The Research On Several Issues About Audit Of Internal Control Over Financial Reporting

At the beginning of this century, the outbreak of financial scandal cases in America shocked the capital market, which many well-known companies involved such as Enron, WorldCom and etc. In response to the situation, and enhance confidence of the investors, the U.S. Congress passed the Sarbanes-Oxley Act, which requires listed companies disclose the internal control over financial reporting, which have been audited by certified public accountants. Therefore, the internal control over financial reporting became a mandatory independent audit service. With the development of domestic economic, many of the enterprises of China have entered the international capital markets. As a result, they have to comply with the requirements of internal control. However, it is exposed that these enterprises have deficiency in internal control, and the construction of the internal control of enterprises in our country should be strengthened. Against such a background, our country’s five ministries and commissions had issued "Enterprise Internal Control Standard" in June2008, together with the supporting directions which released April2010.The standard and directions symbolize our country has established fully-formed internal control system. The "Guidelines for the Audit of Internal Control" among the directions has offered important restitutions and guidelines for the implementation of the internal control over financial reporting audit services.As a new professional work, the audit of internal control over financial reporting’s development requires going through a process of continuous improvement like the financial statements audit. The standard and directions released respectively in2008and in2010have offered important guidelines for auditors when they carry out the service, but auditors also encountered many problems in practice. Based on the "Guidelines for the Audit of Internal Control" and the advanced experiences of other countries both in theory and practice of auditing, this paper do a research on the audit of internal control over financial reporting, in order to put forward more specific guidelines for auditors.Firstly, the paper illustrates basic theory and concepts related to internal control over financial reporting, and makes a review of the development of audit of internal control over financial reporting in the United States, Japan and China. Secondly, this paper studies several important issues encountered during the auditing of internal control over financial reporting, including the scope of the audit, the time covered by the audit, the method of the audit, the integrated auditing and the process of audit of internal control over financial reporting considering the integrated auditing. At last, this paper put forward several recommendations for the implementation of audit of internal control over financial reporting respectively for enterprises, public accounting firms and government regulators and associations on the base of the above analysis.