The Research On Internal Audit In Small And Medium-Sized Enterprises

In the market economy time,the internal audit plays an important role during the enterprise's growing process.As a significant link of the enterprise management,internal audit can prevent internal control failure effectively,recognize financial problems early and improve management efficiency remarkably.In order to survive the fierce market competitions,enterprises must be healthy and strong from inside and outside.And the internal audit could be a reliable guarantee for enterprises.In the former research,scholars paid more attention to the internal audit of large-scale enterprises or the listed companies rather than small and medium-sized enterprises.Until the economic crisis sweeping the globe in 2008,more people realized the importance of internal audit in small and medium-sized enterprises because this type of enterprises lost considerably more than the large ones for their incomplete internal audit and lack of risk awareness.We can see that the internal audit construction of the small and medium-sized enterprises is imperative.Chinese small and medium-sized enterprises have distinct characteristics.On one hand,most of them are short of advanced management and couldn't survive for a long time.On the other hand,their operations are flexible so many small and medium-sized enterprises can develop rapidly.Because of these characteristics,we can't copy the western enterprises mode completely in the development process of the internal audit.Instead of that,we should follow the rules,combine the fact and find the right way for Chinese small and medium-sized enterprises.This research is divided into six parts.The first part is the introduction of the backgrond,purpose,framework,contributions and shortcomings of this paper.The second part is the literature review.This part summarizes the literature of internal audit at home and abroad,and gives a brief review of the literature.The third part is the overview of the theory about internal audit.With reading the literature,we build the theoretical basis of the internal audit from four aspects:the concept,origin and development of internal audit;the patterns and function of internal audit;the relationship between internal audit and internal control;the relationship between internal audit and external audit.These four aspects lay a theoretical foundation for the later studies.The fourth part introduces three things about small and medium-sized enterprises(SMEs),which is status of internal audit,problems of internal audit and some analysis.This part explores general condition of internal audit about Chinese SMEs,which include characteristics,development status and problems.After analysis,the problems of internal audit in Chinese SMEs are as follows:first,SMEs' internal audit is lack of independence and authority.Second,working content of internal audit is limited,and the scope of work is narrow.Third,work techniques and methods are inefficient.Last,the staffs of internal audit are lack of professional knowledge,more and more interdisciplinary talents are in need.We can analyze these problems from four aspects,such as the high degree of concentration of enterprise property right,the lack of proper understanding of internal audit,the incomplete laws and regulations,the inadequate influence of Chinese Institute of Internal Auditors.The fifth part is the Case Study of GF Company.This part focuses on the case of GF Company and is the emphasis of the article.By analyzing the overall situation and problems of the enterprise's internal audit,the article gives some suggestions for improvement:establish the consciousness that the internal audit is important because of "need";adjust the internal audit institutions and increase professional staff;to expand the scope of audit and improve audit techniques;the internal audit system should be gradually improved,and working methods should be changed;strengthen the cooperation with external audit and ensure the great quality of internal audit.These recommendations are not attempt to establish the most advanced internal audit system without considering the facts and characteristics of GF Company.These are trying to find the suitable measures which is effective and feasible in case company.The sixth part is the research findings and policy recommendations.This part summarizes the main points of the article and gives the research findings.It also gives some policy recommendations at the macro aspect in order to achieve the purpose of promoting the development of internal audit in the small and medium-sized enterprises.The main contribution:this article starts with the introduction of internal auditing theory,then analyzes the characteristics of Chinese small and medium-sized enterprises and their applications of internal audit,and discusses the causes of existing problems.Instead of choosing a famous or listed company,the article takes GF Company's internal audit as a case because there are few researches on the internal audit in small and medium-sized enterprises comparing to in the famous and listed companies.Combined with internal audit theory,the article analyzes situation,problems and the challenges of internal audit work in GF Company.Further,the article focuses on the audit ideas,audit methods,audit quality,auditor requirements and proposes and try to find out how to build an effective internal audit system.In the end,the article gives some policy suggestions at the macro aspect.The main shortage:due to limited conditions,this article focuses on the internal audit of GF Company.But actually,there are so many small and medium-sized enterprises and each one has its own characteristics that it's hard to guarantee the case studies could apply for all other enterprises.But for the similar enterprises,this article will bring quite valuable reference to establishment and operation of internal audit system.On the other hand,although I try my best to obtain the first-hand information of the case company,but there are some confidential materials that I can't get.I have done some interviews and surveys to make up this shortage,but it's hard to avoid all deficiencies and omissions.