State budget management under the two-tier local government model and challenges for the State Audit Office in auditing local budget settlement reports

Abstract

The state budget serves as a vital instrument for socio-economic management and ensures financial resources for the public apparatus. Within the national budget system, local budgets play a direct role in securing resources for regional development. Amidst administrative reforms and the shift toward a two-tier local government model, local budget management mechanisms require adjustment to enhance the efficiency and effectiveness of public financial management. The 2025 State Budget Law introduced provisions to strengthen budget decentralization, increase local financial autonomy and enforce financial discipline. Simultaneously, Clause 2, Article 73 of this Law mandates the State Audit Office of Vietnam (SAV) to audit local budget settlement reports before they are submitted to Provincial People's Councils for approval. This article analyzes local budget management issues under the 2025 Law within the two-tier government framework and clarifies the challenges facing the SAV in auditing budget settlements during administrative restructuring.