An Empirical Study On The Influence Of The Independence Of Internal Audit To Internal Control Level

Internal audit should have detached independence when it is supervising the internalcontrol and acting an internal control evaluator. The independence is the soul of the internalaudit, playing an important role in the level of internal control.This paper reviews the relevant literature about the independence of the internal auditand internal control level. On the basis of internal audit and internal control relevanttheoretical analysis, it builds a hypothesis of the independence of the internal audit effectingon the internal control level.Firstly, this paper reviews the relevant literature about the independence of the internalaudit, internal control level and the internal audit effecting on the internal control level.Secondly, it elaborates relevant theories about the internal audit and the internal control level,including the principal-agent theories, cybernetics and system theories, then building. Furthermore, it describes the metrics and the present situation of the internal audit independence andthe level of internal control, defined the level of independence under the internal audit ismeasured by the internal audit systems’ affiliations, the internal control levels is measured byChinese listed company internal control index which is issued by China Ministry of Financeteam of2011. Finally, in the demonstration part, it collects and attributes data, according toprevious studies, selecting other factors will effect on the internal control index, then itconstructs regression model, obtaining conclusion based on the empirical test results.Results of this study of this paper indicate that the independence of the internal audit hasa significant positive impact on the level of internal control. when a higher independence ofthe internal audit system to carry out the internal audit activity, the listed company’s internalcontrol level is better. It provides empirical evidence of the impact of internal auditindependence to internal control level, and reveals the importance of improving theindependence of the internal audit, also help supervision departments generate tactics toimprove the internal control level of listed companies.It combines documentation method, qualitative and quantitative research to study. It setsup qualitative analyses of internal audit systems’ affiliations and others, based on reviewingrelevant literature about the independence of the internal audit and internal control index.Then, it collects data about the internal audit systems’ affiliations of Chinese listed Companyand builds regression models. Further, it sets up correlation analyses, descriptive statistics andmultivariate regression analyses to test how the independence of the internal audit toinfluence internal control level.