The Effect Of Mixed Ownership Reform On Audit Governance Arrangements

The new round of state-owned enterprise reform has kicked off.And the pilot mixed ownership reform of state-owned enterprise has been gradually advanced.The introduction of non-state-owned capital,the promotion of the marketization of state-owned enterprises,and the development of the non-public economy are the focuses of the reform of state-owned enterprises in recent years.Due to the non-public capital,the agency problem between the state-controlled shareholders and the private minority shareholders(the second type of agency problem)may be further aggravated,which hinders the promotion of mixed ownership reform and the development of state-owned enterprises.Auditing is a tool to improve the quality of accounting information,reduce agency costs,alleviate agency problems,and protect the rights and interests of investors.Audit governance arrangements refer to corporate governance arrangements related to auditing.In the corporate governance level of state-owned enterprises,small and medium shareholders may put forward new requirements for auditing arrangements such as the appointment of external auditors.And the function of internal audit and the Audit Committee needs to be further strengthened.Only by perfecting the auditing and management arrangements of state-owned enterprises,can we give full play to the governance function of auditing,protect the rights and interests of small and medium-sized shareholders,and promote the smooth progress of mixed ownership reform.In order to study the impact of mixed ownership reform on the auditing arrangements of state-owned enterprises,this paper sorts out the relevant literature on mixed ownership reform and audit governance arrangements,and deeply analyzes the relationship and mechanism of mixed ownership reform and audit governance arrangements.This article takes China Unicom as a case,sorts out relevant information,and compares the changes in its audit management arrangements before and after the reform of mixed ownership.This paper finds that China Unicom has made certain adjustments to the audit management arrangement after participating in the mixed ownership reform: re-booking the "Working Rules of the Audit Committee of the Board of Directors";clarifying the status and responsibilities of the Audit Committee;the Board of Directors of the company made an early change;the new Audit Committee member was re-elected,and the personnel composition and qualification background were fully considered and rationally arranged;the decision-making power of the external auditor's audit fee was changed from the original management to the board of directors(including 5 non-executive directors from private capital);replacement of audit report signing accountant(external audit project partner)with more qualified partner;increase of “small and medium shareholders' equity” in the external announcement of the Audit Committee,and it highlighted the importance of protecting the rights and interests of minority shareholders and the working principles of the Audit Committee;amending the Articles of Association,and adding explicit provisions related to “small and medium shareholders”.This paper also summarizes and analyzes the possible problems in the current China Unicom audit management arrangement.It mainly believes that China Unicom may have the following problems: the audit committee's information disclosure mechanism is not perfect;the company's CFO serves the audit committee;the working rules of the audit committee have not been strictly implemented;internal audit governance functions are relatively weak.Through the study of the case,this paper concludes that the mixed ownership reform has a great impact on the audit governance arrangements of state-owned enterprises.China Unicom can consider making further adjustments and arrangements in the corporate governance related to auditing,fully and rationally arrange audit management more comprehensively,implement the requirements of audit governance arrangements;innovate audit information disclosure arrangements,and implement audits.Committee's responsibilities,establish a reasonable quality-oriented audit committee incentive mechanism;attach importance to internal audit governance arrangements,build effective audit information communication channels,joint audit committee,external auditors,internal audit departments,improve internal governance structure,and integrate different audit institutions,give full play to the investor protection function of auditing,alleviate the problem of dual principal-agent,and promote the smooth progress of China Unicom's mixed ownership reform.