The Correlation Of The Internal Quality Audit And The Internal Control Audit Opinion

The Ministry of Finance, Securities Regulatory Commission, the Audit Commission,China Banking Regulatory Commission, China Insurance Regulatory Commission jointly issued “Internal Control Standards” In 2008, and released “Enterprise Internal Control Guidelines” in 2010.The guidelines clearly request listed companies to evaluate the effectiveness of the internal control activities of the organizations and public the internal control self-assessment report, while hiring an accounting firm to evaluate the effectiveness of internal control activities and public internal control audit reports. “The notice about the main board listed companies in 2012 implementing the system of internal control practices in batches” issued by the General Office of the Ministry of Finance stipulates that the central enterprises and state-owned enterprises should start from 2012 in accordance with the requirements of internal control specification implementation to be forced to disclose the internal control self-assessment report, and should be forced to disclose the internal control audit reports according to the evaluation of the effectiveness of internal control. To 2014, the stipulation extends to all boards of listed companies. Internal Control Audit becoming more and more important. The internal audit is an independent activity that helps organizations achieve its objectives by evaluating the effect of enterprise risk management, internal control and corporate governance. Thus, the internal audit is a part of internal audit of internal controls, internal control audit that guidelines specify is a part of the external audit of internal control, so there is a certain relationship between the two. The improvement internal audit quality helps to promote the improvement of the effectiveness of the internal control, and the improvement of the effectiveness of internal control causes that external certified public accountant in the internal control audit tend issued unqualified audit opinions.This paper, in the background, analyzes the internal audit and internal control audit theory and compare the difference about internal control audit and the audit opinion between Chinese and foreign, based on synthesizing existing research regarding internal audit, internal control and the relationship between the two documents, then makes assumptions- there is a positive correlation between the characteristics and quality of internal audit and internal control audit opinion. This paper selects the A-share listed companies in Shanghai and Shenzhen and the domestic and overseas listed companies at the same time in 2012-2014 as samples, firstly it put the independence, the scale, the professional competence, the rules and the regulations and the responsibilities of the internal audit as the five aspects of internal audit characteristics, it uses the principal component analysis according to five characteristics to obtain internal audit quality metrics on the basis of using multiple regression analysis to verify the relation between five characteristics of internal audit and internal control audit opinion, secondly it uses regression analysis to verify the relation between internal audit and internal control audit opinion, and using correlation, colinearity and robustness test the reliability of results. The study found that there is a positive correlation between the quality and characteristics of internal audit and internal control audit opinion, the more independence of the internal audit, the greater the scale, the stronger the professional competence, the more robust and the more extensive regulatory mandates, the higher the quality of internal audit, the more likely to be issued unqualified audit opinions.The innovation and the contribution of this paper are mainly in the following aspects.Firstly, it uses the principal component analysis to measure the quality of internal audit and puts forward a more objective and reasonable measure of internal audit quality. Secondly,the paper examines the positive correlation between the quality of internal audit and internal control audit opinion by using the empirical method, it reveals the importance of improving internal audit quality for the improvement of internal control audit opinion and provides recommendations for listed companies to improve internal control, it also illustrates the close relationship between audit and external audit, a certified public accountant is affected by internal audit when issues the internal control audit opinion.Finally, the analysis of the Chinese and American internal control audit shows that our internal control audit is divided into internal control audit over financial reporting and internal control audit over non-financial reporting, and increases the paragraph describing“Internal control significant weakness over non-financial reporting” in the internal control audit reports to show the advancement of the internal control audit in China.