Study On The Audit Committee System Of Listed Company In China

Since it was born in the United States, through decades of development, the auditcommittee has been deeply favored by developed countries such as America andBritain, and has been widely recognized as strengthen corporate governance effectmeasures. The audit committee is a professional committee under the board of directorswhich plays a role of supervising and restricting the company management, and itsresponsibility is through the supervising and communicating internal and external auditand reviewing the effect and efficiency of internal control system in order to improvethe financial report information quality, so as to ensure the company’s management ofentrusted with the responsibility to perform. Since the21st century, the United Stateshappened a number of financial fraud cases striking the world with amazement, somelarge listed companies such as Enron and WorldCom ashes to ashes overnight, manypeople are extreme lack of confidence for financial information from company. In orderto restore public confidence and trust, the audit committee system is immediatelyreceived attention from the community. the United States also issued correspondingmeasures, especially 《Sarbanes Oxley Bill》which improved the value of the auditcommittee system to an unprecedented height. The bill strengthens and improves theaudit committee system, and plays a positive role to other countries in the auditcommittee system development.At the end of20th century to early21st century, our country has experienced aseries of financial fraud cases and false events with serious consequences. The reason ofcausing these events is various, but no doubt that the deletions of governance effecthave inescapable responsibilities. At the same time a large number of scholars and therelevant departments begin to pay close attention to esteem the audit committee systemfavored by the developed countries, and hope use this system to strengthen corporategovernance effect like them. In2002our country issued standards for listed companiesgovernance, which were the official specification for the first time in China to the auditcommittee system, and formally ruled that directors of the listed company can set up theaudit committee under the board of directors according to the resolutions of theshareholders’ general meeting. Along with the development of foreign audit committeesystem, our country also try to improve and perfect the audit committee system. In2007the China Securities Regulatory Commission issued standards concerning about listed corporation information disclosure, which required listed corporation to disclose theirannual report of the board of auditors. The report should include the following content:two deliberations of the company financial statement, supervision situation of externalaudit work, summary report of external audit work and the resolution paper ofemployment relating to the external audit change next year. But the later beginning ofthe study and implementation on audit committee system lead to the audit committeesystem in our country still has a lot of defects which were not cognitive andimprovement. Today, almost all listed companies have set up the audit committee, butthe defects lead to the audit committee failed to play the role of the strengthenmanagement.In this paper, we use normative research method to analyze and discuss theproblems existing in the audit committee system of listed companies in China. Thispaper analyzes the process of our country’s audit committee system production、operation and the output, to explore the problems existing in the system in dynamic,thus to a comprehensive and intuitive perspective on the audit committee system in ourcountry. This paper roughly divided into five parts. The first part of this paperintroduces research background and significance, the domestic and foreign relatedresearch literature review and writing ideas and methods; The second part expoundsdevelopment course of the audit committee system, responsibility of the auditcommittee and related theoretical basis; The third part mainly discusses the problemsexisting in the current audit committee system of china and the causes of these problems.This part is the core part, through discussing the audit committee system process, wefound that our country’s audit committee system mainly has three big problem:1,composition of the audit committee is not standard;2, operation mode confusion;3,resumption information report and evaluation mechanism is weak. The three majorproblems caused by a variety of reasons, mainly composed of the following fourreasons: the audit committee system standard is not comprehensive, the independentdirector system is unreasonable, the company equity is too centralized, people pay lowerattention on the audit committee resumption. The fourth part reference experiences ofaudit committee system in US where the audit committee system was born and the mostperfectly developed. The establishment and development of audit committee system inmost states is based on American audit committee system. Through the comparison ofthe audit committee system with the United States, and found the gap between them, Sums up the improvements suitable for China’s situation. The fifth part according to theproblems of audit committee system itself in China and referencing to the advancedexperience of the United States put forward perfect measures of our country’s auditcommittee system. This paper explores the problems existing in the audit committeesystem of the listed companies in China, analyzes the causes of these problems, andputs forward improvement measures, to hope that my paper can offer my pygmy effortfor the improvement and development of the audit committee system of the listedcompanies in China.