Study On The Relationship Between The Effectiveness Of Internal Control And Audit Quality

This paper mainly adopts the research method of combining theoretical analysis and empirical, separately from the enterprise contract theory, the corporate governance and the point of audit theory, to clarify the historical origin of internal control and auditing, auditors from the enterprise and the positions of the two sides gradually sort out the mechanism of corporate internal control effectiveness and the audit quality of interaction, and then through the empirical research method to verify the theoretical assumptions, draw a conclusion. The hypothesis of this study are: 1, the effectiveness of internal control and audit quality is positive correlation; and 2 for ST, the influence of audit quality of internal control information disclosure not; and 3 for non ST companies, the more effective internal control, audit quality is higher; and 4 internal control more effective, more enterprises to provide accounting information robust; effectiveness of each of the elements of internal control in the 5 increase would promote the improvement of the quality of audit.Draw on previous research methods use the information disclosure of internal control as a substitute degree of internal control effectiveness, by DIB internal control information disclosure index database is measured. The use of 2011- 2013 in Shanghai and Shenzhen A shares non-financial listing Corporation large sample data, the study found that, for ST, the effectiveness of internal control and audit quality influence the relationship does not exist. For non ST companies, there is a positive relationship between the effectiveness of internal control and audit quality. Also found that, in a positive earnings management, internal control information disclosure degree is higher, more can inhibit the management of profit manipulation behavior of increasing; management earnings in the negative, the quality of internal controls, does not affect the management of profit manipulation reduction behavior. To illustrate, good internal control helps the management of the company to provide a more robust financial information. The 5 elements of internal control information disclosure level has a significantly positive correlation with audit quality, and showed that not only the overall effectiveness of internal control will influence the audit quality, as the quality of the composition of the various elements of the internal control system may also have a significant positive impact on audit quality.Study suggests that the listing Corporation to strengthen the internal control evaluation and the importance of information disclosure; government supervision departments to evaluate and standardize the internal control information disclosure of internal control of refinement; the auditor can internal control information to do audit decision making full use of.The contribution of this paper lies in: for the first time using the corporate contract theory, corporate governance and audit practice comprehensive theoretical analysis of the relationship between internal control and auditing independence, in-depth study of the internal control on the overall quality of the various elements, the validity of audit quality. Use the correlation empirical research methods to study the internal control and audit quality, added the empirical research literature related to internal control. And expand the research of audit quality, audit quality is ignored for the current research in this critical variable internal control quality situation.