately reflect the revenue and expenditure situation; to strictly follow the financial and economic disciplines, enhance the supervision and inspection to ensure the safety of the Funds. Article 5 In view of guaranteeing the collection and payment of the Funds in time and in full amount, the handling organs shall, in accordance with the requirements of the work, be entitled to require the paying units to accurately provide the employing situation, pay sheet, financial statement and other original materials and data related to the social insurance in accordance with the provisions. Article 6 The Funds shall be brought into separate Funds financial special account (hereinafter referred to as the special account), and managed in two separate lines of revenues and spending, and used for specific purposes under specific items, and all departments, units and individual persons shall not get possession of or misappropriate the Funds, and shall not use the Funds to balance the financial budgets. Article 7 The Funds shall be managed in a unified way in accordance with the State requirements, deposited to their own accounts separately in accordance with the insurance type, audited and settled separately, spent for specific purposes, and self-balanced, and shall not be appropriated or interchanged for other items. Chapter II Funds Budgets Article 8 The Funds budgets refer to the annual Funds financial revenue and expenditure plan examined and approved by the handling organs in accordance with the implementation plan and assignment schedule of the social insurance system, and in accordance with the provided procedures. Article 9 The municipal handling organs shall, in accordance with the forms, time limit, and drawing-up requirements provided by the municipal finance department and the municipal social security department, and in accordance with the enforcement situation of the budgets of that year, and the forecasting of Funds revenue and expenditure of the next year, draw up the drafts of Funds budgets of the next year at the end of each year. Article 10 The annual Funds budgets drawn up by the municipal handling organs shall be first examined and verified by the municipal social security department, and after summing up, be reported to the municipal finance department for examination and verification, and then be reported to the Municipal People’s Government for approval after the consent of the municipal finance department. The municipal finance department shall, after the approval of the Municipal People’s Government, timely notify the municipal social security department to carry out, and report to the Ministry of Finance, and the Ministry of Labor and Social Security for the record. The municipal social security department shall timely notify the municipal handling organs in written the approved annual Funds budgets. Article 11 The municipal handling organs shall carry out strictly in accordance with the approved annual Funds budgets, conscientiously analyze the revenue and expenditure situation of the Funds, and regularly report to the municipal finance department and municipal social security department the performance situation of the budgets. The municipal finance department and municipal social security department shall regularly report to the Ministry of Finance and the Ministry of Labor and Social Security respectively, in accordance with the requirements, the enforcement situation of the budgets, and enhance the supervision and control over the operation of the Funds, and make proper corrections in case of finding problems. Article 12 Where the annual Funds budgets need to be adjusted in special circumstances, the municipal handling organs shall draw up the adjustment scheme, the municipal social security department shall examine and verify the scheme and report to the municipal finance department for examination and verification, and then the scheme shall be reported to the Municipal People’s Government for approval after the consent of the municipal finance department. After the approval of the Municipal People’s Government, the municipal finance department shall timely notify the municipal social security department to carry out the scheme, and report to the Ministry of Finance and the Ministry of Labor and Social Security for the record in accordance with the requirements. The municipal social security department shall timely notify the municipal handling organs in written the approved adjustment scheme. Chapter III Funds Collection Article 13 The Funds shall be collected within prescribed time limit and in full amount in accordance with relevant provisions on levying of the State and this Municipality, and no departments, Units and individual persons can hold back or reduce and exempt. Article 14 The income of the Funds includes the income of the social insurance premium, the income of interests, the income of financial subsidies, the income of transfer, and other incomes. 1. The income of social insurance premium refers to the basic endowment insurance premiums, the unemployment insurance premiums, the basic medical insurance premiums, the industrial injury insurance premiums, the child-bearing insurance premiums, comprehensive insurance premiums and other incomes paid by the paying Units and the paying individual persons at a certain rate of the paying base. 2. The income of interests refers to the interests obtained by using the social insurance funds to purchase the national bonds or deposit in the banks and other incomes. 3. The income of financial subsidies refers to the subsidies given to the Funds by the finance department at the same level. 4. The income of transfer refers to the incomes transferred to the Funds owing to the social insurance objects’ act of trans-regional moving. 