The Impact Of Internal Control Auditing Features On Financial Information Quality

To avoid numbers of major financial fraud cases,the SOX Act was promulgated in 2002,which forced the US public companies to implement internal control audits to enhance the reliability of the financial information.In 2007,the PCAOB enacted the Audit Standard No.5(AS5),which raised risk-oriented and integrated audit concept,requiring integration of the internal control audit and financial statement audit,to improve the efficiency of audit,and the effectiveness of internal control,and the quality of financial information.Drawing on foreign internal control audit system,Chinese government has introduced the development strategy of gradually expanding internal control audit,and promotes integrated audit mode.Thus,under the background of our system,it is a significant question that whether the internal control audit system has improved the quality of financial information.This paper examines the main board listed companies in China from 2008 to 2014,researches the influences of internal control audit,the auditor's reputation,and integration IAD of two audit services to financial information quality.The results show that:(1)the financial information quality of companies that have conducted the internal control audit is significantly higher than companies without internal control audit;(2)if the listed companies are audited by accounting firms with higher reputation,their financial information quality is higher;(3)The deeper the integration of the internal control audit and the financial statement audit,the higher the financial information quality of the audited entity.In order to solve the problem of endogeneity generated from panel data,this paper adopts propensity score matching and double difference method to study the influence of internal control auditing on financial information quality,and obtain the expected results.The innovation of this paper lies in the original description of the internal control audit features,through which to perspective the internal mechanism of internal control audit on financial information quality.This paper provides objective academic evidence for the effects of internal control audit policy under Chinese institutional background and market conditions.And it also enriches the relevant documents about the internal control audit and the financial information quality.