A Study On The Correlation Between The Effectiveness Of Internal Control And Auditing Charges

At the beginning of the 21st century, a series of nationwide financial fraud and the occurrence of the listed company’s bankruptcy case, making markets and regulators realized just relying on company governance mechanism and external supervision which is inadequate or ineffective, the enterprise internal control is referred to an unprecedented important position.2008 years ago, our country internal control present the phenomenon of conflicting policies from different departments,the enterprise internal control basic norms in 2008 and three of the guidelines issued in 2010 marked the basic build of internal control system in our country. In 2012 listed companies in our country has entered a stage of mandatory disclosure of internal control information,which means internal control entered into a new stage, the implementation of internal control which is good or bad will not only affect the survival of enterprises,but also will affect the accounting firm to provide accounting services for the enterprise, the related systems require companies to hire accountants audit to enterprise’s internal control effectiveness. The level of internal control effectiveness not only affects the enterprise the management situation, determines the success or failure of enterprise management, but also created the new supervision mechanism of the external audit work. The supervision mechanism greatly affect the auditor’s audit work, furthermore, affect the the final formation of audit fees. Based on our country under the background of economic transformation, this paper combines the factors of the marketization process to study the relationship between internal control effectiveness and audit fees, so as to encourage listed companies to further strengthen the internal construction, and promote the reasonable standardization of certified public accountants audit fees.By combining the method of theoretical analysis and empirical research, this paper firstly summarizes the relevant literature about the effectiveness of internal control, audit fee, and the relations between the two, and then based on the theory of cost-benefit, signaling theory, audit risk theory and insurance theory analysis and construct the object-oriented effectiveness of internal control evaluation index by the method of principal component analysis, and then introduce the marketization process factors into the correlation relations research on internal control effectiveness and audit fees, and put forward related suggestions according to the conclusion. This article is divided into six parts:the first part is introduction, mainly introduced the background and significance of the research, research ideas and content, research framework and expected innovations. The second part is literature review. Focus on the related literature review which include the concept of the effectiveness of internal control, influence factors and the evaluation method, the influence factors of audit fees and internal control effectiveness affect audit fees. The third part is the theoretical analysis. Emphasis from the cost benefit theory, signaling theory, theory of audit risk theory and insurance theory on the influence of the internal control effectiveness of audit fees. The fourth part is the research design, the explanation for the source of the sample data and variables, on the basis of the research hypothesis model is constructed. The fifth part is the empirical study, through descriptive analysis, correlation analysis and multiple linear regression method to analyze the empirical results. The sixth part is the research conclusion and suggestion, by analyzing the empirical results to draw conclusions and make recommendations on this basis.The characteristics of the innovation of this paper is that:based on the analysis of the correlation between internal control effectiveness and audit fees, is really not fragmented view of the relationship, but consider the marketization process factors, the purpose is to study whether the marketization process can affect the credibility of accounting firm to the effectiveness of internal control of listed companies, thereby affecting audit fees, which in the previous studies are rare. In addition, this paper broaden the research perspective of the audit fees, consider the internal control effectiveness will affect the determination of audit fees and measure internal control effectiveness with a goal-oriented, on the basis of summarizing the predecessors’ research design, this paper designed a set of more scientific and reasonable index system of internal control effectiveness, enrich the measure of audit fees.