5. Other incomes refer to overdue fines and other incomes examined and approved by the municipal finance department. The above-mentioned Funds income items shall go to the BEIF, the unemployment insurance fund, the BMIF, the industrial injury insurance fund, the child-bearing insurance fund, the SCIF, and the CIF, etc. respectively in accordance with the provisions. Article 15 The income of the BMIF shall be respectively allocated to the basic medical insurance overall planned fund, the local additional medical insurance fund, and the medical insurance personal account fund in accordance with the provisions. 1. The income of the basic medical insurance overall planned fund includes the income of basic medical insurance premiums, which is paid by the paying units and shall be allocated to overall planned accounts in accordance with the provisions, the income of interests of the overall planned account fund, the income of financial subsidies and other incomes. 2. The local additional medical insurance fund includes the incomes of local additional medical insurance premiums paid by the paying units in accordance with the provisions, and the income of interests, the income of financial subsidies and other incomes. 3. The income of the medical insurance personal account fund includes the income of basic medical insurance premiums, which is paid by the paying units and shall be allocated to personal account in accordance with the provisions, the income of the basic medical insurance premiums paid by paying individual persons, the income of interests of the personal account, and the income of transfer, etc.. Article 16 The handling organs shall set up social insurance funds income accounts (hereinafter referred to as the income accounts) at the state-owned or state-holding banks identified by the municipal bidding commission, and determined by the public bidding. The major functions of the income accounts are: to temporarily deposit the income of social insurance premiums levied by the handling organs; to temporarily deposit the Funds income turned over by the handling organs of lower level; to temporarily deposit the income of interests of this account and other incomes. The income accounts of the municipal handling organs shall be solely used to transfer the Funds to the special account and shall not involve in any other payment businesses. Article 17 The handling organs shall regularly transfer the Funds collected and the incomes of interests to the special account. The municipal finance department shall entrust the bank of deposit to transfer the Funds incomes to the special account in case the handling organs fail to perform in accordance with the provisions. The receipt note or transfer certificate (one form and several copies) printed and issued by the bank shall be filled in at the time of depositing, and the income items and specific amount shall also be filled in. The municipal finance department and the handling organs shall charge to the account against such certificates. Chapter IV Funds Payment Article 18 The Funds shall be paid in accordance with the planned scope of social insurance, and in accordance with the items and standards provided by the State and this Municipality, and no departments, units and individual persons can add outgo or raise the payment standards for any excuses. Article 19 The expenditures of the Funds include the social insurance treatment expenditure, the transfer expenditure, the subsidizing-the-subordinates expenditure, the turning-over to superior expenditure, and other expenditures. 1. The social insurance treatment expenditure refers to the basic endowment insurance treatment expenditure, the unemployment insurance treatment expenditure, the basic medical insurance treatment expenditure, the industrial injury insurance treatment expenditure, the child-bearing insurance treatment expenditure, the small city/town insurance treatment expenditure, and the comprehensive insurance treatment expenditure, etc. paid to the social insurance objects in accordance with the provisions. 2. The transfer expenditure refers to the outward transfer of the Funds expenditure owing to the social insurance objects’ trans-regional moving. 3. The subsidizing-the-subordinates expenditure refers to the Funds expenditure allocated to the handling organs of lower level by the handling organs at higher level. 4. The turning-over to superior expenditure refers to the Funds expenditure turned over to the handling organs at higher level by the handling organs of lower level. 5. Other expenditures refer to other expenditures with the nature of non-social insurance treatment that are examined and approved by the municipal finance department. The above-mentioned Funds expenditure items shall respectively form the BEIF expenditure, the unemployment insurance fund expenditure, the BMIF expenditure, the industrial injury insurance fund expenditure, the child-bearing insurance fund expenditure, the SCIF expenditure, the CIF expenditure, etc. in accordance with the provisions. Article 20 The subsidizing-the-subordinates expenditure, the turning-over to superior expenditure, and other expenditures of the BMIF shall be listed and drawn from the overall planned accounts Article 21 The expenditure of the basic endowment insurance treatment includes the basic pensions, the medical subsidies, the funeral and comfort subsidies, the personal deposits refunded, and other expenditures. 1. The basic pensions refer to the basic living expenses and various kinds of subsidies paid to the persons retired or retired with merits. 2. The medical subsidies refer to the medical expenses paid to the persons retired or retired with merits that have been brought into the expenditure scope of the BEIF but not with implementation of the medical insurance procedures in accordance with the provisions. 