The Analysis And The Research Of The Improvement Of "The Guidelines For The Audit Of Internal Control"

In recent years, the USA and Europe such sophisticated capital markets broke out a series of astonishing financial fraud scandals. It not only brought great shocks to the capital market, but also made capital market investors lose confidence in listed companies. At the same time, investors recognized that it was wrong that they only concerned the result of financial statements without concerning controls and processes which produced the result of financial statements. But this situation has changed since "Sarbanes-Oxley Act" enacted. According to 404 clause of this act, it required management to assess the effectiveness of internal control over financial reporting and registered CPA opined on the effectiveness of internal control over financial reporting. In 2008, five ministries of China jointly issued "the Basic Norms of Internal Control", which signified that China would start to publish the report of the audit of internal control in 2012. In order to guide CPAs efficiently provided this kind of service, five ministries also issued "the Guidelines for the Audit of Internal Control" in 2010. Though this guideline has already been issued, as a new system, the audit of internal control has many disputes and differences in the fields of theory and practice. Therefore, it is necessary to analyze and consider the choice made by this guideline of these disputes which exist in the audit of internal control and also necessary for CPAs to perform the audit of internal control by applying this guideline. This is also the value of this paper which studied "the Guidelines for the Audit of Internal Control".This paper falls into four sections. Section one is the introduction. This section briefly summaries the research background, the research purpose and value, the content, the research methods and the innovations of this paper. And this part also makes a comprehensive review of domestic and abroad literatures researches. Section two is the overview and analysis of "the Guidelines for the Audit of Internal Control". It introduces the fundamental content and framework of "the Guidelines for the Audit of Internal Control". This part analyzes the related definitions of the audit of internal control, including internal control over financial reporting, internal control over non-financial reporting, the integrated audit and the assurance of internal control and the audit of internal control. This part also analyzes the disputed fields of the audit of internal control in theory and practice which include the choices made by this guideline over the audit scope targets, business, and integrated audit from the point of the guidelines and combined with related theory. It also provides a basis for later researches. The third section is the considerations about the problems which exist in the establishment of the guidelines. In the view of the guideline, this part analyzes the choices made by this guideline over the disputed fields of the audit of internal control in theory and practice. And it also puts up some of the author's own ideas. Section four is the proposals to improve China's "the Guidelines for the Audit of Internal Control". These proposals range from redefining the audit scope, the business. In order to improve the guidelines' applicability, this paper makes supplements and improvements to the contents of "the Guidelines for the Audit of Internal Control" from the integrated audit, using the work of others and listing the strong indicators of the material weakness, which expects to make proposals to the developments of the audit of internal control of China.The innovations and main conclusions of this paper are as follows:(1) the paper summarizes various debates of the audit of internal control in domestic literatures researches. (2) this paper studies the related standards of the audit of internal control over financial reporting of the United States, namely the standards of internal control auditing over financial reporting of the PCAOB, compares with "the Guidelines for the Audit of Internal Control" of China, and puts forward the author's own views and suggestions on perfecting China's relevant specifications of the audit of internal control. (3) with three elements of attestation, audit costs and information disclosure, this paper relocates the business of the audit of internal control as business based on responsibility. (4) based on the analysis of expected users of the audit of internal control and the competence of the CPA repositions the scope of the audit of internal control as the audit of internal control over financial reporting. (5) based on studying the experience of the audit of internal control over financial reporting, this paper puts forward some suggestions on how to make full use of the work of companies'self assessment of internal control.The biggest drawbacks of this paper are:our country's internal control evaluation system is still immature and the audit of internal control is going to begin operating in 2012. Our country has just introduced the guidelines of the audit of internal control rather than the standards of the audit of internal control, and also lacks the practical experience of internal control auditing. Due to the above facts, this paper may lack practical applications and operabilities just by collecting relevant information and studying from standards of the audit of internal control of PCAOB of the United States.