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Discussion on issues related to China's audit committee system perfect

Author: ZhongLiHong YeXiaoLan From: www.yourpaper.net Posted: 2010-06-01 19:47:32 Read:

Abstract: because as a corporate governance mechanism of audit committee system in the time is short, there are many problems in the actual operation.This paper puts forward some suggestions to improve the audit committee system in China: to perfect the audit committee of the relevant legal system, deal with the relationship between the audit committee and the board of supervisors, improving the independent director mechanism, in order to improve the level of corporate governance for reference.
Keywords: the audit committee system of the legal system of independent director
From the beginning of 2002, China introduced foreign advanced corporate governance means the audit committee system, effectively improves the performance of corporate governance.However, due to the existence of various factors.Role of independent directors in listing Corporation has not yet been effectively, make the audit committee is unable to effectively perform its duty of supervision.According to "the current situation of the audit committee system and the existing problems of" (Ye Xiaolan, 2008), puts forward some suggestions to improve the audit committee system in China this paper.
, improve the legal system of the audit committee
Facing the present situation of the capital market of our country, to make the audit committee system to obtain the good development, give full play to its role, only not mandatory governance proposals, is likely to be nominal, a mere formality, therefore, must use the law as a compulsory means to regulate corporate governance, ensure that this system truly introduced into china.In the form of law system should include at least the following specifications: establish the audit committee system and the provisions of relevant information disclosure mechanism.Provisions of China's "governance": the board of directors of listing Corporation in accordance with the resolutions of the shareholders' meetings, special committee set up strategy, audit, nomination, remuneration and appraisal etc..There is no requirement that the listing Corporation must establish an audit committee under the board of directors, but does not require listing Corporation to disclose information if it consists of the audit committee and audit committee working content, operation effect.The prevalence of the audit committee system of Britain, the United States and other countries is mandatory for all listing Corporation must establish the audit committee, and the provisions of the relevant information disclosure mechanism.Therefore, our country should as soon as possible in the form of law requires that all listing Corporation must establish an audit committee, make it become a member of the corporate governance structure, perfect company administration to play a proper role.
The audit committee members qualifications.The audit committee can effectively play its functions, the core factor is independent and highly professional member of the audit committee of the.The members of the audit committee should be independent of management, in order to protect the interests of all shareholders.A member of the audit committee shall include certain accounting, auditing expertise and industry knowledge staff.In addition, the renewal of knowledge is essential, should require the audit committee members each year to accept the relevant professional training, to learn new knowledge, understand the new situation, in order to adapt to the production and operation activities of the company under the new situation of increasingly complex, competent supervision for new, complex business activities.
Broaden the audit committee responsibilities and authority.According to the provisions of China's "governance", the external auditing institutions to hire or replaced, the audit committee only own the initiative, the final decision is still on the board.Member of the audit committee of the board of directors in reality for minority, who does not favor the administration's proposal will certainly be rejected, it is difficult to change the external auditing institutions to hire or replacement is actually decided by the listing Corporation management problems, the audit committee's duties as decoration, not to the substantial role.To ensure that the rights and status of the audit committee in the company, give full play to the role of the audit committee in the corporate governance. Our country should learn from the "Sarbanes act" content, through legislation to the Audit Committee for greater responsibility and authority.
Audit committee system operation guide.In Britain, the United States and other countries, so that the audit committee system to function effectively, have relevant institutions to provide detailed operation guide, so that the listing Corporation in the establishment and operation of the audit committee system in accordance with the law, rule-based.The relevant management organizations in China such as the Institute of certified public accountants should work to the relevant aspects of the operation, provide guidance reference for the effective operation of the audit committee system.Operational guidelines for the audit committee system should include the following contents: the system design of the audit committee, the audit committee's duties and powers, the number of the audit committee and audit committee members, qualification and production procedures, the audit committee system, performance evaluation of audit committee, a member of the audit committee of the remuneration, audit committee information disclosure.
Improve the beneficial condition of audit committee members exercise.To strengthen the audit committee members of the legal responsibility of information disclosure, establish and improve the corresponding constraint mechanism.Laws and regulations should also be kind to the audit committee members, to ensure that the benefits of the exercise conditions, in order to seek the audit committee in the relative balance between duty and interest.
The relationship between two, deal with the audit committee and the board of supervisors
Double layer board model using China's current "company law", the board of supervisors is supervision and specialized institutions, "governance" and at the same time the single-layer model of the board of directors of the audit committee oversight mechanisms, it is a kind of system innovation.How to deal with the relationship between two kinds of supervision mechanism, has different argument theory.Considering the continuity and the introduction of audit committee in China is not long, in practice remains to be perfected gradually, China's capital market is underdeveloped, the corporate governance level is low, the listing Corporation shareholders "alone big" the serious internal control, the prevalence of false financial information, in which both the lack of external monitoring mechanism is powerful, and there is no effective system of internal control environment, at present and in the future for a long period of time, should adopt the operation mode of the audit committee and the board of supervisors coexist, work along both lines.In addition to the establishment of the audit committee under the board of directors of internal and external, remains improved the board of supervisors, double supervision.Due to the absence of supervisor in the corporate governance structure and audit committee at the same time the precedent, therefore, to promote the implementation of the audit committee system, present a pressing matter of the moment is to divide the range of the audit committee and the board of supervisors duties, in the premise of the realization of goals, two lines of their duty, responsibility, mutual supervision and mutual dependence, uncoordinated, complete control of the company's financial.
In the long run, with the establishment and standardize the listing Corporation ownership structure, governance structure, the independent director system, after the audit committee in the play a substantive role, can be gradually abolished the board of supervisors.In order to reduce the cost of supervision.
three, improving the independent director mechanism
Improve the mechanism for selection of independent directors.The independent director mechanism is the key link to determine the independence of the independent directors, in a sense, also decided to arrange a decisive success or failure of the system of the independent director system.The selections of the independent director, shall be determined by controlling shareholder voting power challenge system, namely the major stockholder does not participate in the nomination and election, and composed of independent directors of the nomination committee, to restrict the big shareholder influence mechanism on the generated in the independent director, from the fundamental guarantee for the independent director really independent of the large shareholders.
Perfect independent director incentive system.The reform of independent director's salary form, the introduction of direct income and equity incentive combination form.Service linked to reward amount of direct income and independent director provides, such as the actual provision of business hours, participate in the number of times the Board issued, the compensation shall be disclosed in the company's financial report.
In addition, if the introduction of stock options a certain number of independent directors, can make its thinking like shareholders, reduce agency cost, improve business performance.Constraint mechanism and strengthening of independent directors.The independent directors must be in accordance with the relevant legal provisions to fulfill its responsibility, if they are not in business management and strategic planning to perform their duties, they shall bear responsibility for the resulting losses.
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