Legal Issues Of Internal Audit And External Audit Based On Corporate Governance

With the controlling enhancement of internal audit and external audit in corporate governance environment, the corporate governance is increasingly interlinked with the internal audit & external audit which belong to a different field. Traditional internal audit and external audit can not adapt to the higher and higher requirements raised by corporate governance mechanism on the respect of management concept or legal system. Therefore, this paper discusses the legal issues of internal audit and external audit from the perspective of corporate governance, deeply analyzes the four aspects of Board of Directors, Supervisory Board, Audit Committee and the organization of internal and external audit from the difference and convergence of internal audit and external audit through the combination with related research results at home and abroad.Feature of this paper is to transfer the original prerequisite from internal audit and external audit to corporate governance, at this stage there are few literatures and achievements concerning the related legal issues of the internal audit and external audit in the corporate governance structure, the internal audit or external audit without particular corporate governance mechanism does not produce a fundamental change. This paper will help to achieve the interaction between internal audit, external audit and corporate governance so as to build the legal system of internal audit and external audit in the corporate governance from the point of their combination, and effectively promote the considerable progress of the company. This paper is divided into four parts:Part I: Based on the review of research background, research significance, literatures at home and abroad, as well as the statement on the research methods and research content, it carries out review on the legal system of internal audit and external audit in the corporate governance.Part II: It mainly elaborates the concept, content, legal status, legal responsibilities of the internal audit, as well as the concept, content, evolution and other aspects of the external audit, providing theoretical basis for the relevant laws of the internal audit and external audit in the following description.Part III: It mainly elaborates the impact of internal & external audit to the corporate governance. It will respectively introduce the impact of internal audit and external audit to the corporate governance, and the difference of internal audit and external audit based on the corporate governance. It purposes to explore the relationship of corporate governance with internal audit and external audit, and to study the new problems occurred after internal audit and external audit introduced into the corporate governance.Part IV: It mainly elaborates the strategies on improving our internal & external auditing system based on the corporate governance. Firstly, it will start from the discussion on reasonably constructing the audit committee, giving full play to the functions of audit committee and ensuring the effective implementation of the internal audit, then it will propose to make sure the responsibilities of the audit committee clearly, reasonably construct the audit committee, give full play to the functions of audit committee and ensure the effective implementation of the internal audit. Secondly, it proposes to constrain the internal audit organization, standardize the external audit organization and improve the audit efficiency by coordinating the relationship between internal and external audit. Finally, it will start from the aspects of improving the organization structures for the board of directors and board of supervisors, in order to ensure the external governance mechanisms through improving the independent director system; to construct market-oriented independent director system, ensuring the authenticity of internal & external audit; improve the arrangements of the supervisors and set up a sound supervision and audit system; ensure the independence of the board of the supervisors, play the roles of authorities of board of supervisors from four aspects, so as to ensure the independence and authenticity of audit.