Internal Audit Of State-owned Enterprise Groups In China

With sustained and rapid development of the Chinese economy for more than thirty years, a large number of state-owned enterprise (the abbreviation is SOE) groups came into being, and play a leading role in economic development. SOE groups' internal audit environments are divided into two types and are in evolution. One is macro-environment (including the political, economic, cultural, legal, technology, industry environments), the other is micro-environment (government and control as the core content). Successful governance and control of enterprise groups is one of the keys of keeping them prosperous. Internal audit of enterprise group is an important tool for supervising and serving the governance and control. Elements of internal audit are only matched with micro-environment of enterprise group in order to lay the foundation for effective internal audit.The theoretical significance of the research: Overseas research on internal audit of enterprise group is fewer and research on internal audit has been focused on the single enterprise. In domestic studies on internal audit of enterprise group, binding studies on internal audit of enterprise group and its environment are fewer; the studies on integrating control and internal audit of the enterprise group are not launching an intensive phase; the combined researches of corporate governance and internal audit are generally limited to a single enterprise. SOEs are the important part and realization form of public ownership economy, the strong body of development of national economy, the strong force for maintaining social stability, and the strong pillar to enhance the country's competitiveness. SOE groups occupy a pivotal position in China's state-owned economy. Analysis of SOE group's internal audit environment and suggestion about how to improve the matched internal audit system can help enrich existing internal audit theory. Therefore, the significance of studying SOE group internal audit is obvious.The practical significance of this study: At present, internal audit environment of China's SOE group is in evolution. However, elements of internal audits of some SOE groups not matching with micro-environment and not promoting micro-environment are not conducive to the sound and rapid development of SOE groups. At the same time, compared with the international successful enterprise groups, internal audits of the majority of SOE groups in China have a large gap. Therefore, drawing on international internal auditing successful experience and combining with the actual situation in China, the development of governance and control-oriented effective internal audit of SOE groups has important practical significance.This paper's innovations:First, according to the theory of internal audit environment, the internal audit's environment of enterprise group includes macro-environment and micro-environment. Micro-environment is grouped into three categories-strong control and weak governance type, weak control and strong governance type, other type. I study internal audit from the point of governance and control of enterprise group, and research how to match elements of internal audit with micro-environment. Second, elements of the internal audit are divided into two categories:elements reflecting micro-environment features more strongly, and the other internal audit elements of enterprise group. Third, through investigation, I in-depth analyze and summarize the relationship between micro-environment and internal audit of a certain number of SOE groups in China. Fourth, from the point of governance and control of enterprise groups, I study how to improve the system of internal audit of SOE group in China more systematically.The research ideas of this paper: By studying the relationship between internal audit and internal audit environment in enterprise group (macro-environment and micro-environment), I propose to match elements reflecting micro-environment features of internal audit in SOE group more strongly with micro-environment, and optimize other elements to improve internal audit system of SOE group. Governance and control is the core content in micro-environment of internal audit in enterprise group. The macro-environment indirectly affects the internal audit mainly through influencing micro-environment.This paper is divided into seven chapters. The first chapter is exordium, including research background, the significance of the topic, literature review at home and abroad, internal audit and other relevant concepts, research methodology, research contents and research ideas, innovations and further research direction.The second chapter is theoretical analysis of the relationship between internal audit and its environment of enterprise group. First, I analyze the internal audit environment (macro-environment and micro-environment) of the single enterprise and group. Second, I point out that internal audit is a tool for supervising and serving governance and control in the single enterprise. Finally I stress internal audit of enterprise group should match micro-environment. Micro-environment is grouped into three categories-strong control and weak governance type, weak control and strong governance type, other type. Elements of the internal audit are divided into two categories: elements reflecting micro-environment features of enterprise group more strongly (should be matched with micro-environment), and the other internal audit elements of enterprise group.The third chapter is the analysis of current situation and problems about internal audit of SOE group. Macro-environment and Micro-environment of internal audit in SOE groups are briefly analyzed. I summarize current situation about internal audit of SOE group, and complete the historical comparative analysis, comparative analysis between SOE groups and private groups, and international comparative analysis of internal audit. The main existing problem of internal audit of SOE group in China is divided into two types:problems related to elements reflecting micro-environment features of internal audit in SOE group more strongly, and problems related to the other internal audit elements of SOE group.The fourth chapter is the empirical analysis of the relationship between internal audit of SOE group in China and micro-environment. I have investigated internal audit and its micro-environment in certain quantity of SOE groups in China. I select the head of internal audit, report objects of internal audit, management style of internal audit (including internal audit organization), and communication stress of internal audit as research priorities of internal audit elements. I come to the conclusion of the relationship between the above-mentioned four elements of internal audit and micro-environment.The fifth chapter is international experience of internal audit of enterprise group. I mainly analyze governance and control, internal audit and their relationship of enterprises in the United States, the United Kingdom, Germany and SOE of OECD's members. I select General Electric Company and France Telecom as the main objects of study, then sum up the successful experience of micro-environment, internal audit and the relationship of both.The sixth chapter is improving internal audit system of the SOE groups in China. The target of improving effective internal audit system of SOE groups in China is to make it more effective. Matching the elements reflecting micro-environment features of enterprise group more strongly with micro-environment and optimizing the other internal audit elements of enterprise group is the scientific and rational path to improve internal audit system of SOE groups in China. Following the above path, I suggest how to enhance the level of internal audit for overseas subsidiaries in SOE group.The seventh chapter is the research conclusions on internal audit of SOE group in China. I summarize how to match the elements reflecting micro-environment features of internal audit in SOE group more strongly with micro-environment, and emphasize that the other internal audit elements of SOE group must be optimized.