Companies’ Incentives, External Audit And Voluntary Internal Control Audit Reporting

China’s listed companies lack motivation to disclose internal control. However, there have been more and more companies tend to take the initiative to disclose internal control audit report to meet the needs of the community. According to the agency and signaling theory, reducing agency costs and releasing positive signals are companies’will to disclose internal control information. Of course, CPA is an important role. Therefore, the impact of assurance engagements development is not only by the company’s willingness of the internal control disclosure, it also depends on the external audit’s willingness to report.Article selects year of2008-2009Shanghai and Shenzhen non-financial listed companies as sample, and selects voluntary disclosure of listed companies internal control audit report, audit scope and level of audit as explanatory variables, analyses firm motivation and external audit how to effect companies’ voluntary disclosure of listed companies. Articles uses SPSS19.0software to do variables descriptive statistical analysis and logistic analysis, analyses ownership concentration, the scale of the supervisory board, the management shareholding ratio, financial report type of audit opinion, the auditor reputation, company size, the level of profitability and financial leverage how to raise listed companies’will to disclose internal control audit report and expand to the extent of assurance and improve the level of assurance report. The study found that ownership concentration, managerial ownership ratio, audit opinion type, size of the company and the explanatory variables is positively correlated, but financial leverage on the role of the explanatory variables is inverted.The article concluded:in order to reduce agency costs between large shareholders and minority shareholders and pass the company’s positive message, listed companies are more inclined to disclose internal control assurance report and expand the scope and level of assurance. The study also drawn:the higher the reputation of auditors, auditors are not willing to issue the internal control attestation report, let alone to expand the scope and level of assurance. According to the findings, the paper proposes policies and proposals, including speeding up China’s internal control audit legal system and improving the profession and quality of CPA in the internal control audit services, to ensure the smooth development of China’s internal control audit.