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Internal Audit study of China's listed companies

Author: CaoHong From: www.yourpaper.net Posted: 2010-02-24 18:25:29 Read:
Abstract: internal audit of the listed companies in China compared with developed countries, not only the origin of late has been not attracted sufficient attention of corporate governance layer, resulting in internal audit of listed companies in China the prevalence of internal audit institutions set unreasonable Professional quality poor independence and auditing practices are lagging behind; view of this situation, it is recognized that only substantially strengthen the internal audit in order to improve corporate governance, value-added enterprise.
Keywords: internal audit; internal control; independence

Existing internal audit of a listed company in China

1.1 Internal audit institutions set unreasonable
In China, the relevant law does not make specific provisions on the setting of the listed company's internal audit agency, therefore, listed companies can be selected according to the actual situation of the company set the internal audit institutions. From the actual situation of China's listed companies internal audit institutions, most part of the management, is responsible for the leadership by the general manager. Although this model is conducive to discover in the operation and management of the internal audit staff, to communicate directly with management to come up with the solution of related problems as soon as possible, to avoid problems further expand. But it still has some shortcomings, for example, can not be achieved effective control of the board of directors of the general manager, exacerbated internal control is difficult to be assured of the independence of the audit, the audit function can not give full play to.

1.2 internal audit staff professional quality is not high enough
From the internal auditors of listed companies in China constitute the vast majority of financial professionals born in relatively low academic qualifications, but the more experienced, more familiar with the company's overall financial position and financial processes, a small number of higher qualifications, rich theoretical knowledge and solid, but the work is not a long time, compared with the former, the experience is more the lack of, as well as part of the audit staff from other departments of the company, not a financial professional birth, no systematic training, only able to enter the audit department After slowly learning at work, and the qualification of internal auditors is the lack of.

1.3 of the independence of the internal audit poor
Independence is the soul of the audit, it requires internal audit staff in the entire work process free from interference of any factors independently audit plan, to determine the scope of the audit, the implementation of the audit procedures, the audit report issued, inspection and evaluation of the company's management activities However, the internal audit function is the internal set of institutions, its settings often with management's subjective factors, the independence of the poor, and can not, as the external audit as authoritative. In addition, the management concept of most listed companies still remain at their original level, internal control mechanism and make the corresponding changes along with economic development and the improvement of the operation and management requirements, set up an internal audit department just to meet the inspection, or set the internal audit institutions attached to the lower level, the internal audit staff to work in full swing, there is a certain difficulty, has been affected, and the independence of the internal audit has not been fundamentally protected and can not play its due role.

1.4 Internal Audit backward
According to related statistics. Nearly 80% of listed companies choose to take this way, after the audit, some important business ahead of prior audit, the rest of the business little effect on normal operating activities, after the audit, 20% of the company prior audit, things in the audit and post-audit the same time, these data show that most of the listed companies in China after the audit, but after the audit is only enterprises already operating activities, can only provide a reference for future work and improvements, can not make up for the loss has been formed, like prior audit and things can not audit to identify problems in advance as to avoid unnecessary losses. In addition, most companies are still traditional manual audit, the new audit methodology with the progress of society, such as statistical sampling and non-statistical sampling, computer auditing technology is not widely used, leading to the efficiency of the audit work greatly reduce audit risk can not be quantified and has been effectively controlled.

perfect internal audit of listed companies countermeasures by

2.1 to strengthen internal audit in corporate governance status
One hand, China's relevant laws and requirements listed companies must set the internal audit institutions, on the other hand, the scope of work of the internal audit institutions also have specific requirements, but the requirements of the law on internal audit, external audit does not like as strict and specific, mainly reflected freedom of choice according to the specific circumstances of the company in the relevant management setting mode of the internal audit agency, the professional quality of the internal audit staff is not required at what level, can be arbitrary arrangements, the more important point is, do not need to take internal audit what liability, that is, the legal status of the internal audit of listed companies in China or blank, which led to the management of the internal audit will not generate enough attention, not to talk about it in the corporate governance. The status of internal audit in corporate governance depends entirely on the level of awareness of its management. According to the actual situation, the legal status of the internal audit in recent years is unlikely to be truly realized Therefore, listed companies in China must be a correct understanding of the internal audit Although there is no legal stringent constraints, however, to internal audit institutions can truly to play a role, must change their ideas to improve the status of internal audit in the company. 2.2 reasonable set of internal audit institutions
Internal audit institutions in order to set a reasonable listed companies, the company must first ensure that the audit agency to maintain a certain independence of the internal audit staff from other departments interference and influence in the unyielding pressure and interests implicated in any sector on the basis of work independently, to identify the problems in a timely manner. Internal audit institutions in China's listed companies crux of the matter is that the Board is responsible for internal audit institutions on the surface, in fact, very vulnerable to the impact of the management and control. China's actual situation, the best way is to establish an audit committee under the board of directors, the audit committee is responsible directly to the Board of Directors and the Audit Committee should be the majority of the independent directors, so that it can avoid internal audit agency management manipulation The phenomenon fundamentally eliminate the possibility of fraud in the financial information. In addition, after an audit committee, the internal audit function is part of the Audit Committee work report directly to the audit committee.

2.3 improve the professional quality of the audit staff
Professional quality of the overall situation, the internal auditors of listed companies in China did not meet the requirements of modern internal audit requirements diversified knowledge structure of the audit staff, not just limited to the field of the original financial. China's actual situation, on the one hand in the selection of the internal audit staff should develop appropriate standards. Just spend than such as audit staff qualifications must reach a certain level, must have a certain degree of audit theoretical knowledge and practical experience of years, so you can make the professional level of audit institutions maintained at a certain height, and follow-up training less financial and material resources, on the other hand the staff's knowledge of the field of audit should be carried out to broaden, as much as possible to grasp the development of financial, legal and other related knowledge to adapt to the times, this can be achieved by strengthening the audit staff training and follow-up education.

2.4 expand the scope of the audit
Internal audit work to expand the scope of their work, should not be limited to the audit of the financial area, would like to extend the field of business and management areas, the focus of internal audit work should not be placed on troubleshooting a variety of measures of financial revenue and expenditure, but should steering strengthening management, improving economic efficiency, and enhance the competitiveness of enterprises. Specific practice, the scope of the internal audit should expand to the price of audit, the audit of economic contracts, internal control audit, quality audit, risk management, auditing, and other aspects. Among them, the audit of risk management has become the major trends of the internal audit, enterprise risk comes mainly from business risks and financial risks, internal audit institutions must establish a risk assessment mechanism for risk control and management, proposed risk control recommendations. In addition, the scope of internal audit should also be engaged in audit expanded to the prior audit audit and things can really be involved in company management, internal audit, to increase the predictability of internal audit in corporate governance and forward-looking.

3 Conclusion
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