The Role Location And Function Reconstruction Of Internal Audit Based On Corporate Governance

In April 2002, the International Institute of Internal Auditors (IIA) expressed the view in the statement of opinion on Sarbanes-Oxley Act of U.S. Congress:"Mutual cooperation of internal auditors, the board of directors, senior management as well as external auditors is the cornerstone to establish effective corporate governance."China Securities Regulatory Commission and State Economic and Trade Commission issued The Guidelines for Corporate Governance of Listed Companies jointly, it states that board of directors could set up special committees including the internal audit committee, and made in principles including the board's composition and duties. Can be seen that China's corporate governance institution have also realize the importance of the internal audit to corporate governance gradually. But the realities decide that the majority of China's status of internal audit services is still relatively low, the functions are limited in financial audit. This paper studies how to locate the role and reconstruct functions of internal audit based on corporate governance. The basis of this study is the theory of fiduciary duties. The object of this study is Chinese enterprises. It can provide some ideas to the Chinese enterprises to carry out internal audit and improve the internal audit based on corporate governance to play an active role through the study. This study uses methods of standardizing study. First, the paper describes the research background, research causes, literature review, writing ideas, and then reviews on the theoretical foundations of corporate governance and internal audit. It concludes that the internal audit and corporate governance have common theoretical basis and goal; this is the theoretical basis for this study. In this paper, the focus is on internal audit's role and functions of reconstruction based on corporate governance. The main conclusions are that the internal audit based on corporate governance plays roles of"monitor"and"facilitator". The functions of internal audit based on Corporate Governance are feedback, monitoring, evaluation and coordination. Last, the paper views the current problems in the internal audit based on corporate governance in China and makes a few suggestions.