3. The funeral and comfort subsidies refer to the funeral subsidies for the retiree and the comfort subsidies and living subsidies for lineal relatives owing to the death of the persons retired or retired with merits that have brought into the expenditure scope of the BEIF. 4. The personal deposits refunded refer to the deposits of personal account returned to the employees owing to his/her settlement out of the mainland or in foreign countries, or dead before reaching the retiring age, or not in compliance with retirement conditions although reaching the retiring age. Article 22 The expenditure items of the unemployment insurance treatment includes the unemployment insurance payment, the medical subsidies, the funeral and comfort subsidies, the unemployment subsidies and other expenditures. 1. The unemployment insurance payment refers to the basic living expenditure in the unemployment period paid to the unemployed personnel. 2. The medical subsidies refer to the medical expenditure paid to the unemployed personnel in the period of his/her receiving unemployment insurance payment in accordance with the provisions. 3. The funeral and comfort subsidies refer to the funeral subsidies for the unemployed person and the comfort subsidies for his/her spouse and lineal relatives owing to the death of the unemployed persons in the period of his/her receiving unemployment insurance payment in accordance with the provisions. 4. The unemployment subsidies refer to the subsidies paid to the unemployed personnel that are not qualified for getting unemployment insurance payment in accordance with the provisions. 5. Other expenditures include the lump-sum living subsidy for contracted peasants as workers and other expenditures provided by the State. The lump-sum living subsidy for contracted peasants as workers refers to the living subsidies paid in a lump-sum to the contracted peasants as workers that will not renew the contract after the expiration or terminate the labor contract in advance. The unemployment insurance fund can be used not only for dispensing the unemployment insurance treatment in full amount, but the balance of which may also be used for professional training, public practices, job introduction, post allowances, guarantee or discount on loans for starting businesses, and other employment promotion projects, and may be used for other employment promotion projects upon the approval of the Municipal People’s Government and reporting to the State Council for the record. Article 23 The expenditure items of the basic medical insurance treatment shall respectively form the social overall planned medical insurance treatment expenditure, the local additional medical insurance treatment expenditure, and the personal account medical insurance treatment expenditure in accordance with the provisions. 1. The social overall planned medical insurance treatment expenditure refers to the medical expenses paid within the payment scope of the basic medical insurance overall planned funds in accordance with the provisions of the medical insurance procedures of this Municipality. 2. The local additional medical insurance treatment expenditure refers to the medical expenses paid for clinic treatments within the payment scope of the local additional funds in accordance with the provisions of the medical insurance procedures of this Municipality. 3. The personal account medical insurance treatment expenditure refers to the medical expenses paid from the medical insurance personal account funds in accordance with the provisions of the medical insurance procedures of this Municipality. The basic medical insurance overall planned funds, the local additional medical insurance funds, and the medical insurance personal account funds shall have their respective payment scope, and shall not be misappropriated for each other. Article 24 The industrial injury treatment expenditure includes the expenditure for cripple owing to work and the expenditure for death owing to work. The expenditure for cripple owing to work refers to the medical expenses, the lump-sum subsidy for cripple, the grade one to grade four allowance for cripple, the living nursing expenses, the supporting instruments expenses, and the working capability appraisal charges. The expenditure for death owing to work refers to the medical expenses, the lump-sum subsidy for death owing to industrial injury, the comfort subsidy to provide for relatives, subsidy for funeral, and the working capability appraisal charges. Article 25 The child-bearing insurance treatment expenditure includes the child-bearing living allowances, and the subsidy for child-bearing medical expenses. Article 26 The small city/town insurance treatment expenditure includes the treatment expenditure of endowment, medical treatment, and unemployment, etc. 1. The endowment treatment expenditure refers to the pensions drawn in accordance with the provisions, and the subsidy for funeral, the relief payment to provide for lineal relatives, and the comfort subsidy etc. applied and drawn by the relatives in accordance with the provisions. 2. The medical treatment expenditure refers to the medical insurance treatment enjoyed when hospitalization or heavy diseases’ clinic treatment occurred in accordance with the provisions. 3. The unemployment treatment expenditure refers to the unemployment insurance payment, the unemployment subsidy, the medical subsidy drawn in accordance with the provisions, and the subsidy for funeral, and the lump-sum comfort subsidy to provide for lineal relatives applied and drawn by the relatives in accordance with the provisions. Article 27 The comprehensive insurance treatment expenditure includes the treatment expenditure of industrial injury, medical treatment, and subsidy for aged people, etc. 1. The industrial injury treatment expenditure refers to the expenses paid, by taking the industrial injury treatment standards of this Municipality as the reference, to the non-local employees who have met the industrial injury accidents (or fortuitous injury), or suffer from professional diseases in the period of participating in the insurance and through the appraisal. 