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Research On The Validity Of Internal Audit In Chinese Listed Companies

Posted on:2010-09-26Degree:DoctorType:Dissertation
Country:ChinaCandidate:Y ZhuangFull Text:PDF
GTID:1119360275494595Subject:Accounting
Abstract/Summary:PDF Full Text Request
Internal audit has been attracted more and more attention as the outbreak of a serial of financial fraud scandals in the early 21 century. As one of four footstones of corporate governance, internal audit has been extensive concern. But the research of the validity of internal auditing departments of listed companies in supervision function is very few now. So in this study, in order to test the validity of internal auditing departments of listed companies, we use empirical analysis, combined with the theory of new institutional economics, based on the environment of corporate governance in our country, check the quality of financial report including earnings management and patches on annual reports, the validity of internal control and external supervising system including independent audit quality and independent audit fee.According to this research, it could be found that: (1) the establishment of internal audit departments of listed companies contributes to reduce the probability of publishing patches on annual reports, and the subordinated position of internal auditing departments inhibit earnings management significantly, the establishment of internal audit departments can play a role in improving the quality of financial report; (2) the establishment of internal audit and its subordinated position positively correlate with the validity of internal control significantly using the external auditors's clean opinion setted as high-quality internal control's alternative variables. It means that the establishment of internal audit departments and its independence ensure the validity of internal control; (3) the CPA's unclear opinions are correlated with earnings management in companies which have established internal audit departments. It means that the quality of the independent audit is higher in these companies. But there is no evidence shows that the establishment of internal audit departments correlates with audit fee. According to these result, this paper propose some policy suggestion, such as strengthening the supervision and evaluation of internal audit, explicit the subordinated position of internal audit, and according to the characteristics of ownership structure to take different position. Undoubtedly, these researches are useful for practice of internal audit.
Keywords/Search Tags:Internal audit, internal control, validity
PDF Full Text Request
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