Articles of audit law are a reflection of the logic of audit theory. The imperfection of audit law is substantially owing to unclear or cognitive bias from the audit theory analysis. Taking public principal agent relations, public management responsibilities and auditing subject as the red thread, this paper analyzes theoretically the six fundamental institutional issues of government auditing in China, and put forward some proposals to perfect the Audit Law. The six fundamental issues include: why is needed to audit, who is to be audited, what should be audited, who is responsible for auditing, how to audit, how to apply audit results.