Research On Internal Audit Based On The Corporate Governance Of Listed Companies

In recent years, a series of corporate scandals, for example, in Enron, WorldCom, ArthurAndersen, Xerox, Tyco international, China National Aviation Fuel cases, happened in foreignand domestic capital market. As a result, corporate governance has attracted increasingattentions. The promulgation of “Sarbanes-Oxley Act” in the U.S. and the regulations of theNew York Stock Exchange, which requires all listed companies to establish internal auditfunction, both have raised the importance of internal auditing in corporate governance. Theacademic research of relative theories, such as the expanded utilization, strategic status, orimprovements of internal auditing in corporate governance, however presents quiet new andinsufficient. Therefore, it is proposed that more studies should be conducted in this area.This paper researches into its main theme through both normative analysis and case study.Firstly, it stated the traditional problems of internal audit in listed companies to drive thenecessity for its expanded functions. Furthermore, the paper promotes practices for listedcompanies based on internal auditing functions in corporate governance. Secondly, itdemonstrates some internal auditing problems through the case study on Company S as wellas offers solutions. The whole paper consists of five chapters.First chapter presents the academic background and significance of this paper, as well asa brief summary and comprehensive assessment of existing researches. It specifically reviewsthe primary theme and methods in this study. Second chapter describes theoretical basis forinternal auditing and corporate governance in listed companies, especially emphases on therelationship between them. It also reveals current problems of internal auditing from the viewof corporate governance. Third chapter analyses the functions of internal audit in corporategovernance. It then introduces the measures for the formation of internal auditing system inlisted companies, which includes a clear status in corporate governance, a proper organizationof audit facilities, improvements of audit practice and the development of capability amongauditing personnel. Fourth chapter includes a simple introduction of Company S, structureand environment of its corporate governance, and current internal auditing systems.Furthermore, it shed light on the problems as well as solutions of internal audit. Fifth chaptersummarizes the conclusions of this paper and points out the shortcomings in the study. Toconclude, this paper attempts to explore the measures of the internal audit system on the basesof corporate governance, in the hope of offering some ideas for further development of theinternal audit of listed companies in China.