Independence Of Taiwan Listing Company's Internal Auditing

Several national and international organizations have caused severe stock market crises since 1995 by doctoring accounting books, manipulating income/expenses, forging earnings and assets, underestimating liabilities and losses, capitalizing excessive expenses, and forging independent auditor's report; moreover, interfering with stock prices, embezzling funds, conducting business transactions with related parties, and exchanging shareholding; also, due to the poor performance of Directors, Supervisors, and management. Therefore, the authority of Taiwan Stock Exchange Corporation has studied relevant systems and regulations of other nations, reinforced corporate governance, and designated independent Directors and Supervisors and Auditing Committees to prevent the said crises from reoccurring.Corporate Governance has a long history in the United States and in European nations. The job responsibility and function of independent Directors (independent Supervisors), Auditing Committee, and internal auditors is defined in the management structure. The enforcement of job responsibility and function is based on an independent spirit and has an internal control system designed and reviewed effectively through internal auditing. Independent spirit is crucial to the success of management mechanisms. Two "landmine stock" bankruptcies are illustrated for case study and it shows the importance of an independent internal audit on management systems; also, the importance of business management is noticed by the world. The historical evolution and development of business management is introduced in the text.The following conclusions are reached from the analysis: (1) Enron and WorldCom scandals are a result of poor supervision of the Board of Directors, manipulation and embezzlement of management, poor internal controls, and loss of independence of external auditors and consultants. (2) An optimal corporate governance system is inconclusive. The study of corporate governance is in the stage of empirical analysis worldwide. The commonly used management mechanisms are composed in many reports for the reference of legislation and market improvement. (3) The major challenge of "improving corporate governance mechanism" is the business itself instead of insufficient regulations. The success of management mechanisms depends on the industrial culture chosen by management, whether shareholders and investors are willing to exchange profitability for higher moral standards, and the understanding of the Board of Directors and business owners on financial data. (4) A leader must have faith in himself/herself, the ultimate confidence; it is the faith in survival and the faith in success. The mission of a leader is to earn trust from the international community by obeying fundamental rules, being responsible for products,constructing systems, and being nice to customers. Moreover, a leader is should not be trying to make a quick buck; a leader should be able to adjust himself/herself while facing competition in economic depression; a leader does not deal with short-term pressure by committing embezzlement, and does not forge sales performance to impress Wall Street analysts and to meet market expectations.