2. The medical treatment expenditure refers to the medical expenses incurred from the hospitalization of non-local employees owing to disease or injury not due to the work in the period of participating in the insurance, and the subsidies for daily medical expenses paid in accordance with the provisions. 3. The aged-people subsidy treatment expenditure refers to the aged people subsidy expenses paid to non-local employees provided they had participated in the insurance and paid the premium for not less than one year. Article 28 The handling organs shall, in accordance with the needs of the work, set up social insurance funds expenditure accounts (hereinafter referred to as the expenditure accounts) respectively according to the insurance type and the payment level in the state-owned or state-holding banks jointly identified by the municipal finance department and the municipal social security department. The major functions of the expenditure accounts are: to accept the funds transferred from the municipal special account, temporarily deposit the social insurance payment and the income of interests of that account, effect the payment of various kinds of social insurance treatments, transfer the income of interests of the funds of this account to the special account, and turn over to the superior handling organs or allocate to inferior handling organs the Funds. The expenditure accounts shall be solely used to accept the Funds transferred from the special account and the income of interests of that account, and shall not involve in any other income businesses. Article 29 The municipal handling organ shall, in accordance with the approved annual budgets of the Funds, fill in the application form of using Funds unifiedly printed by the municipal finance department month by month, marking out the expenditure items, sealed with the special stamp of money-using of the unit, and report to the municipal finance department, and send copies to the municipal social security department within the prescribed time limit. The municipal finance department is entitled to order the municipal handling organs to make corrections on the certificates and money-using procedures that are not in compliance with the provisions. The municipal finance department shall transfer the funds to the expenditure accounts of the handling organs within prescribed time limit after the examination and approval of the application for using the Funds. Chapter V Funds Balance Article 30 The Funds balance refers to the final balance after the offset of the income and expenditure of the Funds. The balance of the BEIF includes the balance of the overall planned funds and the balance of the personal account funds, the balance of the BMIF includes the balance of overall planned funds, the balance of local additional funds, and the balance of personal account funds. Article 31 The Funds balance shall be used to purchase the State bonds or transfer to fixed deposits, except for the payment left in advance that has been negotiated and determined by the municipal finance department and the municipal social security department, with the maximum not exceeding the provided amount. All departments, units and individual persons shall not use the Funds balance to carry out direct or indirect investments in any form. Article 32 Where the Funds’ income falling short of expenditure that year, the case shall be settled in the following order: 1. To use the deposits of accumulated balance over the years; 2. Where the deposits can not guarantee the demands of payment, the State bonds purchased with the Funds can be transferred or realized in advance, and the case shall be handled in accordance with the detailed provisions of the Ministry of Finance; 3. Where the transfer or realization of State bonds can not guarantee the demands of payment, the municipal finance department shall provide certain supports; 4. While providing financial supports, the rate of payment shall be adjusted in accordance with the needs after the approval of the State Council in accordance with relevant provisions. Where the State have no unified rate of payment, the municipal social security department may put forward the suggestions, and upon the examination and verification of the municipal finance department, and the approval of the Municipal People’s Government, the corresponding rate of payment may be adjusted within the scope provided by the State. Chapter VI Special Account Article 33 The special account mentioned in these Procedures refers to the special interest-counting account of social insurance funds set up by the municipal finance department in accordance with relevant provisions of the State council, and at the state-owned or state-holding banks identified by the municipal bidding commission and determined through bidding. The municipal special account, income account and expenditure account can only be set up at the state-owned or state-holding banks. Article 34 The major functions of the municipal special account are: to accept the income of social insurance premiums imposed and transferred by the municipal handling organs, accept the temporarily deposited income of interests and other incomes of the income account, accept the income of principals and interests from the cash of State bonds purchased with the Funds, the income of interests incurred from the funds of that account, and the income of interests transferred from the expenditure account, etc., and accept the income of subsidies from municipal finance, etc., and to transfer Funds to the expenditure account to purchase State bonds in accordance with the money-using plan of the municipal handling organs. Article 35 The income of interests incurred from the municipal special account shall be directly counted in the municipal special account. The income of interests incurred from the expenditure account of the municipal handling organs shall be timely transferred to the municipal special account. The municipal finance department shall charge to the account