Research On Internal Governance Audit In Listed Company Of China

A series of corporate accounting scandals trigger worldwide received high attention from global corporate governance. The US congress passed the Sarbanes-Oxley Act, the Act extend the requirements to the audit committee, external audit and management governance. These requirements directly cause the extension of internal audit activity. People are concerned about what kind of role the internal audit can play in the corporate governance. In Britain, a series of external control demand were added to the corporate governance after Enron scandal. From above, we can see that internal audit is becoming more and more important in the corporate governance. In China, listed companies were first asked to execute 'The Implement and Operation of Basic Standard for Enterprise Internal Audit' on July 1st,2009. The'Basic Standard' that was known as Chins Sarbanes Act asked the affected companies to hire external audit organizations for internal control affectivity audit. Internal control information turned to forced exposures instead of original volunteer. In corporate governance level, the new demand for internal control affectivity audit against internal audit is raising. The internal audit that based upon the corporate governance becomes vigorous. Internal Governance Audit is a kind of audit activity against the internal governance. The role of internal audit played in the corporate governance can be illustrated through Internal Governance Audit.There are many different views to study the relationship between the corporate governance and internal audit. The study is becoming a central issue for theorists and practitioners. However, this article believes that the Internal Governance Audit is the way that internal audit can do to the corporate governance. The audit is the internal audit that considers the corporate governance as object. In this way, the study view is different from the previous study that put the focus on the position of internal audit or the interactivity between the internal audit and corporate governance. It is also different from the study that considers the internal audit as the part of corporate governance. All of above show that the study in this article is a exploring study.Why does the internal audit that known as internal governance audit in corporate governance level be helpful to the corporate governance? One reason is the external regulation requirement. SFC asks the social audit organization to make internal control audit to the listed companies. National audit agency makes a thorough audit to the SOE and state holding companies. In order to reduce the external regulation risk, the work of internal audit section can be used to find the problem existing in the corporate governance level. The other reason is the function of internal audit. Internal audit not only has control but also valuation and consulting function. When the internal audit section conduct a governance audit, it's work cannot be regarded as a kind of control to the manager from a internal section, but a kind of governance affectivity evaluation from the consulting and service view. Because of two above reasons, Internal Governance Audit that is against the corporate governance can appear after obtaining the trust from governance level.To be honest, the concerns over internal audit aiming at the corporate governance just begin and lack of practice. The core issue of this article is how the internal audit plays the role in corporate governance with Internal Governance Audit. To solve this problem is to answer several questions. Why does Internal Governance Audit can work in corporate governance? What condition and form that internal audit can work and how to work? To what extent that Internal Governance Audit can be represented in the listed company practice? How to realize Internal Governance Audit plays a greater role in corporate governance than before.The basic idea of this article is that, first sort out documents related with corporate governance, then analyze the formation and activity mechanism of Internal Governance Audit with corporate governance theory, internal audit theory and trusted responsibility theory, Third create a Internal Governance Audit system including such elements as audit target, subject, limitation, report relationship and contents. Fourth, investigate listed companies from corresponding view, then come to the conclusion that Internal Governance Audit is applicability and effective through compare analysis. Fifth, propose policy suggestion, that include promote audit report level, make sure corporate governance oriented, extend internal governance audit activity, strengthen creating legal environment for internal governance audit and creating demand mechanism., etc.The innovation points of this article are following. First make it sure that the effective way that internal audit can work for the corporate governance is to consider the corporate governance as an object of internal audit. Second, systematically analyze the origin of Internal Governance Audit theory. Third, construct a set of applicable internal governance execution system that is in line with real situation of China listed companies, to provide new contents for the corporate governance. Forth, analyze the real situation of internal governance audit for the listed companies with survey and compare analysis. The result shows that internal governance audit is differential character because of the vitiation of report relationship, listed location, risks management and also shows stage trend. Fifth, propose policy suggestions that suggest speed creating legal environment for internal governance audit and creating demand mechanism.This article combines the theoretical research method and empirical research method. For research methods, there are survey tool, compare analysis, history analysis, system analysis and supply-demand analysis etc. At the same time, this article discuss the internal governance audit problem of the listed companies with several theory tools, for example, corporate governance theory, internal audit theory and trusted reasonability theory.This article is divided into seven parts. In introduction part, begining from problem solving, define the research methods, innovation points and the framework.In Chapter two, make a comparative description of current situation of corporate governance audit. Literature reviews covered the previous study views and systematically review the previous study. Previous study converted many studies, such as study of the position and role of internal audit in corporate governance, the study of interactive relationship between the corporate governance and internal audit, the study considering the internal audit as one part of corporate governance, the study of audit mechanism in corporate governance and the study of audit contents of corporate governance. This chapter also summarizes the Corporate Governance Theory, Internal Audit Theory and Trusted Responsibility Theory. These theories are the theoretical tools for analyzing the formation and boundary of Internal Governance Audit.In Chapter three, study the formation and act mechanism of Internal Governance Audit. This chapter put focus on the demand and supply of the Internal Governance Audit, and analyze that how dynamic evolution of trusted responsibility promote the change of object of internal audit and catalyze the internal governance audit. The analysis of internal audit report makes real foundation for the internal governance audit. The analysis of active form and active way make foundation for create internal governance audit system, that means define target, boundary and contents considering the role as center.In Chapter four, create internal governance audit system. First give clear description of content of internal governance audit, second define the boundary and contents of internal governance audit based upon the analysis of subject and target of internal governance audit. The contents include governance progress audit and governance result audit.In Chapter five, to investigate the constructing internal governance audit system. The sample points almost domiciled in Liaoning province. The author obtained a lot of information through site investigation and interview. The current situation of internal audit of listed companies can be shown from multi-demotion compare analysis of internal audit situation in several listed companies scattering in several representing industry. At the same time, differential character of realization and stage trend can also be shown. From above, the problems existing in the internal governance audit appear.In Chapter six, propose improve path for the internal governance audit in the light of problems. The major policy include promote audit report level, make sure corporate governance oriented, extend internal governance audit activity, strengthen creating legal environment for internal governance audit and creating demand mechanism., etc.In Chapter seven, it gives the conclusion and outlook. Analyze the conclusion, inadequate part and future study emphasis.