A Legal Study On The Audit Supervision On Director By The Board Of Supervisiors In Wholly State-Owned Company

Wholly state-owned companies play a very important role in economic life in our country, but also because of its unique ownership structure, the mechanism of corporate governance is generally considered failure and being questioned. Wholly state-owned companies, either in terms of the law or the actual situation, the power of board of directors is greater than the average company's board of directors. In the "strong board of directors" of the internal power configuration mode, the wholly state-owned companies enjoyed the board decision-making power over the average company, so strengthen the supervision of the board of directors of wholly state-owned companies to become a major issue. Audit by its independence and authority becomes an important economic mode of supervision, and plays an important role of supervision within the company. The specificity of equity structure and shareholders in wholly State-owned determine the audit supervision plays an important role during the director's supervision. But in practice, the state audit, social audit and internal audit corporate and so on lack of restraint to directors. In view of the extraordinary importance of internal supervision and the characteristics of Chinese company's organization, in order to balance the power between institutions, according to company law principles, of course the task should be undertaken by the Board of Supervisors of wholly state-owned companies, but should strengthen the powers of the board of supervisors.This paper is composed of two parts including the introduction, the body and the conclusion.The introduction describes some of the major literature review, significance of the topic, main points of the article, methods and innovations. Literature review shows that existing research on the "audit supervision mechanisms to directors" is absent, and this paper is intended to elaborate a special governance structure and the shortage of monitoring in wholly state-owned companies, to demonstrate the board of supervisors of wholly state-owned companies should be liable for auditing directors. The paper has theoretical and practical significance.There are five parts in the body.The first part mainly arguments the important position of internal audit supervision in wholly state-owned company. On the one hand, from the theoretical of company law analysis we draw the defect of corporate governance structure and indicate the importance of internal oversight in wholly state-owned companies; On the other hand, national audit, investor audit, social audit is weak of constraints on the directors, and internal audit has information superiority, institutional advantages and higher independence and authority of auditing, so the internal audit is important to supervise directors.The second part discusses the problems of current internal audit system in wholly state-owned company. In the current audit system, a single audit institution can not meet the needs of supervising agency relationships in wholly state-owned company, and the agency relationship between investor and director is not be confined. Relevant laws and regulations are lack of binding on the directors, and have failed to effectively compensate for the defects of the current audit system. In practice, although the audit right actually been shared by the internal audit, board of supervisors and audit committee in the board of directors pilot enterprise, whether the board of supervisors have the right to audit and supervise the directors has not yet clear.The third part analyses the rationality that the directors been audited and supervised by supervisory board supervisory board in wholly state-owned company: the board of supervisors as a special supervisory organ performing supervisory duties comply with company law theory; At the same time, the enactment of legislation and judicial practice indicate that the board of supervisors be mandated audit right is the trend of board of supervisors system; And the board of supervisors can carry out the function of independent directors; Addition, the proposed system and reporting system also contribute to exercise audit oversight functions .Part four design a system that the board of supervisors of wholly state-owned company exercise the audit right on directors, including its audit subject, the audit object and audit duties, the audit content, implementation audit of the time, the application of audit results, audit responsibilities and so on.Part five describes the effective measures which contribute to exercise the audit oversight by board of supervisors. First, once the board of supervisors delay or abuse in exercising audit powers, it will cause losses to the company, so it should be properly supervised and restricted, and the main oversight body are investors and the auditee. Second, the board of supervisors effectively play the audit oversight functions depends on strengthen and improve other systems of the board of supervisors, including the incentive and restraint mechanisms on supervisors, improve the supervisory board meeting system, improve the supervisors office system, improve the supervision of the board of supervisors means.Conclusion reiterated the basic argument ideas and views of this paper.