against original certificates issued by the banks, and at the same time, issue the payment and allocation certificates of special account, and, attached by the copies of original certificates sealed by special stamps, to be handed over to the municipal handling organs for account-charging and for future reference. Article 36 The income of financial subsidies shall be directly transferred from the national treasury to special account. The municipal finance department shall charge to the account against the money-transferring document issued by the national treasury, and at the same time, issue the payment and allocation certificates of special account, and, attached by the copies of original certificates sealed by special stamps, hand them over to the municipal handling organs for account-charging and for future reference. Article 37 For the funds used for promoting employment regulated from the unemployment insurance funds, the municipal social security department shall put forward the money-using plan, and after the examination and verification of the municipal finance department, timely fill in the payment and allocation certificates of special account, and directly transfer the funds from the unemployment insurance funds of the special account to the special fund account of promoting employment. The municipal finance department and the handling organs shall charge to the account against the payment and allocation certificates of special account. Article 38 The municipal finance department shall, in accordance with the suggestions put forward by the municipal social security department, and on the basis of joint consultation, timely purchase the State bonds with the Funds or transfer the Funds to fixed deposits in accordance with the provisions. The municipal finance department shall charge to the account against the original certificates issued by the banks, and at the same time, issue the payment and allocation certificates of special account, and, attached by the copies of original certificates sealed by special stamps, hand over to the handling organs for account-charging and for future reference. Chapter VII Assets and Liabilities Article 39 The assets include the cash, bank deposits (including the deposits in income account, the deposits in special account, and the deposits in expenditure account), bonds investment, and the funds temporarily paid, formed in the process of Funds operation. The handling organs shall be responsible for the storage, transportation escort, and administration of cash, and the setting-up and perfect of inner controlling system. The collection, payment and administration on cash shall strictly follow the “Interim Regulations on the Administration on Cash” promulgated by the State Council. The handling organs at all levels shall timely handle the deposit formalities of the Funds, and check the account with the bank month by month. The municipal handling organs and the municipal finance department shall regularly and mutually check the accounts to guarantee the compliance between accounts and between the accounts and the money. The State bonds purchased with the Funds shall be taken as the currency, and shall be managed by the bank of deposit entrusted by the municipal finance department consulting with the municipal social security department to guarantee the compliance between the accounts and the actual situation. The funds temporarily paid shall be regularly checked up and drawn back in time. Article 40 The liabilities refer to various kinds of borrow-in money and temporarily collected money formed in the process of Funds operation. The borrow-in money and temporarily collected money shall be regularly checked up, and reimbursed in time. Where reimbursement can not be effected owing to creditors or other special reasons, the municipal handling organs shall investigate the reasons and put forward the applications, upon the approval of the municipal finance department, to transfer the money into other incomes of relevant funds. Chapter VIII Funds Assets in Kind Article 41 The Funds assets in kind refers to the assets in kind that provided by the units having operational difficulties with disposal rights registered and filed for the record, and, upon the approval of the municipal social security department, delaying in paying the social insurance premiums, but still failing to pay the social insurance premiums in full amount in accordance with the paying plan within the period of deferred payment, mandatorily enforced by people’s court upon the application of the municipal social security department in accordance with laws, and decided by the people’s court to put under the administration of the social insurance handling organs, and on the basis of the “Provisions of Shanghai Municipality on the Levying of City/Town Employees’ Social Insurance Premiums” examined and adopted by the Municipal People’s Congress, and the “Implementation Procedures of Shanghai Municipality on the Levying of Social Insurance Premiums” promulgated by the Municipal People’s Government in 2002 (Decree No.117). Article 42 The municipal social insurance handling organs shall separately set up accounts for the assets in kind, and count at the price decided by the people’s court. The formed assets in kind shall be properly realized, and the net income obtained from the realization shall be totally counted in the income of social insurance premiums of that period. Chapter IX Funds Final Accounts Article 43 The municipal handling organs shall, in accordance with the forms, time limit and requirements provided by the municipal finance department, draw up the annual Funds financial report at the end of each year. The financial report includes the statement of assets and liabilities, balance sheet, relevant attached lists and the description on financial situation. The description on financial situation mainly state and analyze the Funds’ financial incomes and expenditures, the