The establishment of modern China’s audit system commenced in the early years of the Republic of China. Influenced by the political climate of the era, China actively emulated Western models by organizing audit institutions and formulating some important laws and regulations for auditing, marking the initial formation of the system. However, constrained by partisan conflicts during the early Republic, the audit system was frequently instrumentalized as a tool for power struggles among political factions, resulting in significant historical limitations to its practical efficacy. The Jiangsu Bali Bonds Case serves as a critical exemplar for studying the early Republican audit system and offers a novel perspective for analyzing its operation amid contemporary political strife. This case reveals that, owing to the lack of a well-designed constitutional framework at the initial stage and insufficient state capacity in the subsequent period, the audit system, though formally established, failed to operate effectively under the turbulent conditions of the early Republican era and was ultimately relegated to a peripheral position within the broader structure of state governance.