Improved Study On Strategy-oriented Internal Audit In Central Enterprises

Under China's New Normal, China's economic development has exhibited three major characteristics, namely, speedy changes, structural optimization and dynamic conversion. Against this background, the leading role of strategic orientation in enterprise management is becoming increasingly important. As the efforts to adjust, innovate and reform state-owned enterprises enter the deep water area, it became essential for the central enterprises, the "engine" of the state-owned enterprises, to manage all business activities under the framework of development strategy. Internal audit, as a corporate governance mechanism and internal control mechanism to ensure the effective implementation of fiduciary duties, is playing a increasingly important role in the enterprise. The shift of the priority and focus of enterprise management has posed new requirements and endowed internal audit with new missions. Therefore, the management mode, function positioning, personnel structure, technical measures and the evaluation index system of internal audit established on the traditional role of internal audit can not live up to the missions and roles of internal audit in this era of strategic management, nor can they effectively fulfill its function of increasing value or effectively gear the work of the internal audit department to the overall strategy of the organization. This paper is intended to conduct a systematic study on the improvement and transformation of strategy-oriented internal audit in central enterprises, explore a feasible way and mode, provide recommends and suggestions for central enterprises to promote their concepts on and practices of internal audit in order to improve and optimize the internal audit management of central enterprises and to contribute to achieving the desired objectives of state-owned enterprises reform.In this paper, firstly the development of internal audit is introduced and then the necessity for the development of strategy-oriented internal audit is elaborated. The implementation methods and main characteristics of the strategy-oriented internal audit have been summarized from the perspective of corporate governance, internal control and risk management. To facilitate the discussion and study, the case of company A(a subsidiary of CCCC), which is in the strategically transformational period, is introduced. Problems confronting the company as it strives to carry out the strategy-oriented internal audit and their root causes are analyzed and summarized. Finally, from the prospective of internal audit department membership relations, the internal audit organization setting, functional positioning of internal audit, internal audit performance evaluation and other aspects, a useful method is proposed to improve the strategy-oriented internal audit for the reference of other central enterprises which intend to transform their internal audit. The theories of corporate governance, internal control, risk management and balanced scorecard strategy tools are utilized.