administration situation, the matters having great influence on financial situation in this period or next period, and other matters that need to be explained. The handling organs may, in accordance with the requirements of the work, raise the relevant financial analysis indexes including the Funds’ balance rate of that year, the actual paying rate of social insurance premiums, etc. The drawing-up of the annual Funds financial report must meet the requirements of “real numbers, accurate calculations, perfect formalities, complete contents, and timely reporting”. Article 44 The annual Funds financial report drawn up by the municipal handling organs shall be submitted to the municipal finance department for examination and verification after the examination, verification, and summing up by the municipal social security department within the prescribed time limit, and be submitted to the Municipal People’s Government for approval after the approval of the municipal finance department. The approved annual Funds financial report shall be taken as the final accounts of the Funds. Article 45 The municipal finance department and the municipal social security department shall report the Funds final accounts approved by the Municipal People’s Government to the Ministry of Finance, and the Ministry of Labor and Social Security respectively. Chapter X Supervision and Inspection Article 46 The handling organs shall set up and perfect inner-administration system, regularly or irregularly announce to the public the situation of Funds’ income, expenditure, and balance, and accept the public supervision on the Funds administration. Article 47 The municipal social security, finance and auditing departments shall regularly or irregularly carry out supervision and inspection on the situation of Funds’ income, expenditure, and balance of the income account, expenditure account and special account, make corrections in case of finding problems, and report to the Municipal People’s Government and the Municipal Social Security Fund Supervisions Commission. Article 48 Where the paying units fail to pay the social insurance premiums in accordance with the provisions, the social security department shall order the units to pay within prescribed time limit; in case of units’ failure to pay before the deadline, the amount owed shall be paid and an overdue fine equal to 2‰ of the amount owed per day shall be also paid from the date of owing the payment. Article 49 The following acts are illegal acts or acts violating the disciplines: 1. To retain, get possession of, misappropriate, embezzle the Funds; 2. To arbitrarily increase and raise, or reduce and exempt the social insurance premiums; 3. To fail to effect relevant payment of social insurance treatment in time, or in accordance with the provided standards; 4. To fail to deposit the Funds income to special account; 5. To fail to allocate the Funds from special account to the expenditure account in time, or in full amount; 6. Other acts of violating the provisions of the State laws and regulations. Article 50 Where the acts listed in Article 49 existed, the situation shall be identified, corrections within prescribed time limit shall be ordered to make, and the financial handlings shall be carried out: 1. The Funds shall be recovered immediately; 2. The Funds that are over-collected shall be returned, and the Funds that are reduced and exempted shall be made up immediately; 3. Relevant payment of social insurance treatment shall be paid retroactively or recovered in full amount immediately; 4. The payment to special account shall be effected immediately; 5. The Funds from special account shall be allocated to the expenditure account in full amount immediately; 6. Other handling measures provided by the State laws, regulations and the Ministry of Finance. Article 51 The punishment on the directly responsible person (s) among persons-in-charge and the units that having illegal acts or acts violating the disciplines listed in Article 49 shall be carried out in accordance with the “Administrative Punishment Law of the People’s Republic of China”, the “Regulations on Punishment and Penalty on Illegal Acts in Finance”, and the “Interim Regulations on the Levying of Social Insurance Premiums”. Where the act constitutes a crime, the wrongdoer(s) shall be prosecuted for criminal liabilities in accordance with laws. The fines imposed on the units, persons-in-charge, and the directly responsible persons shall be timely turned over to the national treasury. Chapter XI Supplementary Provisions Article 52 The municipal social security department mentioned in these Procedures refers to the Municipal Labor and Social Security Bureau and the Municipal Medical Insurance Bureau. Article 53 The special documents of social insurance funds in this Municipality shall be unifiedly printed by the municipal finance department. Article 54 The municipal finance department shall, jointly with the municipal social security department, formulate the implementation rules in accordance with these Procedures, and report to the Ministry of Finance and the Ministry of Labor and Social Security respectively for the record. Article 55 The administration on rural endowment insurance fund, and the fund used for guaranteeing the employment of the handicapped, etc. of this Municipality shall be carried out by reference to these Procedures. Article 56 The Municipal Finance Bureau shall, jointly with the Municipal Labor and Social Security Bureau and the Municipal Medical Insurance Bureau, interpret and revise these Procedures. Article 57 These Procedures shall become effective as of January 1, 2007, and where the provisions are not in conformity with these Procedures, these Procedures shall prevail. Shanghai Municipal Finance Bureau Shanghai Municipal Labor and Social Security Bureau Shanghai Municipal Medical Insurance Bureau October 30, 2006

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